Informal Trade: Swazi Cross Border Traders Call For One Stop Border Point For Easy Trade

PHATHIZWE-CHIEF ZULU

 

In February last year, the Swaziland Revenue Authority received funding and technical assistance from Common Market for Eastern and Southern Africa to facilitate fast and easy trade at the borders.

The country was expected to be a fully fledged Automated System of Customs Declaration Administration (ASYCUDA) entity by the end of last year.

Swaziland was amongst the five Common Market for Eastern and Southern Africa (Comesa) member states which received about 1.7 million Euros to improve the country’s systems of customs clearance.

This modern web based system will benefit even informal traders like Lucia Shungube who travels once a week to Mozambique to buy stock and sell second hand clothes in urban places in Swaziland.

Since the scrapping of the visa requirement in October 2005 travelling to Mozambique is a lot easier for the informal traders.

The neighbouring country has become favourite destination for informal traders who have earned positive and sustainable livelihoods for their households.

However, Mozambique’s none membership status of Southern Africa Custom Union (Sacu) pose virtual challenges for cross border traders of the two countries.

 

                Lucia Shungube a Swazi cross-border trader

 

The informal traders are frustrated by the double taxation in Mozambique. They pay the customs duty and Value Added Tax (VAT) at the same time.

The bale of second hand clothes costs about E800 and pay about E450 as tax per bale. Or alternatively pay about E5.00 per second hand item. If the item is brand new a trader pays E50 for each. This is one of the dozens of challenges that make profit elusive for the cross border traders.

Principal Secretary in the Ministry of Commerce Industry and Trade, Jinnoh Nkambule, said negotiations are ongoing with Mozambique on the issue of double taxation.

“But since the start of the talks the situation has improved. They are not charging the way they used to. Certainly, it had inconsistencies,” said Nkambule.

Informal trade is thriving in the face of sluggish economic growth and scarce employment opportunities as formal job market is shrinking and the sector is bulging rapidly as it absorbs many people laid-off by the formal private sector.

Through the informal trade, the traders have hugely contributed to the economy by providing education for their children both in school and tertiary levels. And, the informal sector has contributed significantly to the tax base of the countries.

Southern Africa Cross Border Traders, coordinator, Francis Ngambi said informal trade contributes about 43 percent of overall Africa’s gross domestic product. And in SADC intra-regional trade, informal cross border trade contributes 30 to 40 percent.     

However, he stated that informal trade still chocks because there is still lack of information on the existing legal documents that apply in the SADC Free Trade Area (FTA).

The limited implementation of trade facilitation measures under the SADC Protocol on Trade by member states is cited as one of the dozens of challenges hampering intra-regional trade progress.        

He blamed governments for the lack political will to implement some important policies like Simplified Trade Regimes (STR) which would require informal traders to use less paper work at the border posts and increase the threshold to $500 to $1000, specifically, for goods that originate from SADC.

“But countries like Swaziland are struggling to implement the increased threshold. They are reluctant because they are concerned about protecting their markets, it’s only Zambia, Zimbabwe and Malawi that have increased the threshold.” he said.

Ngambi said despite the contribution, informal trade is making to the national development, but SADC governments still have a negative attitude towards this sector because it is still associated with tax evasion, drug smuggling and corruption.

The cross border traders also are subjected to long queues and delays at the Lomahasha border because of the tedious paper work and inspection by custom officers.

“The long delays we endure at the border can be ridiculous at times taking about three hours because of the strenuous exercise to unpack the bale and repack it under the watchful eye of the customs officers,” said Shungube

                                            

                                               Welcome to Lomahasha: a sign tells it all  

                                        

The torrid exercise does not only end with the Swaziland Revenue Authority (SRA), but they also have to put up with the tirade of the soldiers manning the Maphiveni security check point where they have to start all over again the process of unpacking and repacking. Should there be any inaccuracies in the papers the trader is referred back to the custom officers at the border.

Swaziland Cross Border Traders Association (Swacbta) president, Malta Vilakati, said the conduct by military at Maphiveni and at Mhlumeni is a thorn in the flesh for the traders.

“We are not against security. But we think it’s proper that soldiers should use their machines to see if our products comply with safety regulations but not to unpack our items and check our papers when the custom officers have already done so,” said Vilakati.

