Mbabane: The trading across borders component of the Doing Business project measures time, cost and the number of documents required to export and import standardised cargo by ocean transportation. It looks at the entire process for import or export, from the contractual agreement, to getting the letter of credit, to departure of the goods from the port of exit. In Swaziland, it takes on average 21 days at a cost of about E17 472 ($2 184) to export and 33 days at a cost of about E17 992 ($2 249) to import a 20-foot container of general goods via the port of Durban in South Africa.
Nine documents are required for exports and 11 for imports. In this indicator, Swaziland ranks 158th out of 183 countries and 31st in the sub-Saharan Africa region. The key challenge, which falls out of the country’s control, is its landlocked status, where reliance is on the cooperation of neighbours.
The documents required for export are: bill of lading, certificate of origin, collection order, commercial invoice, customs export declaration F1-78 declaration (Central Bank control), Inspection report, NEP Form (National Environment Policy), packing list.
The documents required for import are: bill of entry, bill of lading, cargo release order, certificate of origin, commercial invoice, container terminal order, customs import declaration, import license, inspection certificate, packing list, terminal handling receipts.
Another trade related factor, not captured by the Doing Business indicator, is the level of competition in the country and the government’s effort to monitor its restrictions. Experts report that the setting up of a multitude of competition commissions across the region, each with their own set of competition rules, overlapping jurisdictions and independent enforcement mechanism constitute a looming threat to trade and a disincentive to investors.
In fact, Swaziland is a signatory to many regional and international treaties containing provisions dealing with competition issues. As part of the Southern African Customs Union (SACU) Agreement, Swaziland is required to have a competition policy as a pre-requisite for a SACU wide cooperation mechanism. The ministry of finance is the national contact point.
As part of the Common Market for Eastern and Southern Africa (COMESA), it is bound as well to remove anti-competitive practices in the common market. Swaziland’s membership in the Cotonou Agreement also requires the introduction and implementation of effective and sound competition policies and rules, and to implement regional or national rules prohibiting certain behaviour, as well as reinforcing the cooperation in this area.
Lastly, SADC Agreement requires Swaziland, as member state, to implement measures within the Community that prohibit unfair business practices and promote competition. In 2007 a Competition Commission was established and it benefited from UNCTAD training on assessing a merger cases.
This net of legal provisions and different enforcing agencies creates legal uncertainty for the business community and makes the compliance more difficult. It is suggested to clarify scope of application of each provision and the respective role of the implementing agencies.
- World Bank and Investor Road Map Recommendations and Actions:
Streamline document requirements for importing and exporting
Currently traders must fill out and submit nine documents to export and 11 to import. Document preparation takes seven days for export and 12 days for imports, which amounts to about 1/3 of the total time to export and to import in Swaziland.
Swaziland requires many more trade documents than the best practice countries in the African region (some documents may have changed after introduction of SRA, as some of the recommendations were developed based on the processes prior).
In Tanzania, for example, just five documents - bill of lading, commercial invoice, customs declaration, export license, and packing lists - are required for exports.
The government of Swaziland, through the Investor Road Map, is exploring ways to streamline these documentary requirements. Documents should be kept to the minimum necessary in the interest of saving time and money on document preparation.
A mapping exercise of import and export processes will be helpful to determine the need of certain documents or how best to integrate the required information. This exercise has been completed through the Time Release Study, which was undertaken by SRA with support from the World Bank. Crucial going forward is the implementation of the recommendations of the study.
Work with partner states to develop an integrated transit system
Being a landlocked country, Swaziland must rely on its neighbours for access to seaports. The establishment of border co-operation agreements with neighbouring countries can avoid double inspections and reduce delays in transit.
According to the 2002 Southern African Customs Union (SACU) Agreement, Article 23 on Customs Cooperation, member states shall take appropriate measures, including arrangements regarding customs co-operation, to ensure that the provisions of this Agreement are effectively and harmoniously applied. Member states shall take such measures as are necessary to facilitate the simplification and harmonisation of trade documentation and procedures.
