Zimbabwe Experience in Transit Management
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1 Expert Meeting on REGIONAL COOPERATION IN TRANSIT TRANSPORT: SOLUTIONS FOR LANDLOCKED AND TRANSIT DEVELOPING COUNTRIES September 2007 Zimbabwe Experience in Transit Management by A. Mutombodzi Zimbabwe Revenue Authority This expert paper is reproduced by the UNCTAD secretariat in the form and language in which it has been received. The views expressed are those of the author and do not necessarily reflect the view of the United Nations.
2 ZIMBABWE REVENUE AUTHORITY ZIMBABWE EXPERIENCE IN TRANSIT MANAGEMENT PREPARED BY A. MUTOMBODZI
3 Background Zimbabwe is one of the 31 landlocked developing countries situated in the southern part of the African continent (see map below). It shares borders with four countries namely Mozambique, South Africa, Botswana and Zambia. Zimbabwe manages one of the busiest and biggest border post which is beitbridge and it lies between South Africa and Zimbabwe. Because of its strategic location Zimbabwe plays a very critical role in facilitation of transit traffic mainly from overseas via South Africa up north to Malawi and Democratic Republic of Congo. Zimbabwe s geographical fate has posed challenges in transit and trade facilitation and this paper will further give details on the transit experience, challenges and some initiatives that the country has implemented in order to facilitate smooth movement of transit traffic. Regional Integration Agenda Zimbabwe belongs to two regional economic groupings which are COMESA and SADC. The regional integration agendas of the two economic groupings provide for facilitation
4 of transit traffic hence the issue of transit has aroused interest in both, the public and private business fraternities. Most of the countries that belong to these regional groupings Zimbabwe included, have transit systems that are nation or country based. What this means is that each country has its own transit requirements regarding bond requirements, different documentation, procedures and regulations. The different requirements in management of transit traffic has had negative impact on trade facilitation and therefore the need for more practical solutions towards better facilitation of transit traffic. This paper will touch on some of the practical solutions that COMESA and SADC have proposed towards transit facilitation in the region. Major Transit Routes in Zimbabwe Zimbabwe mainly services transit traffic that originates from South Africa up north to Malawi-Tanzania and DRC. The following are the border posts that transit traffic passes through. South Africa DURBAN South Africa BEIT BRIDGE BEIT BRIDGE Zimbabwe HARARE Zimbabwe NYAMAPANDA CUCHAMANO CHIRUNDU CHIRUNDU Mozambique Zambia Malawi ZOBUE MWANZA KASUMBALESA KASUMBALESA DRC BLANTYRE LUBUMBASHI The above route begins in South Africa and splits up in Zimbabwe with one way going to DRC via Zambia and another to Malawi and beyond via Mozambique. Transit traffic passes through at least six points of entry and exit. A number of challenges are faced by transit operators along transit routes varying from poor road infrastructure, poor communication, dealing with various border agencies, different levies charged by countries, different documentation requirements, lack of secure overnight parking facilities and different bond requirements. The road infrastructures in certain countries are poor and this of course leads to high vehicle maintenance costs. During poor weather conditions, poor roads also add to the number of accidents on the roads and transit traffic is not spared. Customs automated
5 systems in the region are not interfaced and therefore this is a major challenge in ensuring that goods have left the country and accounted for in the next transit country and also those acquittals are genuine & authentic. Customs administrations run systems that are different and even those that run the same systems e.g. Asycuda, their systems do not talk to each other. Most of the customs offices in the different countries are not on Wide Area Network and again this is an obstacle in management of transit traffic as customs offices have to rely on physical documents upon arrival of the truck at the port of exit. At all border posts within the region there are various agencies posted there for different missions. This has obviously posed challenges in smooth movement of transit traffic as each agent endeavours to satisfy their requirements. Border agencies range from police officers, immigration, state security agents, Vehicle Inspection departments, health and customs officers. One of the challenges faced in managing transit traffic are different levies charged on truckers as they pass through different points of exit and entry. Not only are the fees different but they are not fixed as well. Obviously this calls for harmonisation in this area to ensure consistency and certainty. The other challenge is to do with documentation which different countries require for transit operations and again this becomes a hindrance in the smooth flow of traffic. One major challenge has been that of different bond requirements by countries. The current system where each country demands that a certain level of bond be raised for transit traffic to pass through their country has aided in the already high costs that transit operators face. Other challenges faced range from transit frauds and diversion of goods. Because of these challenges, a truck may take 2-3weeks to transit through to the furthest destination where ordinarily it should take at most 6-8 days. Most of the delays however, have been attributed to customs formalities at border posts. Zimbabwean situation In light of the above challenges currently being faced, Zimbabwe has been quite active in an attempt to ensure smooth flow of transit traffic. Zimbabwe in on Wide Area network, an initiative that has improved communication along transit routes. Zimbabwe has also implemented the transit module in Asycuda where a transit declaration that is made at the port of entry is automatically posted to the exit office before the truck arrives. When the truck arrives at the exit office, customs extracts the details of the consignment, checks if goods and seals are intact and acquits the entry in the system and releases the truck. Zimbabwe is on the draw down bond system and the acquittal of the document reinstates the bond amount held in the commencement port. The system also then terminates the transit operation and informs the commencement office electronically. This systems largely depends on human intervention where it calls of customs officers with high integrity to ensure that they acquit transactions whose goods and documents they would have physically seen otherwise, scrupulous officers may acquit a transaction whose truck never arrived at that exit point. Electricity shortages and power break-ups pose a challenge in the implementation process as officers then to revert to the manual system. However, to further strengthen tracking of goods, Zimbabwe has also introduced non intrusive scanning equipment and initiatives are being worked on where it should be possible that the office of entry electronically sends a scanned copy of the truck and goods to the office of exit for compassion purposes. This cuts on delays caused by physical examinations of goods. The above initiatives are only good to the extent of serving Zimbabwe but a more regional approach would be the best for any transit operator to gain from engaging in
