The SADC protocol on Transport, Communications and Meteorology sets out the framework for the integration of the regional transport system. In terms of the SADC protocol, much progress has been made towards regional integration but further action is required on aspects such as vehicle weights and dimensions, road user charges and customs procedures.
Number of corridor management institutions have been set up such as Walvis Bay Corridor Group, Maputo Development Corridor, North-South Corridor in Southern Africa.Increasingly funding corridor developments along corridors Borders delays, a proliferation of road checkpoints and other practices that increase monetary and time costs.Various initiatives have been designed to both monitor the performance of corridors and to eliminate the non-tariffs barriers (NTBs);The objective is to enhance the efficiency and cost-effectiveness of the main transport corridors into landlocked countriesThe South African government defines special emphasis on coordination and cooperation with our neighbouring and regional partners in matters of border management. Given its mandate, legitimacy, experience and presence on the ground, the CBRTA has a key role to play and a special responsibility in championing CBM in close cooperation with other agencies, regional organisations and other external actors. However, there is currently no common understanding, much less a comprehensive policy framework, that would guide CBRTA support to CBM programmes in a coherent, coordinated and sustainable way.
Marina Aucamp, Chief Financial Officer, Cross Border Transport Agency
Cross Border Road Transport InitiativesPresented at: Future Fuel Distribution Strategies for Southern Africa Conference Marina Aucamp Chief Financial Officer Cross Border Road Transport Agency 3 November 2011
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? 2
Overview of theCross 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 provisionof advice, regulation, facilitation and law enforcement pertaining to cross border road transport activities. 4
MissionTo 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 StrategyTo position the Agency as a facilitator of unimpeded flow of crossborder road traffic and promoter of economic development andimprovement 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
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.
Africa’s Key Economic Indicators - 2011 SADC: Population: 271m African Population: (27%) Population: 1,031m GDP: US$ 590bn (35%) GDP: US$ 1,703bn GDP per Capita: GDP per Capita: 2,941 $3,444 Growth Rate 2012: 5.8% 1.8% of world GDP (2015 – 2.4%)SOUTH AFRICAPopulation: 50m (5%)GDP: US$ 366bn (21%)GDP per Capita: $10,334Growth Rate 2012: 4.3%
Real GDP Growth in correlation with FDICountry GDP Growth GDP Growth Ranking – Ranking – 2008 2012 GDP FDI 2008 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 24Nigeria 6.3 6.7 15 1South Africa 4.9 4.3 29 4 www.africaneconomicoutlook.com (2010)
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. 14
Africa - a fragmented continent (2)• Trade between African countries and their emerging partners (BRICS) has grown significantly over the past decade.• Africas 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 Africas top trading partner.• So is Africa moving away from a post-colonial dependence towards a Chinese one? 16
Africa - a fragmented continent (3)• 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. 17
Key shaping forces in the future for SA?South Africa’s future will be shaped by a number of internal andexternal forces over the period to 2030, which is the current focus ofthe NPC:• Global economy• Energy transitions, food security, climate change and new technologies• African development and regional integration• Demographic changeDiagnostic Overview Report by the National Planning Commission (2011) 18
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
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.
History of Regional Integration (1)• 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. 23
History of Regional Integration (2)• 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. 24
History of Regional Integration (3)The African Economic Community is envisioned to be created insix 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. 25
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. 26
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. 27
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. 28
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
Summary of activities at two major commercial border postsLebombo 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 38
Lebombo – SA Export Months SARS data 1,800,000,000 1,600,000,000 1,400,000,000 1,200,000,000Rand Value of Goods 1,000,000,000 800,000,000 600,000,000 400,000,000 200,000,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YEAR 2008 YEAR 2009 YEAR 2010
Beit Bridge – SA Export Months SARS Data 3,000,000,000 2,500,000,000 2,000,000,000Rand Value of Goods 1,500,000,000 1,000,000,000 500,000,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Months YEAR 2008 YEAR 2009 YEAR 2010
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%) 41
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 42
The most important SADC purchaser ofSouth African petroleum products in2010 is Zimbabwe (32.69%), followedby Zambia (24.42%), and DRC (13.47%) 43
Are the current business processes at Beit Bridge and Lebomboconducive for regional integration?
