Lessons from Malawi, Nigeria, Uganda and Zambia that Africa can learn for facilitating trade

Global Alliance for Trade Facilitation (GATF), a public-private partnership dedicated to international trade facilitation which supports governments in developing and least developed countries in implementing the World Trade Organization’s Trade Facilitation Agreement, published the Annual Report 2022. The report describes ten projects implemented in seven countries, including in Africa, where the main results of regulatory reforms, process simplifications and digitalization projects in Malawi, Nigeria, Uganda and Zambia are presented. The report shows that implementation of trade facilitation reforms does not happen in a vacuum. These reforms cannot be designed by uniquely taking into account the needs and perspective of traders, but also the interests of governments, or they risk to fail. The report, in particular, raises a red flag on some problems that are common to many other African countries. Among them, the one that emerges more clearly from the document is the fear of revenue losses and the over-sensitiveness by border agencies to risks of frauds, two factors that explain why such agencies tend to implement stricter controls at borders that often discourage trade.

A lesson that can be learned from a project that GATF implemented in Malawi is that when customs clearing agents operate in a weak institutional and legal framework, with limited training, this increases the risk of non-compliance with import and export requirements that inevitably end up creating more barriers to engage in international trade. This because customs clearing agents play a vital role in moving goods across borders, helping businesses of all sizes understand and comply with complex export and import requirements. Here, the lesson is that providing training and moralization programs to clearing agents in line with international best practices is a solution that African government can leverage for increasing compliance to customs regulation and reduce possibility of frauds. In this regard, a report published by the World Bank in 2020, already showed that as the relationship between customs and traders is normally managed through such intermediaries, who are in most cases used by businesses as “facilitators” of corruption because of the close relations they develop over time with officials. Hence for Customs, having a competent, knowledgeable and reliabile counterpart in the fulfilment of customs formalities, is essential for developing a facilitative envorinment for trade.

The Nigeria experience, on the other hand, shows how the need for traders to provide the same information to various border agencies as well as multiple physical inspections of the same shipments can increase and cost of trade, discouraging exports and imports, damaging the country’s competitiveness and potentially driving up prices for consumers. The lesson to be learned here is that simplifying border processes must go hand in hand with the introduction of collaborative practices (e.g., developing joint inspections for imports and exports, strengthening public-private consultation and cooperation) to create a secure environment for trade operations. Trade facilitation cannot be implemented at the detriment of security, a priority to which African government are over-sensitive.

In Uganda, a project implemented by GATF shows that inefficient and manual processes for horticultural products discourages plant exports, particularly among micro, small and medium-sized enterprises (MSMEs). Any digital solution aimed at reducing inspections and the number of procedural steps that such traders need to put in place to ensure compliance of their products to regulations in force, needs however to be combined with the use of modern risk management systems capable of preventing the risk that economic operators profit from such simplification to commit frauds. Otherwise, the risk is that border agencies will develop resistance to the application of such solutions.

Similar to Malawi, experience in Zambia showed that the absence of a proper licensing framework and accreditation programme for customs clearing agents is the main source of inconsistencies and errors in documentation. This leads to high levels of physical inspection and delays at the border, and a lack of trust between government and traders that undermines the country’s competitiveness. The solution, also in this case, is to implement a solid licensing framework involving training and formal examinations for clearing agents to ensure greater capacity in the clearing agent industry, and consistency in the treatment of goods at the country’s borders.