eTransform Africa: Regional Trade and Integration

African Development BankTransformation Ready

programmeRegional trade and

integration component

Presentation of work to dateJohannesburg review meeting

30 June 2011

Research programme

Final report

Landscape analysis

Assessment of regional integration

Trade flows and customs

Trade and transport logistics

Trade & business information

Thematic reviews

Case

studiesBotswana Kenya Senegal

Progress to date

African Development Bank – Transformation Ready programme – Regional trade & integrationInitial presentation of Chapter 2 – Landscape analysis – 16 May 2011

Inception reportDelivered on schedule - 1 April

Discussed with Bank teams - 18 April

Landscape analysis, opportunities & challenges:

a) thematic overview

Delivered on schedule (Powerpoint format) - 6 May

Landscape analysis, opportunities & challenges:

b) regional integration

Delivered on schedule (Powerpoint format) - 13 June

Mid-term progress report Delivered on schedule - 20 June

Chapter 2 - landscape analysis, opportunities & challenges Full text draft submitted 24 June

Next steps


Thematic reviews and consultation process

Thematic reports due 15 July

Consultation process to 20 July

Country case study - Botswana Country workshop in early JulyReport by 15/20 July

Country case study – Kenya Country workshop in early JulyReport by 15/20 July

Country case study – Senegal Country workshop on 6 JulyReport by 15 July

Draft report Scheduled for 1 August

African trade in context

Africa’s share of world trade is very low: 2.85% in 2006, 3.41% in 2008

Over 80% of African trade is with regions outside Africa Europe and North America are predominant export markets for

many countries Recent increase in trade with Asia, including tenfold growth in

trade with China over decade Primary commodities are main exports.

60% of exports to RoW are oil 75% of imports from RoW are manufactured goods – hindering

development of regional manufacturing Three of 56 countries accounted for almost half of African

exports to RoW in 2004-6 (Algeria, South Africa, Nigeria) Economic downturn reduced the volume and value of

African tradeAfrican Development Bank – Transformation Ready programme – Regional trade & integrationInitial presentation of Chapter 2 – Landscape analysis – 16 May 2011

Intra-regional trade

Exports Imports

COMESA

EAC

ECCAS

ECOWAS

SADC

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Exports IntraREC Exports Other Africa Exports RoW

COMESA

EAC

ECCAS

ECOWAS

SADC

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

Imports IntraREC Imports Other AfricaImports RoW

Within Africa there are significant national and regional variations in intra-regional trade:

Southern Africa performance is strongest because of dominance of South Africa.

Central Africa (ECCAS region) has particularly weak intra-regional trade.

Intra-regional trade: obstacles

Predominantly small, low-income markets offering few economies of scale and limited demand

Lack of complementarity: neighbouring countries tend to export similar primary commodities to extra-African markets, and have few manufactured good to trade regionally

Difficulty of addressing informal trade within formal trading structures

High trade costs, resulting from poor quality of transport and other infrastructure across historic borders, cf. stronger intercontinental links dating from colonial era

High trade costs, resulting from bureaucratic and administrative inefficiencies, including failure to implement policies and processes, poor systems management and corruption

Lack of coordination and harmonisation between within regions concerning trading mechanisms, standards, payment systems etc, in some cases exacerbated by inter-state conflict and border-region civil conflict

Confusion between requirements of different RECs in instances of dual/multiple REC membership


Regional integration – REC membership


Regional integration in Africa – the AEC project

Creation of regional blocs

Strengthening of REC

coordination &

harmonisation

Establishment of free trade

area and customs

union in each REC

Establishment of continental

customs union and free trade

area

Establishment of continental

common market

Establishment of continental economic and

monetary union (and Parliament)

Full completion of AEC process

1999

2007

2017

2019

2023

2028

2034

Regional integration in Africa – progress to date

Establishment of FTA and CU in four regions and one sub-region COMESA, EAC, SADC, CEMAC, ECOWAS

Establishment of Tripartite Agreement including COMESA, EAC and SADC – leading to FTA of 26 countries

African Union Minimum Integration Programme favours further rationalisation

Very limited progress in the other RECs ECCAS overall, AMU, CEN-SAD, IGAD

Limited demonstrable impact on trade performance

Trade & RI

Legal and Policy Framework

Operational Components

Integrated Border Management

(IBM)Single Window

Risk-BasedControls

SimplifiedProcedures

RegulatoryTransparency

Harmonisation

EfficientMIS

Application of International

Standards

World Trade Organisation GATT Articles V, VII, and X

Doha Round TF dossier

International UNECA, UNCEFACT, UNCTAD, WB

UNECE,WTO, AfDB, ADB, IADB

World Customs Organisation Kyoto Convention,

SAFE Framework of Standards

Regional Institutions AU, EU, COMESA, ECOWAS,

SADC/SACUNAFTA, Mercosur, ASEAN, etc.