                                                                             

                                                                          Malta Vilakati: Swacbta president listening attentively 

 

She said SADC countries should invest in road and trade infrastructures to make regional integration a reality.

“Some roads are good and some countries don’t have good enough roads. We need safe roads,” said Vilakati. “It would be nice too to have trading houses and good, affordable accommodation within SADC to help travelling small traders.”

Nkambule acknowledged the challenges facing cross border traders.

He said the traders face issues of finances, accommodation, and health, especially, malaria in Mozambique and government is working on their challenges but solutions cannot be achieved overnight.

He said there is still advocacy by cross border associations to have the them involved in medical aid schemes and the banks urged to provide a credit facility which can make the traders - who are mainly women not to carry cash, which make them easy target for criminals.

“The traders have also raised the issue of security, and Trade and Promotion Unit is negotiating with Mozambique and South Africa through the embassies, to try and address the problems to facilitate smooth cross border trade,” said Nkambule.

He said the future is bright for the traders with new programme which might be introduced by the SADC, Common Market for Eastern and Southern Africa (Comesa) and East and African Community (EAC) tripartite cooperation.

The tripartite free trade area will encourage free movement of goods and people to shall eliminate all existing non-tariff barriers to trade with one another.

However, consultative meetings in the tripartite are ongoing to agree on a method of cooperation.

He noted the already close cooperation amongst Swaziland, Mozambique and South Africa on the 24 hour operations of the Oshoek and Lomahasha borders.

Infrastructure development is another issue that is important to deepen regional integration.

SADC regional integration philosophy is premised on the implementation of the Regional Infrastructure Development Master Plan (RIDMP) adopted in 2012. However, Ngambi is critical about the RIDMP because the cross border traders were not consulted when it was incepted.

“It is good that we have the master plan, but infrastructure is too expensive to access in SADC, particularly the transport sector,” adding: “The railway can be cheaper to use but the different track gauges (the spacing of the rails on a railway track) make it expensive and tedious because the region doesn’t have a standard cross country railway line.”

He said the different track gauges is an inconvenience because trains are limited to operate within country of origin, then the freight has to be reloaded to reach the next destiny in the other country.   

Nkambule said it is accurate that infrastructure enhances both formal and informal sectors. For example, reliable telecommunications infrastructure makes business easy and efficient even for small traders if fully utilised.

He cited the mobile phone roaming facility, mobile money and internet banking for the small traders.

Vilakati said the Women Cross Border Trade Forum, last July, in Johannesburg called for SADC governments to establish One Stop Border Post (OSBP).

The SADC cross-border associations alluded to the critical role the OSBP infrastructure facility plays in promoting intra-trade in the region.

The World Bank estimates that 25 percent of border delays are caused by infrastructure and 75 percent are caused by poor trade facilitation. It further estimated that a one-day reduction in inland travel time in sub-Saharan Africa could result in a 7 percent increase in exports and reducing export costs by 10 percent through greater efficiency could increase exports by 4.7 percent.

A good example is the Chirundu OSBP between Zambia and Zimbabwe.

    Chirundu between Zambia and Zimbabwe, a good example of OSBP

 

Zambia’s High Commissioner to the Republic of Malawi, Charles Banda, speaking exclusively to The Nation, said the project is a big success story because it has helped to reduce the cost of doing business by decreasing the time that people and vehicles spend at the border.

Banda said the achievement came through joint introduction of gate passes for commercial cargo and increased use of pre-clearance trade facilitation initiative and establishment of fast lanes for heavy duty vehicles.

He said there are joint inspections and harmonized procedures to facilitate quick movement of goods in the border.

“This project (OSBP) received a lot of support from Comesa and SADC and it would be good if it is replicated in several other border posts in the region because it has helped to reduce the transit times at the border for the people,” said Banda.

It has also improved the competitiveness of goods and people have confidence in the system because of the efficient harmonized border procedures.

Banda said the OSBP also reduced the prevalence of fraudulent activities as cargo is cleared within a short period if proper documentation is in place and all the taxes are paid.

“It has also enhanced the exchange of information among the border agencies between the two countries, thus helping to achieve the goal of greater integration,” he said.

In the Heads of States Summit in Zimbabwe last year, SACBTA demanded that they want simplified trade regime, Fair Value Added Tax procedures and free movement of people in the SADC region.