Balancing Clearance with Compliance

May 16, 2012

Evans Klutse
Trade Facilitation Advisor

USAID West Africa Trade Hub

ECOWAS Intra-Trade Pales

ECOWAS exports continue to be dominated by minerals, petroleum and primary agriculture. Biggest markets are USA (35.6%) and EU (28.2%) with China and Asia gaining. For the period 2000 - 2007, Intra-ECOWAS trade accounted for only 9.3% of ECOWAS total trade. Rest of Africa a scant 3.5%. This is much less than elsewhere. For example:

NAFTA 40% Western European 63% MERCUSOR - 20%.

On average, Intra-ECOWAS exports account for only 4% of countries GDPs. Argument goes that a country & region cannot grow sustainably without intra-regional trade. In other words ECOWAS has UPSIDES.

High Trade Costs Erode Competitiveness

Trade Hub is building statistical base on the cost of moving goods within ECOWAS and UEMOA Based on initial responses, leading exporters are paying roughly 20% of cif value to ship ETLS FMCG from Accra to Lagos. Total Cost is about $15/km, of which 55% comprises in/formal fees for ETLS. Transport translates to $400-600/day/truck. Indicative time from loading to delivery is 8 days (for 400 km!).

Fees and Red Tape

Various Formal and Informal Taxes and Charges Imposed along the Ghana to Nigeria Corridor

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Administrative Tax (1% fob) Assoc. of Customs Agent Levy BIVAC (GH) CBC Certificat dorigine (Chambre) Certificat dorigine douane Certificat sanitaire CNCB Commune Convoy Fee/Escorte Custom Agent Declaration/quittance Ecor Ecotax ECOWAS tax

1. Enregistrement 2. Entry Tax 3. Fin. Charge for Remboursables 4. Gendarmerie Levy 5. Hygiene & Sanitation 6. Import Card 7. Laisser Passer 8. NAFDAC 9. Parking/Stationnement 10. Passage BMA 11. Passage magasin douane 12. PC 13. Police Levy 14. Prise en charge

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Redevance informatique Section visite Sortie Standard Org. of Nigeria Statistical Tax Taxes de declaration Taxes globales Taxes Supplmentaire Tolls/Page Transit Fee URCB (Syndicats) VAT/NHIL Veterinarian Tax Visa

Whats Holding Back ECOWAS Trade ?

Non-complementarity. Differentiated goods are relatively few. Multiple national currencies with limited convertibility. High costs of doing and transacting business and trade. Limited effect of ETLS and ECOWAS Compensation Scheme. Dominance of Informal Cross Border Trade over formal trade. AND, red tape, in/formal fees and delays at border crossings.

Opportunities Boom or Bust

Will West African companies and institutions capture and drive the boom or fall by the wayside? What strategies will the private sector and government embrace? For example: Country-centric vs. Regional Open Markets vs. Protected Markets Economies of Scale vs. Small Scale Middle Class vs. Bottom of Pyramid Oligopoly vs. Competition Primary Agriculture vs. Agribusiness Trade Tariffs vs. Income Taxes

The Border Information Center is a Cross-Border Partnership!

ECOWAS, UEMOA

Ministries of Trade and Transport

GSA, ALCO, Trade Hub

Chamber of Commerce, Transport Unions, Private Sector, Clearing Agents

Customs, Immigration, BNI, Police,

Customs procedures at Aflao

Clearance of Imports: 2 Levels

LONG ROOM
Goods Value > $3000

BAGGAGE HALL
Goods Value < $3000

Importer/Exporter Obligations at the Border

Importer, with a Clearing Agent, obtains and completes Importation & Exportation by Overland Routes C68
Available from Loading Task Force Office of Customs Division, Ghana Revenue Authority

Submits Declaration from Front End System (FES)

If error free, Declaration is validated for importer to pay appropriate taxes at Ghana Commercial Bank or Ecobank Importer takes Declaration and payment receipt to Compliance Officer Then, Examination Officer examines and releases goods before exit

If errors are detected, Importer/Agent completes a Post Entry

Other Documents Needed for Import

FCVR
Licenses, Certificates or Permits (for restricted goods)

Certificate of Origin

Packing List

**NOTE: Depending on volume of work and type of goods, normal clearance procedure should not take more than 1 hour

Exports: 2 Main Types

Examples: -Cocoa Beans -Logs & Lumber -Unprocessed gold & other minerals -Electricity -Fresh Fish
All other goods

Traditional

Non-Traditional

Export: Traditional Goods

Supporting Documents: 1. Bank of Ghana Form FX5 2. Appropriate Licenses, Certificates & Permits from authorizing agencies (many obtained online) 3. Certificates of Origin 4. Packing Lists

Export Procedure
- Exporter/Agent submits a Declaration at the Front End System (no need to pay taxes on exports) - Documents verified by the Compliance Officer and routed to the Examination Officer - Examination Officer releases goods for export through the Exit Gate into Togo

Customs procedures at Aflao

Why Enforcement?
Standards
- Quality - Public Health and Safety, etc

Revenue Collection
- Excise tax - Duties, etc

Security
- Illicit Trade - Arms - Human Trafficking, etc

Cross border recognition

- Standards?
- UEMOA, SON

- Certification?
- NAFDAC, FDB

- Documentation?
- Carte dIdentit or Endorsable passport?

Borderless Alliance Secretariat USAID West Africa Trade Hub Accra, Ghana www.borderlesswa.com www.facebook.com/borderlesswa Evans Klutse: eklutse@watradehub.com