Improving customs clearances and intermodal transport are vital if the region's growth is to continue, writes Steve Cameron
While global economic developments offer Africa an opportunity to integrate and benefit from engaging in global trade, there are a number of indigenous factors that currently hinder trade growth. Terminal concessioning and privatisation will not have its desired effect unless these factors are ironed out. Led by Unilever, British American Tobacco, SITPRO (the UK's trade facilitation agency) and Diageo, Business Action for Improving Customs Administration in Africa (BAFICAA) is a flagship trade facilitation programme of Business Action for Africa. BAFICAA's primary objective is to achieve measurable and meaningful progress in customs reform by retaining a strong private sector lead, while working in a wider co-operative relationship with governments, donors and other stakeholders in Africa. The focus has been on six areas: the need for fast-track customs services for the compliant and low-risk taxpayers and traders; the need to support change in customs administration; automation of customs processes and procedures; a service charter between the customs services department and the private sector; avoiding duplication and unnecessary bureaucracy in Post Clearance Audits and valuation processes; and training, accreditation and certification for customs A World Bank study on trade facilitation notes that, "inefficiency in most African countries' customs severely affects cross border trade", reflecting the generally perceived belief that customs procedures slow down trade growth in Africa. "Inefficiency" exists in various forms, be it in terms of slowing down cargo movement, excessive procedural requirements, inefficient and partial implementation of technology, and also high costs. Regarding delays, customs procedures slow down cargo movement by an average of 10 days compared with an average delay of between five days at east Asian ports and two days in developed countries. Most of these delays are at the major ports in Africa, and delays of as much as 15 days are common in Nigeria. Concentration of trade in existing ports is having a multiplier effect on these delays, as more and more cargo awaits clearance from customs. Customs procedures are therefore curtailing further growth of cargo. This is also largely raising the cost of trade due to increasing amounts of commodities being stacked at the customs for several days.
The high documentary procedures in the first place and secondly, those requiring authorisation from several officials, only further complicates customs clearance. West African ports have yet to catch up with the harmonised customs documentation that exists in other part of Africa, notably South Africa where a dozen documents have been integrated into a single document, which has greatly reduced customs delays. This has translated into savings in costs and time. West African ports have the potential to form a gateway for the landlocked countries of central Africa, but each country treats its own customs clearance and trade systems independently without reference to other countries, which further hampers intra-community trade.
Customs clearance in West African ports is also characterised by insufficient use of automated systems. For instance, the introduction of scanning facilities aimed at reducing delays and inspections is not having the desired effect, since the entire cargo is still being physically examined and inspected. The partial implementation of scanning facilities has therefore only added to the already excessive customs procedures. Equally, even where a computer has been installed, procedures still require laborious processes in the customs long room. The introduction of automation is actually seen to be having the opposite effect to that intended. Any delays in procedural paperwork habitually delay clearance to often around 21 days to get cargo assessed for duty and duty paid, compared with cargo that could be cleared within two to three days when paperwork was received in time.
SITPRO research found that reform is less advanced in West African countries than in east or southern Africa, and this in general stems from West African customs casting themselves as paramilitary organisations, with associated ranks, uniforms and a hierarchical organisational culture that is profoundly at odds with a business-like approach.
However, transport infrastructure continues to remain the single most challenging obstacle to trade growth in the West African countries. The region has a low density of road and rail network, and is finding it increasingly challenging to cater for trade growth. The conditions of the few existing networks are in a pitiful state, and although considerable progress has been made in developing an integrated transport infrastructure, it is not keeping pace with trade growth. While investments are being made in infrastructure these do not alleviate the inland transport problems of the region. Road transport suffers from a myriad of problems such as unofficial check points, cross-border crossing, and customs delays, and all these issues stagnate growth. Despite road being the prominent mode of transport, the condition of road infrastructure is far from satisfactory. Only 10% of the network is paved, and the remaining 90% comprises unpaved roads. With future trade growth and therefore economic development completely reliant on road movement, there is an urgent need to build an efficient road network to support trade growth. This region is totally reliant on international aid for building roads, and major inefficiencies exist in the operations and use of this network. This region has the highest number of checkpoints and barriers on its transit corridors. The most serious impediments to the transit of goods on roads are the imposition of "facilitation fees", which include a variety of illicit financial charges, and range from control fees to outright requests for bribes, making exports from Africa uncompetitive. A study by the West Africa Trade Hub found that these fees can vary from US$50 to $150. West Africa therefore has the most expensive and least efficient road transport in the world. The region needs not just additional roads linking the distant hinterland with the gateway ports and landlocked regions, but there is an urgent and imminent need to reduce barriers, physical or otherwise to facilitate expeditious flow of goods.
Rail transport is in an even worse condition, with only three corridors in the entire region that run perpendicular to the coast, and which are disconnected from each other. Their main function is to transport relatively large quantities of minerals to the gateway ports. While all the three rail corridors have been privatised, it has failed to provide the impetus to trade growth. Lack of investment has resulted in the Bamako-Dakar line falling into almost total decay, with parts of the track, in particular around Dakar, totally out of use. Freight companies cannot count on schedules, but rather have to take large delays and breakdowns into account, and significant investments need to be made just to maintain the existing rail linkages. The fairly constant trade volume on the rail routes and the growing demand of resources from the landlocked countries of Mali, Burkino Faso and Niger are necessitating a shift to road. This is changing ports' share of hinterland traffic and therefore the dynamics of regional port competition. Traffic flows on these corridors are also largely impacted by the political events of the transit countries, and the falling share of Abidjan is a case in point.
The bullish trend in trade growth driven by the Asian demand is creating an opportunity for this region to integrate and benefit from global trade. However, inland transport represents significant challenges to this growth and both strategic investments and operational issues need to be revisited if the region is to benefit from the opportunity that exists. cs
