AfCFTA's success depends on the introduction of efficiencies and improvements in customs processes

A report launched by the World Economic Forum in partnership with Deloitte at the Annual Meeting 2022 in Davos, argues that non-tariff barriers need to be reduced and border and customs services to be improved in Africa through a digital transformation of Customs and border posts. The modernization of customs procedures, observes the report, is among the reforms that are much needed in the Continent and that are expected to deliver the higher benefits in terms of reduction of trade costs across Africa, followed by the upgrading of transport infrastructure and other border agency reforms.

Titled “Growing Intra-Africa Trade through Digital Transformation of Customs and borders”, the report notes that Sub-Saharan Africa in particular performs very poorly compared to other regions globally in terms of costs and length of border and documentary compliance procedures for both imports and exports. Things can change with the full implementation of the African Free Trade Area agreement (AfCFTA), which however can be a catalyst for Africa’s growth and its benefits can be fully exploited only if accompanied by the introduction of efficiencies and improvements in customs processes. In particular, digital transformation of border posts and Customs is necessary, especially for many of Africa’s landlocked countries. In this respect, the report calls for more public-private partnerships to drive integrated digital reforms to ensure that such reforms address specific issues faced by all participants in the trade and achieve the highest adoption rates possible. A series of case studies where digital reforms have unlock greater efficiencies in import, export and transit procedures are described. They are referred to countries such Angola, Ghana, Kenya, Rwanda, South Africa, Uganda and Zimbabwe.

The study also identifies some of the main challenges affecting trade in the continent, that have been reconstructed through a series of interviews with logistics practitioners that operate on the continent:

• Manual paper-based processes: Many countries still have in place paper-based processes for the submission and control of documents. This causes to traders an extra work for the preparation of paperwork, and results in redundant controls carried out by government agencies, with longer times for processing goods.
• Movement of goods through ports: In some ports, multiple touchpoints are required to move containers through them, necessitating teams at ports from logistics companies to ensure that the containers are cleared successfully. Moreover, a poor traceability of containers in some ports, causesfreight forwarders and logistics companies to spend additional time in locating them within the terminal areas, which greatly increase the time taken to process these containers and deliver them to their final destination.
• Limited cooperation between border agencies: as a multitude of agencies and other actors are involved in clearance of goods, all these actors need to cooperate with each other in order to accelerate the process. Through cooperation, agencies can agree on aspects such as controls, inspections and standards conformity to ensure smooth transit of goods from one country to another, generating significant savings. Conversely, where there is little cooperation (as it happens in most African countries) processes are duplicated on either side of the border and the release time of goods is higher.
• High inspection rates for goods and vehicles/containers at ports and physical inspections: Many ports and borders on the continent do not adopt risk management techniques for targeting controls on goods. As a result, all cargo is systematically (100%) inspected at ports of entry or exit, leading to significant time delays as well as increased costs. In addition, in many border posts inspections are mostly conducted physically due to a lack of modernized tools and processes for inspections.
• Slow turnaround times for granting of cross-border road transport permits: Permits are required for the movement of goods across borders. At times, special permits may be required in addition to ordinary permits when moving goods to specific countries if there is no harmonization on the need for such permits. It may take time to apply for and obtain these special permits, that further delays the movement of goods across borders. The COVID-19 pandemics has made matters worse because there is a capacity shortage in the issuing of permits, resulting in greater delays.
• Lack of transparency: A lack of transparency in customs administration can create a hurdle for traders. For instance, when laws and regulations are not clearly set out and easily accessible, traders may be unaware of their rights and obligations and the resolution of complaints or findings against traders may take a while. This lack of transparency is also perpetuated by parties that may seek to circumvent laws and regulations and they may resist changes that provide greater transparency.
• Lack of predictability: Traders require predictability in their operations. This includes ensuring that rulings made on tariff classifications and customs origins are made in advance and are binding for a set period. This will increase the confidence of companies to conduct trade due to the increased predictability of elements such as costs. Companies will also have assurances that they will avoid disputes while their cargo is in transit.

The extent to which these challenges disrupt trade or make trade more difficult can be seen in the Tripartite Non-Tariff Barriers (NTB) monitoring, reporting and resolution mechanism, where most of complaints (44%) are referred to customs and administrative entry procedures, followed by challenges regarding the execution of transport, clearing and forwarding operations (31%), as shown in the table below. These two categories include border operating hours, delays at border posts, lengthy and costly customs clearance procedures, inadequate or unreasonable customs procedures and charges, lack of capacity of customs officers and issues related to pre-shipment inspections.