There also International Players in trade and Regional Integration

ICTs and trade – analytical framework


Underlying economic and

political challenges:

Undiversified and non-complementary

economiesLandlocked statusPolitical instability

and conflictLack of domestic

demand and limited skills

Weak financial infrastructure

Trade barriers

TariffsNon-tariff barriers

Transaction costs

Transport costs

Trade facilitation

comprehensive streamlining of processes, formalities, procedures and documents … supported by an improved legal and regulatory framework, the optimal arrangement of IT solutions, and the implementation of an improved human resources management policy

Key issues: elimination of

unnecessary processes and duplication

elimination of scope for corruption and illegality

coordination of agencies within government and across borders

targeting of inspections legal framework for

trade reduction of delays in

consignment transitAfrican Development Bank – Transformation Ready programme – Regional trade & integrationInitial presentation of Chapter 2 – Landscape analysis – 16 May 2011

Assessing the role of ICTs and the potential contribution of

ICTs


Efficiency

Coordination

Knowledge

Which trade barriers and aspects of trade

management are most susceptible to ICTs?

What complementary factors are necessary to

enable ICTs to add value?

What policy interventions can foster synergies between ICTs

and wider context?

Initial findings – trade flows and customs

African countries have embarked on various reform programmes to address tariff and non-tariff barriers to trade. Some of these have incorporated the use of ICTs to facilitate trade easier

The automation of customs and border processes is central to enhancing trade through the use of ICTs and most countries in Africa are at some level of automating such processes

There is an overall move towards a web-based distributed ICT environment that integrates customs automation,

African Development Bank – Transformation Ready programme – regional trade & integrationInitial presentation of Chapter 2 – Landscape analysis – 16 May 2011

Initial findings –trade flows and customs

Different systems that require interface - ASYCUDA widely used (85 countries, 42 in

Africa), maintained centrally by UNCTAD for customs control, tax collection and trade stat.

Lesson – the use should be preceded by reform of policies and regulations; capacity, the streamlining of processes and standardisation of forms and other trade instruments

GAINDE 2000 (SIMBA 2005) – customs system with interfaces for e-payment, risk analysis, valuation and NSW interface

Strong support for e-commerce and e-payment, faster development cycle


Example: SARS modernization

Registration/

Licensing / AEO

Pre-movement Cargo Movement

Port of Export

SA Port Customs front-line

Inland / Regional Transport

Importer / Distributo

r

International

Transport

• E-filing• 3rd Party Data• Centralised • Trader

Segmentation

• C2C Data Sharing

• EDI Manifest• Risk +

Targeting for security and contraband• 3rd Part Data• Single Window

• E-Declaration– 2D Barcode– EDI– Web

channel• Risk

+Targeting

• E-Release• CBCU

– CCA– Gate– Patrol– Rummages– Search

• CBCU Inspections– NII– Detector

Dog• Transit

document with 2D barcode

• Transit controls– Documents– Bond

controls– Seals– Controlled

delivery

• PCI / PCA• Compliance

Measurement

Customs ops.

• Centralised Assessment– Analytics for

valuation, classification and origin

• Suspense Regimes controls• Bond acquittal

(centralised)• Intelligence

and Investigations

OPERATING MODELPRINCIPLES

1. Electronic Data / Paperless2. Integrated Risk Engine (Manifest,

declarations, 3PD and C2C)3. Control Model (inspect, audit and

investigate)4. Trade Segmentation5. Centralised Processing:

– Registration– Risk– Assessment– Audit

Post-Movement

features Multi-year, multi-module, internally

developed Integration of XML Financial – e-payment Adobe forms Integration of risk engine Link to passenger processing system, ware

house management

Implications of ICT in trade flows and customs

Challenges are in cross-border trade Different systems – requirement of exchange

across border (XML, RADDEX) Progress with ASYCUDA affects progress in

80% of the countries (e.g. Not all countries moved from ASYCUDA ++ to ASYCUDA World)

Need for experience sharing between GAINDE, SARS CMS, ASYCUDA...


