Trading Across Borders
In Mozambique
Introduction
• What were the results ?
• Why these results ?
• How to improve results ?
Ranking: Overall Ease of DB vs Ease of Trading
180
160
149
140
121
114
120
131
133
140 141 144
156
146
153
110
170
168
153
102
100
76
80
67
60
40
42
32
21
29
20
M
au
rit
iu
So
s
ut
h
A
fr
ic
a
Le
so
th
M
o
ad
ag
as
ca
r
Sw
az
ila
M
nd
oz
am
bi
qu
e
N
am
ib
ia
A
ng
ol
a
M
al
aw
i
Zi
m
ba
bw
e
Za
m
bi
a
0
Overall
Trade
Total Import Time Break Down
90
80
70
60
50
40
30
20
10
0
Mauritius
Namibia
South Africa
Swaziland
Mozambique
Botswana
Documents
Madagascar
Customs
Ports
Lesotho
Transport
Malawi
Zambia
Zimbabwe
Angola
Total Export Costs Break Down
3500
3000
2500
2000
1500
1000
500
0
Mauritius
South Africa Madagascar Mozambique
Lesotho
Documents
Malawi
Customs
Botswana
Ports
Namibia
Transport
Angola
Swaziland
Zambia
Zimbabwe
Import Time – Mozambique
Pre-shipment Inspections
Bank L/C
Time
•15days
•2 weeks
Costs
free
•Min $350
Documents
Institution
Comments
•L/C
•Clean report findings
•Intertek
•Bank
•High Risk environment
•Burdensome
Import Time – Mozambique
Other
documents
Time
•3 days
•$55 for courier
Costs
Documents
Institution
Comments
•Original B/L, COO, Com.
Invoice, Packing list
Customs
2-3 days
$160
DU, manifest, cargo release,
Packing list
•Exporter, MCC
•Too much paper work
Bureaucratic and manual
processes
Import Time - Mozambique
Ports
Scanner
Time
few hours
Costs
$120
Documents
Inspection
report
Institution
KUDUMBA
Comments
80% scanning
5-7 days
$260
Stowage plan, THC,
Cargo manifest
MIPS, container
terminal
Low port
productivity
Transportation
•2 days.
•$240
•Delivery order
Shipping line,
Freight forwarder
Poor roads going
north or west
hampers transit trade
Export Time - Mozambique
Securing
bank L/C
Other
documents
Time
•2 weeks
Costs
•Min. $350
•$55 for courier
•L/C
•B/L, Com. Invoice,
•DU
packing list, CoO($20)
Institution
•Banks
•Importer, firm
Comments
High risk
environment
•Too much paper
work
Documents
•3 days
Customs
•2-3 days
•$160
•Customs
•Bureaucratic and
manual processes
Export Time - Mozambique
Scanner
Time
Costs
Documents
Institution
Comments
Few hours
Ports
•2 days.
4-5 days
$90
$260
Inspection
report
Release order
KUDUMB
A
Costly
Transportation
MIPS, Terminal,
Shipping line
Low port
productivity
•$240
• Freight forwarder
•Includes, arranging, loading
and unloading
Trading Across Borders - Mozambique
Core Issues
Analysis
•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%)
Banks
•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.
Trading Across Borders - Mozambique
Core Issues
Analysis
•Duplicatory/repetitive procedures
•Manual (face-to-face paper pushing)
•No risk management system in place
• Corruption
Customs
•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
First screening
at Customs for
Complete DU
(Aceitação)
Separator gives
You Copy of
approved
Document
(Separação)
•Data registered
In computer and (Entrada)
•Notice for payment
Provided (Aviso de pagamento)
•Pay duties
•Verification of DU
at Treasury.
(prices, tariffs,
quantities etc). (Verificação) (Tesouraria)
•Revenue Dept
•Signed-off by
Also verifies.
Management (Gestão)
(Receita)
Trading Across Borders - Mozambique
Core Issues
Analysis
•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.
PSI
•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.
Trading Across Borders - Mozambique
Core Issues
Analysis
•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.
Cross-border
trade
• 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