marina aucamp, chief financial officer, cross border transport agency
DESCRIPTION
Future Fuel Distribution Strategies for Southern Africa, 2 & 3 November 2011, Southern Sun O. R. Tambo International, GautengTRANSCRIPT
Cross Border Road Transport InitiativesPresented at: Future Fuel Distribution Strategies
for Southern Africa Conference
Marina AucampChief Financial Officer
Cross Border Road Transport Agency3 November 2011
2
Aspects covered in this presentation
• The role of the Cross Border Road Transport Agency
• Will regional integration support the growth in Africa?
• What is the future of cross-border road transport?
Overview of the Cross Border Road Transport Agency
Mandate
Established ito of the Cross-Border Road Transport Act 4 of 1998.
To provide for co-operative and co-ordinated provision of advice, regulation, facilitation and law enforcement
pertaining to cross border road transport activities.
4
Mission
To spearhead social and economic development within the SADC region through facilitating unimpeded cross
border road transport movements.
5
Core functions
Facilitation and Industry Development: Ensures that consultations and partnerships with other key role players within South Africa and SADC are fostered and maintained.
Road Transport Inspectorate: Monitors the carriers through country-wide inspections and ensures that carriers operate within the prescribed legal parameters.
Regulatory: Responsible for the issuing and facilitation of all cross border permits.
Research and Advisory: Advises the Minister of Transport and the DoT on regional road transport imperatives and challenges.
6
Changing Gears Strategy
To position the Agency as a facilitator of unimpeded flow of cross border road traffic and promoter of economic development and improvement within the SADC region.
Five key strategic projects:
1. Strategic Value Proposition Plan;
2. Industry Partnership Development Plan;
3. Operator Compliance Accreditation Scheme;
4. Business Model for Streamlining Border Management Practices; and
5. Market Access Regulation for passenger transport.
7
Regional Integration in Africa
Definitions
• Regional integration: Co-operation between countries in trade, domestic regulations, policies, infrastructure and other cross-border initiatives, including public goods.
• Free Trade Area: Is a trade bloc whose countries have signed a free trade agreement (FTA), which eliminates tariffs, import quotas, and preferences on most goods and services traded between them.
• Customs union: Free trade area with a common trade tariff and policy.• Common market area: Expansion of the customs union to allow for the
free movement of labor, capital, goods and services.• Monetary Union: Where two or more states share the same currency. • COMESA: East and Southern Africa.• EAC: East Africa Community.• SADC: Southern African Development Community.
SOUTH AFRICA
NAMIBIA BOTSWANA
ZIMBABWE
SWAZILAND
LESOTHO
MOZAMBIQUE
MADAGASCAR
MAURITIUS
SEYCHELL ES
ZAMBIAANGOLA
CONGO, DRC
TANZANIA
MALAWI
SADC Countries
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Firstly, Africa
Africa’s Key Economic Indicators - 2011
African Population:Population: 1,031mGDP: US$ 1,703bnGDP per Capita: 2,941Growth Rate 2012: 5.8%1.8% of world GDP (2015 – 2.4%)
SADC:Population: 271m
(27%)GDP: US$ 590bn (35%)
GDP per Capita: $3,444
SOUTH AFRICAPopulation: 50m (5%)GDP: US$ 366bn (21%)GDP per Capita: $10,334Growth Rate 2012: 4.3%
Real GDP Growth in correlation with FDICountry GDP Growth
2008GDP Growth
2012Ranking –
GDP2008
Ranking – FDI
2008Angola 16.8 11.1 1 2Equatorial Guinea 16.3 7.5 2 8Ethiopia 11.4 8.6 3 20Chad 8.4 6.9 4 17Uganda 8.0 6.9 5 14Sudan 8.0 5.3 6 5Mozambique 7.8 7.9 7 24
Nigeria 6.3 6.7 15 1
South Africa 4.9 4.3 29 4
www.africaneconomicoutlook.com (2010)
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Africa - a fragmented continent (1)
• 47 out of 53 countries are small and least developed.• 15 countries are landlocked: Contributory factor to high cost of
doing business in Africa due to border barriers.• Most countries have a low per capita income and small
populations resulting in small markets.• Transport costs in Africa are still among the world’s highest.• Geography constraints: Disconnected air, rail and road transport
infrastructure, which in colonial times were designed to transport primary products to ports resulting in poorly developed cross-country connections.
