trading across borders in mozambique. introduction what were the results ? why these results ? how...

Trading Across BordersIn Mozambique

Introduction

• What were the results ?

• Why these results ?

• How to improve results ?

Ranking: Overall Ease of DB vs Ease of Trading

32 29

114

149

76

140

42

156

110

153

102

21

67

131 133144 146

153

168 170

121

141

0

20

40

60

80

100

120

140

160

180

Mau

ritiu

s

South

Afri

ca

Lesot

ho

Mad

agas

car

Swazila

nd

Moz

ambiq

ue

Namib

ia

Angola

Mal

awi

Zimba

bwe

Zambia

Overall Trade

Total Import Time Break Down

0

10

20

30

40

50

60

70

80

90

Mauritius Namibia South Africa Swaziland Mozambique Botswana Madagascar Lesotho Malawi Zambia Zimbabwe Angola

Documents Customs Ports Transport

Total Export Costs Break Down

0

500

1000

1500

2000

2500

3000

3500

Mauritius South Africa Madagascar Mozambique Lesotho Malawi Botswana Namibia Angola Swaziland Zambia Zimbabwe

Documents Customs Ports Transport

Import Time – Mozambique

Costs

Documents

Time

Bank L/C

Institution

Pre-shipment Inspections

Comments

•15days

free

•Clean report findings

•Intertek

•Burdensome

•2 weeks

•Min $350

•L/C

•Bank

•High Risk environment

Import Time – Mozambique

Customs

Costs

Documents

Time

Other documents

Institution

Comments

•3 days

•$55 for courier

•Original B/L, COO, Com. Invoice, Packing list

•Too much paper work

2-3 days

$160

DU, manifest, cargo release, Packing list

•Exporter, MCC

Bureaucratic and manual processes

Import Time - Mozambique

Costs

Documents

Time

TransportationPorts

Institution

Comments

Scanner

few hours

$120

Inspection report

KUDUMBA

80% scanning

5-7 days

$260

Stowage plan, THC, Cargo manifest

MIPS, container terminal

Low port productivity

•2 days.

Poor roads going north or west hampers transit trade

•$240

Shipping line, Freight forwarder

•Delivery order

Export Time - Mozambique

Customs

Costs

Documents

Time

Other documents

Institution

Securing bank L/C

Comments

•2 weeks

•Min. $350

•L/C

•Banks

High risk environment

•3 days

•$55 for courier

•B/L, Com. Invoice, packing list, CoO($20)

•Too much paper work

•2-3 days

•$160

•DU

•Importer, firm

•Bureaucratic and manual processes

•Customs

Export Time - Mozambique

Costs

Documents

Time

TransportationPorts

Institution

Comments

4-5 days

$260

Release order

MIPS, Terminal, Shipping line

Low port productivity

•2 days.

•Includes, arranging, loading and unloading

•$240

• Freight forwarder

Few hours

$90

Inspection report

KUDUMBA

Costly

Scanner

Trading Across Borders - Mozambique

Core Issues Analysis

Banks

•High fees in L/C (1% to 2.5% of transaction value)

•Perceived by banks as high risk lending

•Lack of credit information on traders

•High T-Bill interest rates (16%)

•Lack of competition in banking sector

•Hence low usage of L/C (10%), majority use advance payments, telegraphic transfers, with attendant risks and associated costs.



Customs

•Duplicatory/repetitive procedures

•Manual (face-to-face paper pushing)

•No risk management system in place

• Corruption

•Unprofessionalism among customs services

•Use reference prices, even when evidence for transactions value exists.

•VAT re-imbursements are slow

Clearance Process at Customs

Customs broker fills the DU

Customs broker fills the DU

First screening at Customs forComplete DU

(Aceitação)

First screening at Customs forComplete DU

(Aceitação)

•Data registeredIn computer and (Entrada)

•Notice for payment Provided (Aviso de pagamento)

•Data registeredIn computer and (Entrada)

•Notice for payment Provided (Aviso de pagamento)

•Pay duties at Treasury. (Tesouraria)•Revenue DeptAlso verifies. (Receita)

•Pay duties at Treasury. (Tesouraria)•Revenue DeptAlso verifies. (Receita)

•Verification of DU(prices, tariffs, quantities etc). (Verificação)

•Signed-off by Management (Gestão)

•Verification of DU(prices, tariffs, quantities etc). (Verificação)

•Signed-off by Management (Gestão)

Separator gives You Copy of

approved Document(Separação)

Separator gives You Copy of

approved Document(Separação)



PSI

•Send pro-forma invoice to ITS (Intertek) for a MOZ reference = take 2 days to obtain this number.

•After which the reference number is transmitted to the supplier.

•Supplier arranges for the inspection to be carried out, = take some 5-6 days.

•It could then take some 4 days to issue the inspection report and transmit to importer.

• It is not uncommon for there to be some rejection in the inspection process thus requiring a recommencement of the process.



Cross-border trade

•Delays at border crossings (Ressano Garcia/FRIGO) of 2-3 days. Due to inter alia:

•Further border co-operation, harmonised procedures, forms, systems and interfaces.

• Hours of customs operation at the border

•Weak road/rail network to land-locked countries is a hindrance to the development of transit trade.

Recommendations - Administrative

• Scanning should be applied on a selective basis and not more than 20% of cargo.

• Abolish pre-shipment inspection• Allow for complete pre-good arrival clearance• Allow clearance without showing originals for

reliable and trust worthy traders. • Streamline VAT rebate system.• Increased transparency in Customs decisions• Involve private sector in decision making:

national trade facilitation committee. • Abolish “Aviso 2”

Recommendations – Short to Medium Term

• Establish a properly functioning EDI system• Create a single window, linking, customs with

banks and port authorities. • Apply computerized risk management procedures

using existing database on customers• Implement an E-manifest system• Border posts to increase hours of operation• IFC’s Global Trade Finance Program• Lower T-bill rates

Recommendations – Longer term

• Roads and ports facilities need significant investment, if Mozambique is to become a regional hub.

• Creation of a single cross-border posts requiring only one inspection.

• Improve risk assessment of traders to banks by improving the functioning of public credit bureau.

• Allow more entries into the banking sector to stimulate competition.

• EXIM bank to provide trade finance