Improving Customs Efficiency: What are the Gains and For Whom?
It is imperative for Africa to transform its customs environment through fast-tracking implementation of interventions geared towards eliminating inefficiencies, if the continent is to make significant strides regarding trade between its regional economic communities (RECs), improving trade competitiveness and participation in the global trading system. Border posts in Africa are often grid-locked with inefficiency of customs operations which also has a negative impact on Africa’s global trade performance. The bottlenecks results in delays, long transit times, congestion and illicit trade flowing through some of the border posts.
Despite efforts to improve Africa’s trade competitiveness and the continent’s participation in the global trade system, the continent is still a peripheral player owing to these and other challenges. Central to resolving the continent’s trade challenges is the need to improve customs performance, which is a key factor determining trade efficiency. Meanwhile, there are many protocols and agreements aimed at addressing some of the challenges which were ratified, many strategic REC programmes and effort by several stakeholders, yet customs operations are still affected by:
unharmonised and unclear customs procedures and the lack of standardised systems for import declarations which delays the clearing of imports by customs
lack of computerised and integrated customs managements systems which adds on to other manual process
inadequate staff compliment and skills which affect the speed at which services are rendered
incorrect classification of goods imported, incorrect tariff classifications, false invoices and under invoicing
long-time which is taken to complete and approve import documentation
uncoordinated customs operating hours between trading partners which affects clearing of vehicles and cargo
excessive documentation, physical inspections and controls which could be seen as anti-trade facilitation in that they lead to time wastages and inefficacies.
These issues certainly affect customs operations, customs compliance and trade competitiveness. Their effects on trade facilitation are well documented and it is imperative that they are urgently addressed. This will lead to a fit-for-purpose customs capability which in turn enables the continent to start making significant gains regarding regional trade and grow its share of global trade. Despite many clear and well documented benefits regarding improving customs efficiency, the challenges haven’t been resolved yet and this can be linked to several factors, which include:
weak institutional structures with lack of capacity and delivery mechanisms to effectively address the challenges affecting the customs environment
lack of transparency regarding customs procedures compounded by too many documents and language barriers
corruption and underhand payments often facilitated by same actors administering customs procedures and operations
certain actors seem to benefit from the existence of chaos at border posts and often manipulate manual procedures
not every country clearly demonstrate political will and commitment to transforming the customs environment which weakens efforts to clean-up the environment of corruption and improve integrity.
There is also the concern that excessive controls and inspections at border posts, while intended to reduce possible risks, may well have a perverse effect, resulting in congestion and inefficient border management. As a result the objectives of effective risk management, curbing revenue leakages and illicit trade are not achieved. which will improve trade facilitation and in turn address current inefficiencies.
A number of interventions can be implemented to overcome the bottlenecks, some of which can be facilitated through the effective implementation of the AfCFTA:
transparent legislation anchored on the need to facilitate trade competitiveness and eradicate excessive and unnecessary controls in the customs environment, some of which have not proven to be effective
simplification and harmonisation of customs procedures and documentation which will reduce transit time and improve the processing of cross-border cargo movements
implementation of risk management systems as the basis for regulating customs operations, anchored on the need to balance regulatory control and trade facilitation. This will improve voluntary compliance thus reducing the need for intensive inspections right at the border. Meanwhile, if required such checks and inspections can be conducted at the depots of clients
ensuring incentives and organizational structures conducive for integrity and effectiveness in customs administration. Customs administration must be given a clear mandate freed of political interference (Lowitt: 2017)
use of information communication technology to digitise procedures and reduce human intervention in customs procedures
improve data processing and real-time data exchange between border agencies, and improve communication between logistics service providers and customs
deployment of surveillance systems to detect illegal activities and eliminate corruption opportunities
Regarding risk-based regulatory systems, lessons can be drawn from countries and regions (for example, the European Union and United States of America) which have successfully implemented programmes such as the authorised economic operator, the international road transport system and the customs-trade partnership against terrorism. To those countries, these systems have transformed the regulatory landscape and effectively eliminated risks related to revenue leakages and illicit trade flow.
African countries can implement these measures – provided there is political will and technical competence. This will result in many benefits to everyone in the value chain:
customs and other border stakeholders will benefit from improved operational efficiency, resource optimisation and improved delivery of mandates linked to trade facilitation and revenue collection
traders will benefit from improvements in time release for imports and exports, as well as reduction of trade costs
logistics service providers including carriers will benefit from reduced delays and transit times, and improvement in fleet productivity
countries and RECs will benefit from improved revenues, increased regional trade, economic integration and trade competitiveness, both on the continent and with global partners.
There are gains through the entire trade value chain from addressing customs bottlenecks and improving customs efficiency.
Arbay, D (2020) The modernisation of the European Union’s Customs Union with Turkey, Centre for applied Turkey Studies (Cats)/ WP Nr. 05, September 2020
Glenday, G (1997) Customs and trade facilitation: Challenges and Opportunities in sub-Saharan Africa, Working Paper 1004 International Tax Program, Harvard Law School
Lowitt, S (2017) Cross-cutting logistics issues undermining regional integration across SADC, Trade and Industrial Policy Strategies
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