• The unreliability of transport services and infrastructure.• Lack of sophisticated communication systems.
16
Africa - a fragmented continent (2)
• Trade between African countries and their emerging partners (BRICS) has grown significantly over the past decade.
• Africa's trade in 2011 has doubled with emerging countries, reaching 40% of its total trade volume.
• Ten years ago, this represented only half of the trade between Africa and the European Union. Now it is on par.
• In 2009, China overtook the USA as Africa's top trading partner.• So is Africa moving away from a post-colonial dependence
towards a Chinese one?
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• More than 80 % of Africa’s exports are still destined for outside markets.
• At the same time, Africa imports more than 90 % of goods from outside the continent.
• On average, only about 10-12 % of African trade takes place amongst African nations.
• Reliance is placed on few export commodities – primary commodities representing more than 80 % of Africa’s total exports in recent years.
• Such high dependence on commodities creates constraints on growth due to commodity price volatility.
Africa - a fragmented continent (3)
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Key shaping forces in the future for SA?
South Africa’s future will be shaped by a number of internal and external forces over the period to 2030, which is the current focus of the NPC:
• Global economy• Energy transitions, food security, climate change and new
technologies• African development and regional integration• Demographic change
Diagnostic Overview Report by the National Planning Commission (2011)
Sources of employment growth in SA?
• Economic growth and industrialisation• From ‘70-’95 agriculture and mining employment shrank by
46%. • Raising global market share of value-add ito commodities• Expansion of SMME• Move from consumption-led to investment-led growth and
increased exports• Regional integration
Diagnostic Overview Report by the National Planning Commission (2011)
Key shaping forces in the future for Africa?
• African countries should adopt the following measures to improve their performance in the global arena:– Fast-track regional integration as a top priority;– Develop public institutions and financial markets;– Upgrade educational systems;– Diversify exports beyond reliance on traditional (mining)
commodities;– Improve ground transport infrastructure (quality of roads,
railway lines, ports of entry).
“It’s time for Africa”: Ernst & Young 2010 survey on Africa’s competitiveness
21
Regional Integration?
Benefits of Regional Integration
• Increase market size in the region and allow for realisation of scale economies;
• Exploit opportunities and increase trade across regional borders;• Reduce trade, transactions and operating costs and enhance
regional competitiveness;• Attract foreign direct investment leading to improved transport
infrastructure and competition amongst firms;• Reduce inefficiencies and transport costs which will in turn
increase intra-regional and international trade.
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• The geo-political configuration of Africa has been largely determined by the continent’s European colonial powers.
• Small domestic markets and continental fragmentation translated into a lack of scale economies in the production and distribution of goods and services.
• There was a strong belief that development would be promoted by industrialization, in particular core manufacturing. The industrialisation-regional integration interface was clear. Larger, protected markets in the various sub-regions would support a policy of import-substituting industrialisation.
History of Regional Integration (1)
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• Strong political ambition (overlapping memberships).• The aim was to establish a broad range of industries across
different sectors. • First initiative for regional integration was called the Lagos
Plan of Action (1980) followed by the Abuja Treaty (1991) focusing on Africa’s self-reliance through industrialisation.
• The proposed framework for African integration and continental industrialization was the division of the continent into regional integration areas that would ultimately constitute a united African economy, the African Economic Community.
History of Regional Integration (2)
25
History of Regional Integration (3)The African Economic Community is envisioned to be created in six stages:1. Creation of regional blocs (completed).2. Strengthening of intra-regional integration and inter-regional
harmonization (in progress, e.g. FTA in SADC and COMESA).3. Establishing of a free trade area and customs union in each
regional bloc (to be completed in 2017).4. Establishing of a continent-wide customs union and thus also
a free trade area (to be completed in 2019).5. Establishing of a continent-wide African Common Market (to
be completed in 2023).6. Establishing of a continent-wide economic and monetary
union and pan-African Parliament (to be completed in 2028).7. End of all transition periods by 2034.