2. Initial findings – trade and transport logistics

Focus on automation of movement of goods and infrastructure management (port, airport) less on people, money and services

ICT use in trade logistics in Africa has been limited as exemplified by African countries’ score in Logistics Performance Index (LPI)

The large number of landlocked countries and border crossings makes logistics in Africa particularly challenging

There is overall disconnection between diverse proprietary tools including Electronic Cargo Tracking System, Port Community System, Cargo Community Systems implemented by ports, airports and inland (rail, road) transport authorities

Efforts are underway in modernisation of transit and traffic management and studying non-tariff barriers across corridors to alleviate the situation

There is an overall move towards a web-based distributed ICT environment that integrates customs automation to sea and air cargo community and other systems used for border management to establish a single nationwide systemAfrican Development Bank – Transformation Ready programme – regional trade & integration

Initial presentation of Chapter 2 – Landscape analysis – 16 May 2011

Initial findings – trade and transport logistics

Port management – port community systems Cargo management – cargo community systems Transit management –transport observatories such

as databases on corridor performance, automated tracking of delays and reasons

Tracking - Electronic shipment tracking system (RUFAATRACK), DHL and Fedex Tracking

Payment - e-payment systems, e-banking – e.g. – potential for mobile payment

Integration of different logistic system and linking to National Single Window

African Development Bank – Transformation

Examples -trade and transport logistics

Portnet of Singapore Managed by Port of Singapore Authority (PSA) Linked to PSA’s terminal operating system (CITOS) and

custom declaration system (TradeXchange) Fully integrated to online platforms for electronic

commerce between the port users The Mauritius Cargo Community Services Ltd

(MACCS) a CCS Established in 2008 aggregates, optimizes, synchronizes and secures Supply

chain processes for Cargo stakeholders -Customs, Port Authority, Port Terminal, Container Freight Station, Freight Forwarders, Importers, Exporters, Customs Brokers and Shipping Agents).


An example – trade and transport logistics

TEMA Pilot transit management of Northern corridor (Burundi, DRC, Uganda, Tanzania, Kenya, Rwanda) Pay once - MIS needed at the bank for regional

payments – to low them to transfer duties and taxes to relevant revenue authorities right from the country of customs declarations, sealing evasion loopholes and accelerating pace of cross border transactions

TEMA corridor observatory Centralized, corridor-based database to monitor corridor

performance based on road performance survey and automated GPS data to address corridor bottlenecksAfrican Development Bank – Transformation Ready programme – Regional trade & integration

Initial presentation of Chapter 2 – Landscape analysis – 16 May 2011

Trade and transport logistics: Implications

Valuable support from regional trade hubs and initiatives such as TEMA and TESA ( cross-border flow of goods, money and people)

Broadband connectivity is improving access to transaction

Aided by countries’ move towards launching single window


3. Initial findings – trade and business information The development of broadband networks and increasing

requirement for Customs, Immigration, Quarantine and Security (CIQS) agencies to collaborate has made it imperative to interconnect border management agencies

Progress in backbone networks and broadband wireless has made it easier to interconnect remote border agencies to central sites.

A number of barriers ranging from incompatible hardware and software, different data sets and mindsets have hampered efforts towards establishing public and private partnership platforms

There is increasing need for sharing of experiences of the progress in developed countries (leading nations like, ZA USA, UK, Japan) and others such as Singapore and Mauritius in implementation of public and private partnership platforms and interconnecting border agencies

African Development Bank – Transformation Ready programme – regional trade & integrationInitial presentation of Chapter 2 – Landscape analysis – 16 May 2011

Initial findings – trade and business information Three major systems (WS, SW and IBM) are the driving forces for

information exchange

Web services e-regulations portal, e-procedures, forms, handbooks,

e-learning system, databases of service providers, e-certification

Single Window: Single point of information dissemination Single point for applications/issuance of documents by agency Single point for submission of trading documents by trader Single point of feedback on submissions

Integrated Border Management: Coordination via information sharing of agencies: Agency HQ to border offices Agency to agency nationally Agency to counterpart agency regionally


Examples – Single Windowstrade and business informationCase: Tunisie Trade

Net (TTN)

Established in 2000 as a semipublic agency, to operate a value-added network providing electronic data interchange for stakeholders and expediting the flows and processing of trade documents

Brings banks, freight forwarders, port authorities, customs, maritime agents, importers, exporters, the ministry of trade and customs agency together

Begun with standardisation and digitisaton of trade documents

African Development Bank – Transformation Ready programme – Regional trade & integrationInitial presentation of Chapter 3 – RECs, Opportunities and Challenges – 16 May 2011

Case Tunisie Trade Net (TTN)

Processing shipping manifests, customs declarations, and technical control documents.

