class="no-js"> ELECTRONIC CUSTOMS SEALS ARE INCREASING THE COST OF DOING BUSINESS IN SADC – SACA
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ELECTRONIC CUSTOMS SEALS ARE INCREASING THE COST OF DOING BUSINESS IN SADC

Most countries in the SADC region are landlocked and do not have direct access to seaports, examples are Zimbabwe, Zambia and Democratic Republic of Congo (DRC). Goods exported from and imported to these countries pass through third party countries to the seaports. Goods coming from Beira port or Durban and destined for the DRC pass through Zimbabwe and Zambia. Customs duties are not imposed on goods-in-transit. However, freight forwarders who facilitate removal in transit are required to execute Customs Transit Bonds in the transit country. This is meant to secure state revenue at stake should the goods fail to exit the country for one reason or the other.

In addition to transit bonds other measures can be taken to monitor the trucks in transit and these measures include customs escorting the trucks and putting electronic seals on the trucks. Zimbabwe, Zambia and Mozambique are now using electronic seals for some trucks in transit.

The use of customs seals is provided in Appendix to Specific Annex E/Chapter 1 of the World Customs Organisation (WCO) Revised Kyoto Convention. The WCO has published transit guidelines handbook and this handbook provides guidelines on the use of electronic customs seals. “The electronic Customs seal (e-Customs seal)/electronic cargo tracking system is a newly developed technology whereby traditional Customs seals are equipped with a special mechanism for online tracking of the means of transport to which the Customs seals are affixed. E-Customs seals ensure the complete electronic monitoring of the goods and vehicles from the Customs office of departure to the Customs office of destination along the whole transit route.”[1]

Freight forwarders in SADC are complaining about the amount being charged for use of the electronic customs seals. Zimbabwe[2] and Zambia charge USD30.00 while Mozambique is charging USD60.00. A truck transporting goods from Beira port to DRC will spend USD120.00 on electronic seals alone. These electronic seals can be used repeatedly on different trucks. Assuming that a Mozambique electronic seal is used twice per week, it will generate USD6240.00 in one year. An electronic seal can be used for a period between 3 and 4 years. The Mozambican seal will generate USD18 720.00 after 3 years. Assuming that the same seal is just used once per week, it will generate USD9 360.00 and transporters are wondering if these seals cost that much or the use of electronic seals has become another hard currency generating measure for member states in SADC. The WCO transit guidelines handbook provides that:

“Customs administrations should not oblige transit operators to affix an electronic Customs seal, except in cases in which ordinary Customs seals are not sufficient to ensure the integrity of the transit goods.

 When Customs administrations oblige transit operators to affix an electronic Customs seal, Customs should not collect administrative/processing fees for the use of the seal, apart from the cost of the seal itself. When an electronic seal is requested by the transit operator, Customs administrations may collect fees for it from the operator.”[3]

This author recommends that SADC implements a regional transit management system that includes use of regional transit bond guarantee and develop regional electronic customs seals. This recommendation is also contained in the WCO transit guidelines as follows:

“Customs administrations are encouraged to develop regional electronic Customs seals to be used for transit operations in the region, as replacing the electronic Customs seal with another seal at the border could give rise to delays”[4]

SADC can take lessons from the COMESA regional transit management system as implemented by Kenya, Uganda and Rwanda. This regional electronic cargo tracking system is intended to achieve the following:

  • Enable an end-to-end monitoring of transits along the Northern corridor;
  • Harmonize regional approach to e-monitoring, so that it is less tedious, less cumbersome;
  • Reduced cost (time & money) of doing business, especially at border crossing points and hence attain a better trade environment;
  • Real-time detection of transit violations and coordinated Rapid Responses. – Better enforcement; and
  • Better information sharing & exchange across borders to improve enforcement controls.[5]

The implementation of the regional approach to transit management has yielded the following benefits in the Northern corridor:

  1. a) The Revenue Authorities:
  • Better end to end monitoring of Transit across the Northern Corridor
  • Reduced enforcement administrative costs incurred by the revenue Authorities
  • Improved voluntary compliance
  • Improved Revenue collection
  1. b) The Private Sector.
  • Reduced clearance time
  • Reduced cost of doing business ( in terms of time and money)
  • Enhanced cargo security
  • Improved real time monitoring
  1. c) To the Government
  • Better Coordination and cooperation between Government Agencies at intra, Inter and international level.
  • Improved resource allocation, sharing and utilization
  • Improved service delivery
  • Better investment climate
  • A competitive Economic Region, and hence
  • Improved living standards[6]

Available evidence based on number of seizures and outstanding removal in transit entries has shown that the use of electronic customs seals and customs escorts has significantly reduced transit fraud challenge in Zimbabwe. Cases of goods in transit being dumped in Zimbabwe are now rare. Focus should now be on reducing cost of electronic customs seals in the SADC region. Implementing a regional transit management system will reduce cost of moving goods in transit; for example, instead of a single truck paying for electronic seal at each border, one seal put at the seaport should suffice. Member states sharing the same corridor will pool resources to procure regional corridor seals. Currently, a truck moving goods from Mozambique to DRC spends USD120.00 on seals and when a regional transit management system is implemented the cost will come down to USD30.00. This recommendation points to the need for deeper regional integration where in the long run, a single market would be ideal to ease cost of doing business where all formalities will be concluded at the point of entry into the region like say at Durban Port, ensuring express transiting within the region.

About the author

Elisha Tshuma is a Customs and Trade Facilitation Expert based in Zimbabwe. He holds a Master of Commerce Degree in Management in Trade Law and Policy from the University of Cape Town and has worked extensively in the area of customs, tax and border administration in southern Africa. Elisha is a visiting lecturer at the University of Sciences (NUST) where he teaches Customs Management and Reforms. He currently serves as Director: Customs and Trade Facilitation at Shalom Fiscal Consultants in Harare. He can be contacted on tshumaelisha72@gmail.com or +263 777850251 www.shalomfiscal.co.zw.

He writes in his personal capacity.

[1]http://www.wcoomd.org/-/media/wco/public/global/pdf/topics/facilitation/instruments-and-tools/tools/transit/transit-guideli

[2] These are gazetted through a government statutory instrument, SI 113 of 2017.

[3] Page 85 of WCO transit guidelines

[4] Page 85 of WCO transit guidelines

[5] Page 91 of WCO transit guidelines

[6] Page 92  of WCO Transit guidelines

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