26
SADC Protocol• The Southern African Development Co-ordinating Conference
(SADCC) was established in 1980, by front line states with the specific aim of reducing economic dependence on apartheid South Africa.
• South Africa joined SADC in 1994.• SADC, however, adopted an explicit market integration
agenda (SADC Trade Protocol) and detail is provided in the Regional Indicative Strategic Development Plan of 2003.
• This strategic plan articulates the roadmap for SADC’s integration and provides for the establishment of a free trade area by 2008, a customs union in 2010, a common market in 2015, monetary union in Angola, Botswana, Lesotho, Malawi, Mozambique, Swaziland, Tanzania, Zambia and Zimbabwe by 2016 and the introduction of a single currency in 2018.
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Where are we with regional integration? (1)
• Commitment to SADC Protocol.• Recent commitment by the member states of the COMESA,
SADC and the EAC to establish a Tripartite Free Trade Area consisting of the 26 member states and is seen as an important step in addressing the problem of overlapping membership.
• Negotiations were officially launched at a summit, held in South Africa, in June 2011.
• The T-FTA will be anchored on three pillars; market integration, infrastructure development and industrialisation.
• These pillars do appear to capture the key challenges that prescribe the competitiveness of African businesses and integration into the global economy.
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Where are we with regional integration? (2)
• NTBs, including import bans, cumbersome customs procedures, restrictive technical regulations and many more, are well-documented impediments to intraregional trade.
• The private sector can play an important role in the elimination of NTBs.
• SADC, EAC and COMESA have established, through the Tripartite Coordination Mechanism, an online NTB reporting system (www.tradebarriers.org), which can be effectively used in conjunction with the existing legal instruments, and preferably a rules-based framework in the T-FTA.
General initiatives to facilitate regional trade
• DTI Trade Policy: Influence economic growth through its role in trade liberalization
• New Growth Plan: Influences economic growth through paving way for regional integration
• Nepad• Relaxed exchange controls by SARS• World Bank initiatives• Border Control Operational Coordinating Committee• Maputo Corridor Logistics Initiative• New Growth Plan• Industrial Development Policy
Is the current cross-border environment in Southern Africa conducive for regional integration?
A brief synopsis of movements at Lebombo and
Beit Bridge border posts
32
Lebombo – Imports (Tons)
Constructi
on & St
eel
Tobacco &
Grains
Paper & W
ood
Consumer
Minera
ls
Fuels
& Bevera
ges
Other
Equipment
Perishables
Chemicals
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
TOTAL = 5,484,302
3%
33
Lebombo – Exports (Tons)
Perishables
Constructi
on & St
eel
Consumer
Fuels
& Bevera
ges
Tobacco &
Grains
Chemicals
Other
Minera
ls
Paper & W
ood
Equipment -
50,000
100,000
150,000
200,000
250,000
TOTAL = 578,858
9%
Lebombo (Movements in Rand Value)SARS Data
35
Beit Bridge – Imports (Tons)
Tobacco &
Grains
Minera
ls
Constructi
on & St
eel
Paper & W
ood
Perishables
Other
Equipment
Consumer
Fuels
& Bevera
ges
Chemicals
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
TOTAL = 1,401,614
0.14%
36
Beit Bridge – Exports (Tons)
Consumer
Fuels
& Bevera
ges
Tobacco &
Grains
Minera
ls
Equipment
Perishables
Other
Constructi
on & St
eel
Chemicals
Paper & W
ood -
50,000
100,000
150,000
200,000
250,000
TOTAL = 487,017 20%
Beit Bridge (Movements in Rand Value) SARS Data
YEAR 2008 YEAR 2009 YEAR 20100
2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
12,000,000,000
14,000,000,000
16,000,000,000
Total value of SA goods exported Total value of goods imported to SA
Rand
Val
ue o
f Goo
ds
38