6 transit movement. In light of this, Zimbabwe has been quite active in the development of various transit instruments under the assistance of SADC and COMESA. This approach has seen Zimbabwe interacting with its neighbours and other countries in the region. The two economic groupings have proposed two almost similar models which may bring practical solutions to the transit challenges in the region. Below are summarised versions of the two models: SADC Regional Customs Transit Guarantee (RCTG) model This model relies on common law and procedures, through single customs document, mutual assistance and collaborative enforcement, partnership between key stakeholders and a chain net work between bond holders and designated representatives. Key players in this model are Government/Member States National Customs Administrations Principal bond holders Designated Representatives Financial Institutions/Guarantors Transporters The role of Member States or Governments is to: sign and ratify the Transit Agreement recognize the extra territorial validity of the Chain Bond Guarantee scheme in its customs territory promulgate laws and regulation to that effect and facilitate the transfer of funds for reimbursement of any claims/liability payments made by the designated representatives where the need arises. The role of Customs administrations is to ensure to: ensure the smooth operations of the Regional Chain Bond guarantee Scheme in its country vet and approve insurance and financial institutions that issue transit bond guarantees vet and approve Principal bond holders and their designated representatives examine and approve Customs guarantees presented throughout the transit process check validity of guarantee documentation presented as evidence of compliance with transit procedures and confirm security of goods to be transited confirm transit termination to office of commencement and facilitate the speed of acquittal of the transit operation. Customs administration should be made up of the following: Office of commencement Office enroute Office of destination Central guarantee office The role of Principal Bond Holders is to: Coordinate, supervise and oversee the whole Regional Customs Transit Bond Guarantee financial arrangements, as well as, operations of their Designated Representatives in transit or destination countries
7 Issue guarantee to clients, reimburse claims/liability settlement by designated representatives and settle disputes and claims The role of Guarantors is to: provide acceptable surety, sign up as guarantors of surety and become jointly and severally liable and act as last resort for claim settlement. The role of Transporters is to: timely delivery of goods at the right place using the designated transit corridor report incidences to the nearest Customs Office or Police and ensure registration of the means of transport. The operational relationship is diagrammatically depicted as follows: Trader Guarantor Operational Relationship PRINCIPAL BOND HOLDER Principal bond holder Designated representative Designated representative Designated representative Designated representative Carrier South Africa Office of commencement Zimbabwe Customs Authority Mozambique Customs Authority Malawi Office of Destination The above model is in the process of being piloted along the South Africa, Zimbabwe, Mozambique, Malawi route and has also been launched for piloting in the Beira corridor. Some successes were recorded in certain areas and these include the use of a single through bond reduces costs of raising bonds in each and every country entered, reduction of turnaround times by more than 50% i.e. customs clearance times and truckers travel times. The use of a single administrative document has also reduced costs to a great extent. However reliance on bond holders network only works to the extent to which the private sector supports the system. Landlocked countries have complained of loss of business to countries like South Africa. The effectiveness of this system is yet to be evaluated after the pilot run which ends December 2007.
8 COMESA Regional Customs Transit Guarantee (RCTG) model The COMESA RCTG system is based on five basic principles: Goods should travel in customs secure vehicles and / containers wherever possible, therefore licensing is required. Throughout transit, duties and taxes at risk must be covered by an internationally valid guarantee. Goods must be accompanied by recognised COMESA documents, the COMESA CD and the COMESA Carnet. All transit country customs authorities should accept the customs control measures taken in country of commencement. Customs and participating sureties control access to the RCTG program. These are responsible for authorising the issuing of COMESA Carnets and administering the operation of the RCTG scheme. Various private and public parties are involved in the RCTG scheme. These are: Principal-the importer, exporter or other person seeking to guarantee a transit movement or his agent. Primary surety- a financial institution that guarantee the undertaking of a Principal to a customs administrator. National Surety- the organisation responsible for the functioning of the RCTG scheme in member states. Council of Surety-comprises of national sureties Customs administration which comprise of the following: Office of commencement Office enroute Office of destination Customs central guarantee office-customs office where guarantees are lodged. Central transit office- responsible for matching and notifying the national surety of acquittal of a guarantee or a claim against a guarantee. Management committee- responsible for the oversight of the scheme. So far a COMESA Management Information System (MIS) was developed and it comprises of four modules which are: The information dissemination module The carnet tracking and management model The claims tracking module The reporting and statistics module. The piloting was undertaken in the northern corridor countries namely Kenya, Uganda, Rwanda and Burundi by COMESA in conjunction with TTCA and ECA-HUB. The following were observed: i. COMESA carnets on regional general bonds should be issued only by principals and their agents. Surety may issue Carnets for particular bonds/guarantees
9 ii. Sureties should charge deposit premiums on the issuance of the regional bond and should furnish principals with stocks of COMESA carnet iii. Principals should account for carnets supplied before replenishment. iv. The concept of Nominal bond to be adopted in combination with General/Draw down/continuous Bond. v. Transit document issued in country of commencement be accepted by all transit countries. Conclusion The two models are relatively similar as the anchor on the same pillars and address the same problems. Zimbabwe is still to test the COMESA model and evaluate the two systems. However the following recommendations are worth considering for effective management of transit traffic: Adoption of a single administrative document Adoption of single through bond, preferably nominal bond Development of ICT to enable different systems to talk to each other Harmonisation of procedures Improvement in communication equipment Cargo tracking Use of scanning equipment Commitment by governments to recognise extra-territorial arrangements Public and private sector partnership
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