BEIT BRIDGE – SOUTH AFRICA South African Exports South African Border Precinct 4 1 2 3 ZIMBABWE BORDER PRECINCT Clearance SAWeighbridge Agents Receive Security Customs (Truck Docs check Park) Stop Notice (inspection) Truck or Gate Inspection Clearance Pass (Stop Notice or Random) Inspection Ramp passport 5 6 7 8 9 SA Customs SA Port SA SA Police (Cash Health Agriculture Immigratio Check Truck Office) n Leaves SA side
BEITBRIDGE - South SOUTH AFRICA African imports South African Border Precinct 10 8 9 SA Clearance Receive SA Police Agents Docs Customs checkZIMBABWE BORDER PRECINCT Truck Inspection 15 16 Truck 11 13 passport 13 14 enters SA Customs SA (Cash SA Port SA Final Weighbridge Agriculture Office) Health Immigration Check Truck Inspection
LEBOMBO - South SOUTH AFRICA African Exports South African Border Precinct Kilometre Seven (Commercial Bypass Road) Airfield 3 passport 7 8 9 SA SA Police Truck Immigration Check leaves MOZAMBIQUE BORDER PRECINCT Truck Stop South Africa & SA side Mozambique 1 Customs 2 6 Truck Agriculture Clearance Receive Limited interaction:Weighbridge Agents Docs Inspection focuses on imports 4 5 Inspection Traffic SA Customs Gate SA Port Health Ramp Monitoring BORDER POST Centre (Cash Office) Pass Limited interaction: focuses on imports Land concession - SANRAL
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% 50
Port check point On-route checksSA Border post checksNeighbouring Border post checks 52
Collaborative Border Management• 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. 53
Collaborative Border Management Intelligence Customer Inter-agency approach driven risk Pre-clearance segmentation management Collaborative information portal Customer centric view with compliance historyReduced compliance Enforcement verification Low risk persons focuses on higher documentation and freight move risk individualsrequired at the point uninterrupted and freight of border entry
1 Registration Process Clearing Authorised Business Agent Risk Profile Set-up per entity Freight Completes electronic ElectronicTransport registration of submission forBusiness business approval in Department Department of Department of Department of SAPS SARS of Transport Agriculture Health Home Affairs out Becomes authorised / accredited user
2 Pre-Clearance Build Risk Profile per Freight Submit freight Electronic submissionTransport clearance request of consignment detailsBusiness electronically for approval entity in Department Department of Department of Department of SAPS SARS of Transport Agriculture Health Home Affairs outProfile Analysis Apply Risk Specific turn- Each role player STOP around time responds to the At border consignment and or on-route communicates status GO per entity
SARS Modernisation Process• 3 September at Lebombo Border Post• 8 October 2011 at Beit Bridge Border Post
2004: SARS signs agreement • 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 with WCO (Kyoto management & audit based controls, border agencies & partnerships formed. • Customs standardizationPurpose of Modernisation • To streamline the customs clearance process • Offer an improved experience & service to the trader • Modern, electronic & integrated technology • New Legislation, Simplification & harmonisation of Customs procedures, Requirements • Automation of key processes, aautomated risk management & non-risk related goods will be fast-tracked for release • Risk profiling • Redesign of Customs declaration process, Implementation of purpose codes for declarations, Implementation of procedure category (PCC) and customs procedure codes (CPC’s). Phase1 – Nov 2010 • 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) • 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, Phase 2 – Jun 2011 • • 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) • New warehousing, home and inward processing systems • Holistic profile of traders, taxpayers and their interactions with SARS Phase 3 – 2011/2012 • • 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
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, • Partial electronic system called Service Manager - • SARS inputs the data received from Agents at the Border• A new inspection process• As per the electronic system’s objective outcome Customs • Risk evaluation done by custom official, subjective outcome informs Agent if the vehicle will be stopped. Two options. • Customs official decides to stop vehicle or delay vehicle Customs may request inspection of documents (not submitted automatically), second phase Customs may require an inspection – have 4 days to request inspection)• Electronic submission of supporting documents by Agents • Paper submission of supporting documents• Agents don’t need to go to Customs at the Border. • SAD 500 etc• No hand-delivery of clearance supporting documents to • Agent prepares forms, copies, files and submit to SARS 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• Mostly EFT • Duties paid by agents at Customs / EFT• New Customs Status Codes• The Customs’ internal inspection process is redesigned with • n/a 9 new Customs Procedure Code combinations• An electronic release system, reducing the need for paper • Possible requested pre-inspection and release, at least 24 and authorising stamps at branches which should result in hours previously reduced turnaround times, • Random inspection possible• 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.
New Electronic Clearance Process (Assumed Exporting Old Clearance Processfrom SA)• Driver parks truck • Driver parks truck• Clearance note handed to driver – all processes may be • Driver possibly hands in Documents for load to clearing Agents / completed before arrival if submitted may be prepared before depending on agent.• Clearing agent/s check documents for accuracy and correct • Clearing agent checks documents for accuracy and correct supporting documentation prior to the submission to both supporting documentation prior to the submission to customs for customs for clearance. Unlikely random stop. Internal risk matrix. 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 • Customs issues release order and documents returned to agent• Prior issued release order – except if must stop 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. 61