Summary of activities at two major commercial border posts
Lebombo Imports 5,484,302 69%
Lebombo Exports 578,858 7%
Beit Bridge Imports 1,401,614 18%
Beit Bridge Exports 487,017 6%
TOTAL 7,951,791
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0
200,000,000
400,000,000
600,000,000
800,000,000
1,000,000,000
1,200,000,000
1,400,000,000
1,600,000,000
1,800,000,000
YEAR 2008 YEAR 2009 YEAR 2010
Rand
Val
ue o
f Goo
dsLebombo – SA Export Months
SARS data
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
YEAR 2008 YEAR 2009 YEAR 2010
Months
Rand
Val
ue o
f Goo
dsBeit Bridge – SA Export Months
SARS Data
41
Cost Elements: Flows to and from Beit Bridge and Lebombo
• Transport Cost - R 3 487 M (52%)– Line Haul 54 %– Distribution 30 %– Externalities 16 %
• Inventory Carrying cost - R 1 135 M (17%)– In transit 13 %– Excl. In transit 87 %
• Warehousing - R 1 036 M (16%)– Storage 51 %– Handling 45 %– Overheads 4 %
• Management and Admin - R 992 M (15%)
42
Border related freight flows in context (2009)
• Total SA freight = 728 million tons• Total imports = 56.6 million tons
– 10.3 million tons border related• Total exports = 146.9 million tons
– 5.1 million tons border related
43
The most important SADC purchaser of South African petroleum products in 2010 is Zimbabwe (32.69%), followed by Zambia (24.42%), and DRC (13.47%)
Are the current business processes at Beit Bridge and Lebombo
conducive for regional integration?
BEIT BRIDGE – South African ExportsSOUTH AFRICA
Weighbridge
1
Clearance Agents(Truck Park)
Receive Docs
Security check
South African Border Precinct
ZIM
BABW
E BO
RDER
PRE
CIN
CT
Gate Pass
SA Customs
4
Truck Inspection
(Stop Notice or Random)
SA Customs (Cash Office)
2 3
SA Port Health Agriculture
SA Immigratio
nSA Police
Check
passport
Truck Leaves SA side
5 6 7 8 9
Stop Notice (inspection)
orClearance
Inspection Ramp
BEIT BRIDGE - Zimbabwe ImportsZIMBABWE
SA
BO
RDER
PRE
CIN
CT
Truck Inspection
Zimbabwe Border Precinct
Clearance Agents
Receive Docs
ZimbabweCustoms(ZIMRA)
14
Truck Inspection
Zim Customs
(Cash Office)
13
Zim Port Health Agriculture Zim
ImmigrationFinal Check
passport15 16 17 18Truck enters
Zimbabwe
19
Gate Pass
Bridge Toll Road
Ministry of Transport
Vehicle CheckLevies/Toll
Road Worthy
12
10
TollBooth
Weighbridge
11
BEITBRIDGE - Zimbabwe ExportsZIMBABWE
Zimbabwe Border Precinct
Clearance Agents
Receive Docs
ZimbabweCustoms
2
Truck Inspection
ZimCustoms
(Cash Office)
1
Zim Port Health – limited
interaction
Agriculture – limited
interaction
ZimbabweImmigration
Zim Police Check
passport3 4 5 6
SA B
ORD
ER P
RECI
NCT
Truck Leaves
Zimside
7
BEITBRIDGE - South African importsSOUTH AFRICA
Weighbridge
16
Clearance Agents
Receive Docs
SA Policecheck
South African Border Precinct
SA Customs
10
Truck Inspection
SA Customs (Cash Office)
9
SA Port Health Agriculture SA
ImmigrationFinalCheck
passportTruck enters
SA11 13 13 14
15
ZIMBABW
E BORD
ER PRECINCT Truck Inspection
8
LEBOMBO - South African ExportsSOUTH AFRICA
BORD
ER P
OST
Weighbridge
Kilometre Seven
Traffic Monitoring Centre
1
Clearance Agents
Truck Stop
2
SA Port Health Limited interaction: focuses on imports
Agriculture Limited interaction:focuses on imports
SA Immigration
SA Police Check
Receive Docs
Land concession - SANRAL
Truck Inspection
SA Customs (Cash Office)
5
passport
6
7 8Truck
leaves SA side
Airfield 9
South African Border Precinct(Commercial Bypass Road)
Inspection Ram
p
South Africa & Mozambique
Customs
3
MO
ZAM
BIQ
UE
BORD
ER P
RECI
NCT
Gate Pass
4
50
Preliminary Economic Impact of Delays
• Delay examples: 1 day at Lebombo, 1.5 days at Beitbridge• Translates into an additional R 488 Million logistics cost
Border post Beitbridge Lebombo Grand Total
Additional Inventory Carrying Cost R 40 M R 48 M R 88 M
Additional Road Transport Cost R 171 M R 226 M R 397 M
Total R 211 M R 274 M R 488 M
In this scenario road logistics costs increases between 15-20%
What is the future of border management?
