The Minister of Finance,
The honourable Mr Majozi Sithole The Minister of Commerce, Industry and Trade
Mrs Jabulile Mashwama Commissioner General for the Swaziland Revenue Authority,
Mr Dumisani Masilela Commissioner for the Mozambique Revenue Authority Mr Domingos Tivane Mr Alan Hall of the World Bank, Representatives of the transport, trade and business communities for Swaziland, South Africa and Mozambique.
Ladies and gentlemen
It is a privilege to be with you today to celebrate the start of such an important project aimed at identifying critical inhibitors and obstacles within our shared customs and border environment with a view to helping us better facilitate trade between our three countries. As partners in the supply chain we all have important roles to play in facilitating legitimate trade and in protecting our people and our economies from harmful and unwanted goods.
Trade is a critical enabler of our shared ambitions of growing our economies, creating jobs and ultimately enhancing the prosperity of our countries and all their people.
The economic challenge we face;
Taking steps to reduce the barriers to trade has never been more imperative. Our economic recovery and indeed the economic recovery of our region, our continent and the globe needs all the help it can get to gather momentum. All three of our countries have felt the effects of the global economic slowdown.
Trade with our traditional markets in Europe, in particular, has been severely affected by the sovereign debt crisis in that region. Over the past two or three years we have seen trade levels plunge contributing to our own economic challenges and more directly to a significant loss of revenue.
In order to lift ourselves from this predicament and to inject new life into our economic growth we must find ways to reach our traditional markets more efficiently and to reach new developing markets – including within our region and the continent where economic growth is set to outpace that of the developed world both in the short and long term.
Opportunities for improvements;
Ladies and gentlemen, unnecessary customs delays and red tape not only increase the direct costs for all stakeholders involved but stifle opportunities for growth and development most especially for small businesses.
According to the World Bank’s Doing Business 2012 report the more delays in the import and export process, the less likely that a trader will be able to reach markets. This of course negatively affects the ability to capitalise on opportunities, expand businesses and create jobs. The study points out that limited access to international markets can prevent the growth of businesses and economies of scale. Local markets are often small, particularly in developing economies, and trade provides potential for greater output at lower cost.
Trade also allows developing economies to become part of global supply chains. Having access to imported raw materials and other inputs is often crucial for businesses, and delays or shortages can affect production. The study estimates that cutting the days needed to clear exports by half could enable a small to medium-size enterprise to increase its share of exports in total sales from 1.6% to 4.5%.
Globally, improving the customs environment is estimated to increase trade in manufacturing by over $370 billion a year in all regions. In our region, the scope for improvement is even higher with estimates that reducing exporting costs by 10% through improvements in the efficiency of the trade process could increase exports by 4.7%. Another study in Sub-Saharan Africa shows that a 1-day reduction in inland travel times leads to a 7% increase in exports. Put another way, a 1-day reduction in inland travel times is equivalent to a 1.5 percentage point reduction in all importing-country tariffs. These are not just theoretic hypotheses.
There is very strong evidence on our own continent for the power of customs efficiencies. Ghana saw customs revenue grow by 49% in the first 18 months after implementing its electronic data interchange system for customs procedures and in Uganda reforms to improve customs administration and reduce corruption helped increase customs revenue by 24% between 2007 and 2008. Ladies and gentlemen, the customs environment has massive potential for improvement and none more so that for our administrations.
The latest ranking in Ease of Trading across borders places Swaziland 148th and SA 144th out of 183 economies. According to the World Bank, countries that have a high ranking on the ease of trading across borders have the following in common: They require fewer documents They allow traders to submit those documents electronically, preferably before the goods arrive at the port They limit physical inspections to the riskiest cargo
They have fast-track clearance procedures for selected companies, auditing their shipments only after clearance.
Ladies and gentlemen, not all trade facilitation reforms require heavy spending. Initiatives such as providing training, clarifying and publicising the rules and holding regular meetings with exporters on the clearance process can make a significant difference. For example, through a series of efforts to improve customs administration such as training staff, reducing inspections, simplifying procedures and enhancing communication with users Grenada reduced the customs clearance time by 3 days for exports and 2 days for imports between 2008 and 2010.
Existing initiatives to streamline Customs;
So what are we doing as Customs to help create the conditions to boost trade and grow the economy, to reduce red tape, to lower the barriers to entry?
Ladies and gentlemen;
Technological advances and the modernisation of our customs systems and processes hold enormous opportunity for rapid improvements not only for the movement of legitimate goods but for the detection and deterrence of unwanted and illegal goods.
We need to focus on minimising the level of customs intervention in cargo movements and maximising the level of trade facilitation by: revolutionising the core Customs processing system
enhancing risk management techniques to better identify suspect imports and exports for scrutiny Implementing new philosophies on Customs and border control and engaging with private sector partners in mutually beneficial alliances but we need to act soon. Technology is already changing the world of international trade and travel.
We risk falling badly behind and being excluded from trade opportunities if we are not able to compete in this fast-changing arena. And we need to act together. The supply chain is an integrated process involving a wide range of public and private sector stakeholders on each side of the border. Our imports are your exports and vice versa.
What does it help if goods move rapidly through one half of the border only to be delayed in no man’s land?
The benefits of modernisation Ladies and gentlemen;
Converting our manual, paper-based processes to electronic, automated risk-based process offers a number of benefits including:
1. Enhancing risk detection: which enables more precise risk targeting and selection, driving better operational efficiency and output.
2. Speeding up the movement of goods through borders: electronic, pre-clearance implies reduction in border wait times.
3. Reducing administrative costs for all parties: electronic transactions, integrated processes and an improved service model for clients reduces the burden on trade to comply.
And, ladies and gentlemen, it supports our quest for a greener planet!
Conclusion
Ladies and gentlemen,
Thursday is International Customs Day, celebrated annually by the global customs community in honour of the inaugural session of the Customs Co-operation Council (CCC) which took place almost 60 years ago on 26 January 1953.
This year’s theme is dedicated to promoting connectivity, including enhanced cooperation and communication, under the slogan "Borders divide, Customs connects”. The value of imports and export between South Africa and Swaziland has increased by 27% in 2009/2010 compared to 2008/2009, totalling some R20 billion a year. Each year a total of 1.4 million people, 880 000 vehicles and 130 000 trucks cross between our countries, of which just over half travel through this border post.
That is why we welcome this World Bank study to help us identify opportunities for improvement so that together as customs authorities, clearing agents, transport companies and other stakeholders in the supply chain, as Swazis, Mozambicans and South Africans we can further boost trade and in so doing set our countries on a higher growth path for our shared prosperity. I thank you.
Address by Commissioner of the South African Revenue Service Mr Oupa Magashula on the occasion of the launch of the World Bank Time Release Study on border posts, Ngwenya/Oshoek border post