A good practice example in this area comes from West Africa, where Mali signed a border cooperation agreement with Senegal, to introduce a single transit document. Mali and Senegal are also developing an electronic solution to allow transit data to be transferred between customs administrations.
Upon implementation, once goods are cleared at Dakar, Malian traders will need no additional transit documents. In addition, an entire terminal was dedicated for Malian products at the port of Dakar.
Improve electronic submission for all documents and pre-arrival declaration
The development and implementation of an Electronic Data Interchange system (EDI) can enhance the information flow between agencies such as customs, security agents, port authorities, health and technical control authorities, banks and trade agents (i.e. freight forwarders and customs brokers). Given that most of these institutions require similar information concerning the goods being cleared prior to granting a clearance, better information sharing could alleviate the burden on traders and significantly improve the clearance procedures.
In addition, allowing freight forwarders and customs brokers to pre-declare the goods would alleviate the burden faced by the staff of the customs. Introduction and improvement of electronic data interchange system has been the most popular trade reform feature in the recent year. Among the 19 countries that introduced an electronic data interchange system in the last couple of years, seven were in Africa.
Swaziland began introducing the ASYCUDA++ electronic data interchange system for customs at its different entry points and border posts since early 2009.
ASYCUDA is a computerised customs management system (the software is developed by UNCTAD) which covers most foreign trade procedures. It allows traders to declare to the Customs and Excise Department electronically at the country’s entry/exit points or remotely from their own office. It is has been conducting training and installation of ASYCUDA++ free of charge.
However, users complain about having to pay a fee of about E32 ($4) for each document submitted to customs via the system. Although ASYCUDA++ represents a significant improvement over the previous system, since Swaziland is landlocked and the system does not communicate with South African customs own system, traders are required to declare their goods twice when transiting.
Government, through creation of the Swaziland Revenue Authority, is working at addressing some of the bottlenecks related with trading from Swaziland.
Discussions are ongoing with partner states relating to the removal of the double declaration requirement; introducing the other reforms (namely, working with partner states to develop an integrated transit system and introducing a single window for the lodging of customs documents) will help toward this goal.
Educate public on the Competition Policy framework and the enforcement of the law
Through the technical assistance efforts already undergoing, it would be important to clarify the institutional and legal framework of the competition policy in place in Swaziland and ensure that it is widely understood.
The multitude of legal instruments and enforcement agencies with sometimes overlapping roles and jurisdictions can create an excessive burden to the investors and be an obstacle to the transparent application of the law.
In addition, these clarifications could help identify competition restrictions in key sectors of the economy. The creation of the Competition Commission will go a long way in enhancing the status quo, although more public awareness on the function, mandate and power of the Commission is crucial.
Introduce a single window for lodgement of customs related documents
Swaziland could introduce a system whereby all customs documents can be obtained and submitted in one place.
This will enable all border clearing agencies (customs, port authorities, health and technical standard agencies, banks, tax authorities, etc.) to have simultaneous access to trade documents.
The current requirement, where traders have to submit different documents in different places, is cumbersome and slow.
An electronic single window could even consolidate many of the documents into a few essential ones and link the approving authorities to provide approvals simultaneously.
A recent study concluded that traders in landlocked developing countries may be confronted with bad infrastructure or long distances, but the main sources of higher cost have to do with rent rent-seeking, inefficient markets for services such as trucking and inadequate transit procedures.
Improve inland transport efficiency
Inland transportation and handling takes up to seven days from Durban port (395 km to Mbabane).
Inland transportation in South Africa between Johannesburg and Durban takes two to three days despite the distance being longer (518 km).
The cost of the inland transportation is also the biggest component (more than 60%) of the total cost of trading across the border in Swaziland. Currently, to export or import a cargo of goods in Swaziland costs about E11 888 ($1 486). In Lesotho, another landlocked country, the cost is significantly lower at about E7 200 ($900).