52
Port check point
On-route checks
SA Border post checks
Neighbouring Border post checks
53
• Concept of a virtual border encompassing the entire transport and supply chain.
• Goods and passengers are assessed for admissibility and clearance in advance of arriving at the physical border.
• All role-players gather, collate and share data.• Complete view of risks and opportunities.• Encouraging a knowledge sharing culture.• Built on proactive decision making.
Collaborative Border Management
Collaborative Border Management
Customer segmentation
Collaborative information portal
Intelligence driven risk
managementPre-clearance
Inte
r-ag
ency
app
roac
h
Reduced compliance verification
documentation required at the point
of border entry
Low risk persons and freight move
uninterrupted
Enforcement focuses on higher
risk individuals and freight
Customer centric view with compliance history
Freight Transport Business
Completes electronic registration of
business
Clearing Agent
Authorised
Becomes authorised /
accredited user
Department of Transport
Department of Agriculture
Department of Health
Department of Home Affairs SAPS SARS
Risk
Pro
file
Set-u
p pe
r enti
ty
Registration Process
Business
in
out
Electronic submission for
approval
1
Freight Transport Business
Submit freight clearance request
electronically
Each role player responds to the
consignment and communicates status
Department of Transport
Department of Agriculture
Department of Health
Department of Home Affairs SAPS SARS
Build
Ris
k Pr
ofile
per
en
tity
Pre-Clearance
in
out
Electronic submission of consignment details
for approval
2
Specific turn-around time
GO
STOP
Appl
y Ri
sk
Profi
le A
naly
sis
At border or on-route per entity
SARS Modernisation Process
• 3 September at Lebombo Border Post• 8 October 2011 at Beit Bridge Border Post
• Fast release of goods, lower costs, increased revenue, economic competitiveness, transparent, predictable, standardization & simplification of supporting documents.
• Simplified procedures, use of information technology, decreased customs control to ensure compliance, risk management & audit based controls, border agencies & partnerships formed.
2004: SARS signs agreement with WCO (Kyoto
• Customs standardization• To streamline the customs clearance process• Offer an improved experience & service to the trader Purpose of Modernisation
• Modern, electronic & integrated technology• New Legislation, Simplification & harmonisation of Customs procedures, • Automation of key processes, aautomated risk management & non-risk related goods will be fast-tracked for
release • Risk profiling
Requirements
• Redesign of Customs declaration process, Implementation of purpose codes for declarations, Implementation of procedure category (PCC) and customs procedure codes (CPC’s).
• Update trade systems & personnel training, Old MAS system decommissioned ( 6 May 2011 )and replaced with the new Automated Cargo Management (ACM) system.