Providing online tariff payments and transport documents. Network platform to allow for exchange of

documents and messages among participants Simple user interface

Benefits: reduced import and export processing times from days to

minutes. Reduced physical inspection increase the efficiency of government administrative

processesAfrican Development Bank – Transformation Ready programme – Regional trade & integrationInitial presentation of Chapter 3 – RECs, Opportunities and Challenges – 16 May 2011

Case – Mauritius NSW

Proprietary system that was set up by Mauritius Network Services Ltd. in collaboration with Crimson Logic

For submission of customs declarations, their processing and their return by electronic means

Links Customs & Excise Department, Freight Forwarders, Shipping Agents, Customs Brokers, the Cargo

Handling Corporation, the Ministry of Commerce, Operators within the Freeport, and Importers and Exporters

Linked to Mauritius Automated Clearing and Settlement System (MACSS)

public-private partnership between several agencies of the Mauritian Government, the Mauritius Chamber of Commerce and Industry, and Crimson Logic

Self sustaining through pay-as you use-basis and helping to develop further e-government programmes


Implications

Increasing use of web and electronic commerce tools including XML that facilitate integration of various information sources

Country single window initiatives growing, but stillLack of cooperation between logistics

agencies (Customs, Immigration, Quarantine and Security - CIQS) internally in particular across borders

Tendency to rely on various proprietary software by CIQS agencies that is difficult to create IBM



ICT applications Customs modernization and trade flows (CMS, RFID)

Logistics and supply chain(CCS, PCS, TMS, TS)

Information and knowledge exchange platforms among CIQS (IBM, NSW, WS)

Applications areas Electronic Customs Declaration and processingOnline approval of permitsDetection of fraudMonitoring

efficient flow of goods, people and money across borderinfrastructure management (port, airport)

One entry and sharing of dataavailability of information on regulation, fees, procedures through website

Example of ICT application Customs systems – ASYCUDA, GINDE (SIMBA)SARS modernization programmeRevenue Authorities Digital Data Exchange (RADDEX)

e-payment systems - Equity Bank (M-Keshomobile paymentCargo community systemPort community systemElectronic shipment tracking system (RUFAATRACK)Africa West Cargo (Togo)DHL and Fedex tracking systems

GCNet – Ghana Single window systemTradeNet – TunisiaTradeNET- MauitiusNSW (Kenya, Rwanda, ZA)

Stakeholders CustomsPermit Issuing AgenciesShipping agentstraders

Shipping agentsCustoms brokersStorage and warehousing organizations Freight forwardersBanksPort tenantsTruck operators

CustomsQuarantineImmigrationSecurity Shipping and forwarding agentsBanks

1980+Early customs Automation

1990+Electronic Data Interchange automation of ports, cargoPaperless customs systems

2000+Web-based and early integration of multiple data sources

2006+NSW IBM

ICT application maturity

NetworksNarrow band Broadband

Standard

s

Legisl

ations

Polic

y

Back office

Front e

nd

Sco

pe (

nati

onal, inte

rnati

onal)

Internal

Regional (REC)

Few integrated modulesglobalstandardization

Consolidation, full supply chain

The ICT RI Dimension

RI promotion of ICT Promotion of ICT strategies (SADC) Custom Union and promotion of

ASYCUDA, EUROTRCE (e.g. COMESA, ECOWAS)

Regulatory harmonization through regulatory association (WATRA, ARICEA, CRASA, EACO)

Regional backbone initiatives (NEPAD, SATA)

Regional Trade Hubs (SADC, EAC, ECOWAS Regional Trade Information System, BOS)

PPP – TEMA, TESA, Trans-Kalahari corridor e-customs/e-trade

Regional protocol on infrastructure (EAC Backhaul –EAC BIN)

IT Promoting RI and trade Regional and national

fiber-backbones are improving opportunities for trade

CAB is fostering integration in CEMAC region

COMESA, EAC and SADC Non-Tariff Barriers (NTBs) reporting, monitoring and eliminating mechanism – www.tradebarriers.org


In conclusion Country case studies (Botswana, Kenya, will bring more light

into ICT and RI and innovative use in trade Customs Management Systems (CMS), Port Community

Systems (PCS), Cargo Community Systems (CCS), Corridor Transit Systems (CTS), e-payment interconnected through NSW and IBM will be critical, but require Coordination – takes about five years to make breakthrough within and

across borders Continuous learning and improvement of CMS, PCS, CCS, CTS, e-

payment Adoption of open standard (e.g. ebXML)

Lead countries will likely help other countries to emulate them


In conclusion

External support needs to focus on comprehensive and integrated regional and national solution and problem resolution

TEMA and TESA are providing initial direction


Thank you


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eTransform Africa: Regional Trade and Integration

Business