SACU calls for urgent reform

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By Magreth Nunuhe

Swakopmund – There is a serious regression of performance in doing business in the Southern African Customs Union (SACU) member states and something urgently needs to be done to improve and reform the business and investment environment, said SACU executive secretary, Paulina Elago.

Elago was speaking at the 10th Annual Logistics and Transport Workshop in Swakopmund on Wednesday, where she expressed her concern about SACU member states’ global ranking on the ‘World Bank Doing Business Index’.

SACU is a customs union among five countries of Southern Africa, namely Botswana, Lesotho, Namibia, South Africa and eSwatini.

“This calls for some work to be done to improve the competitiveness of the countries – also specifically to trade across borders,” stressed Elago.

Out of 190 countries worldwide, South Africa fell from 41st position in 2014 to the 82nd spot in 2018, while Botswana which was at position number 56 in 2014 also dropped to 81st spot this year.

Namibia, which stood at number 98 in the world, ranking fell to number 106, while eSwatini saw an improvement from 123rd spot to 112th ranking.

Lesotho also improved on its ranking from 136th position in 2014 to the 104th overall in 2018.

Elago said there is a link between trade facilitation and logistics and specific measures must be highlighted as they directly contribute to the performance of logistics and reduce the cost of doing business across borders.

She noted that trade facilitation matters because it contributes significantly to economic growth and development, increased international trade through efficiency of trade, expedites clearance processes, release and movement of goods in transit to the final destination.

Imported inputs for manufacturing can be received expeditiously, thus amplifying competitiveness of firms, while investors’ decisions can be influenced by the efficiencies associated with movement of goods and the ease of doing business in a specific country, thus affecting Foreign Direct Investment (FDI).

According to the United Nations Economic Commission for Africa (UNECA) Computable General Equilibrium estimates on continental free trade area (CFTA), tariff removal by 2017 would have resulted in an increase of trade from 10.2% in 2010 to 15.5% in 2022.

But if trade facilitation was to be addressed in intra-African trade, it would double trade from 10.2% in 2010 to 21.9% in 2022.

Among examples of trade facilitation measures that have a positive effect on logistics are the timely release and clearance of goods, border cooperation, formalities connected with importance, exportation and transit, freedom of transit and customs cooperation.

According to Elago, SACU has put in place a five-year regional customs modernisation programme for trade facilitation supported by the World Customs Organisation (WCO) and the Swedish International Development Cooperation Agency (SIDA).

This is to facilitate cross-border trade in SACU, harmonise policies and procedures and create a conducive trade environment for business through less cumbersome formalities, while also implementing the World Trade Organisation Trade Facilitation Agreement.

SACU also focuses on IT connectivity, risk management and enforcement, trade partnership and customs legislative framework.

When it comes to the regional customs risk management framework, SACU has a compliance strategy through which they were able to undertake risk management enforcement operations targeting illicit trade in alcohol, tobacco products and clothing and textile.

“These joint operations are quite critical because it gives you a sense of how much of illicit trade is taking place in some of the countries in terms of cooperation of customs authorities,” Elago noted.

Nevertheless, on a positive note, SACU trade flows have been increasing consecutively over the years since 2013, with the exception of 2017 where exports and imports dropped to R191 billion and R185 billion, respectively.

This was from an all-time high of R210 billion in exports and R194 billion in imports in 2016.

 

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