• The new system ensures “clean” data , automated risk profiling & declaration to the SARS Customs Risk Engine (CRE)Phase1 – Nov 2010
• Change implementation of submission of supporting documents, no hand-delivery of clearance supporting documents to Customs, electronic supporting documents, a customs broker, importer or exporter submit trade documents electronically to SARS, declaration processing, case management, inspection procedures, 9 new Customs Procedure Code combinations,
• Amendments to both international and cross-border import and export clearances.• Electronic case management and inspection process and the elimination of manual customs stop and inspection process.• New Customs Act, e-filing payment system, SARS Single Registration system, coordination of important collaboration between importers,
exporters, customs brokers, release authorities, bonded warehouse operators, cargo reporters, and certain Other Government Agencies (OGA’s)
Phase 2 – Jun 2011
• New warehousing, home and inward processing systems• Holistic profile of traders, taxpayers and their interactions with SARS• Coordination with areas such as VAT, CIT and PAYE – & visa versa• Integrated cargo and clearance declaration management, integrated account & revenue management, increased 3rd party data usage,
integration of Other Government Agencies (OGAs), introduction of full Single Window
Phase 3 – 2011/2012
New Electronic Clearance Process Old Clearance Process
• 24 hour submission. Requested scanning only office hours • Custom hours
• The introduction of an electronic case management system, called Service Manager -
• Partial electronic system• SARS inputs the data received from Agents at the Border
• A new inspection process• As per the electronic system’s objective outcome Customs
informs Agent if the vehicle will be stopped. Two options. Customs may request inspection of documents (not submitted automatically), second phase Customs may require an inspection – have 4 days to request inspection)
• Risk evaluation done by custom official, subjective outcome• Customs official decides to stop vehicle or delay vehicle
• Electronic submission of supporting documents by Agents• Agents don’t need to go to Customs at the Border.• No hand-delivery of clearance supporting documents to
Customs• The introduction of electronic supporting documents• A customs broker, importer or exporter will be able to submit
trade documents electronically to SARS where such documents may be required to finalise a customs inspection
• Paper submission of supporting documents• SAD 500 etc• Agent prepares forms, copies, files and submit to SARS
• Mostly EFT • Duties paid by agents at Customs / EFT
• New Customs Status Codes • The Customs’ internal inspection process is redesigned with 9
new Customs Procedure Code combinations • n/a
• An electronic release system, reducing the need for paper and authorising stamps at branches which should result in reduced turnaround times,
• It also includes the introduction of an electronic case management and inspection process and the elimination of manual customs stop and inspection process.
• “release note” not handed to agent - issued at Customs back office – second check by case manager – issued electronically.
• Possible requested pre-inspection and release, at least 24 hours previously
• Random inspection possible
New Electronic Clearance Process (Assumed Exporting from SA) Old Clearance Process
• Driver parks truck • Driver parks truck
• Clearance note handed to driver – all processes may be completed before arrival if submitted
• Driver possibly hands in Documents for load to clearing Agents / may be prepared before depending on agent.
• Clearing agent/s check documents for accuracy and correct supporting documentation prior to the submission to both customs for clearance. Unlikely random stop. Internal risk matrix.
• Clearing agent checks documents for accuracy and correct supporting documentation prior to the submission to customs for clearance
• Driver clear immigration authorities and gets a gate pass • Driver clear immigration and gets a gate pass
• Duties paid upfront • Duties paid by agent mostly or EFT
• Prior issued release order – except if must stop • Customs issues release order and documents returned to agent for truck to be released.
• All accounting can be done by back office • Driver pays other charges
• Gate pass stamped by both custom authorities • Gate pass stamped by customs
• Truck proceeds • Truck proceeds
Closing remarks• Southern Africa should determine how the global recession can
benefit the region.• Government entities playing a role in cross-border road
transport movements should define the public value add.• The public value add should be agreed and negotiated between
the public and private sectors.• Government systems that are implemented to ensure the
consolidation of freight data should include a value add to the industry.
• Private sector should become more involved in driving regional integration and to realise the benefits.
• Alleviation of cross-border road transport impediments should be approached from an economic and social development approach by both sectors with a focus on job creation.
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62
Thank You