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Trading Across Borders In Mozambique

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. Total Import Time Break Down. Total Export Costs Break Down. Import Time – Mozambique. Pre-shipment Inspections.

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Trading Across Borders In Mozambique

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  1. Trading Across BordersIn Mozambique

  2. Introduction • What were the results ? • Why these results ? • How to improve results ?

  3. Ranking: Overall Ease of DB vs Ease of Trading

  4. Total Import Time Break Down

  5. Total Export Costs Break Down

  6. Import Time – Mozambique Pre-shipment Inspections Bank L/C Time • 15days • free • Clean report findings • Intertek • Burdensome • 2 weeks Costs • Min $350 Documents • L/C Institution • Bank Comments • High Risk environment

  7. Import Time – Mozambique Other documents Customs Time 2-3 days • 3 days • $55 for courier Costs $160 DU, manifest, cargo release, Packing list • Original B/L, COO, Com. Invoice, Packing list Documents Institution • Exporter, MCC Bureaucratic and manual processes Comments • Too much paper work

  8. Import Time - Mozambique Ports Transportation Scanner Time • 2 days. few hours 5-7 days $260 • $240 Costs $120 Stowage plan, THC, Cargo manifest • Delivery order Inspection report Documents Institution Shipping line, Freight forwarder MIPS, container terminal KUDUMBA Comments Poor roads going north or west hampers transit trade 80% scanning Low port productivity

  9. Export Time - Mozambique Customs Securing bank L/C Other documents Time • 2 weeks • Min. $350 • L/C • Banks • High risk environment • 3 days • 2-3 days Costs • $160 • $55 for courier Documents • B/L, Com. Invoice, packing list, CoO($20) • DU Institution • Importer, firm • Customs Comments • Too much paper work • Bureaucratic and manual processes

  10. Export Time - Mozambique Scanner Ports Transportation • 2 days. Time Few hours 4-5 days Costs $90 $260 • $240 Documents Inspection report Release order MIPS, Terminal, Shipping line Institution • Freight forwarder KUDUMBA • Includes, arranging, loading and unloading Comments Costly Low port productivity

  11. Core Issues Analysis Trading Across Borders - Mozambique Banks • 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%) • 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.

  12. Core Issues Analysis Trading Across Borders - Mozambique Customs • Duplicatory/repetitive procedures • Manual (face-to-face paper pushing) • No risk management system in place • Corruption • Unprofessionalism among customs services • Use reference prices, even when evidence for transactions value exists. • VAT re-imbursements are slow

  13. Clearance Process at Customs Customs broker fills the DU First screening at Customs for Complete DU (Aceitação) • Data registered • In computer and (Entrada) • Notice for payment • Provided (Aviso de pagamento) • Verification of DU • (prices, tariffs, • quantities etc). (Verificação) • Signed-off by • Management (Gestão) Separator gives You Copy of approved Document (Separação) • Pay duties • at Treasury. • (Tesouraria) • Revenue Dept • Also verifies. • (Receita)

  14. Core Issues Analysis Trading Across Borders - Mozambique PSI • 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. • 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.

  15. Core Issues Analysis Trading Across Borders - Mozambique Cross-border trade • 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. • Hours of customs operation at the border • Weak road/rail network to land-locked countries is a hindrance to the development of transit trade.

  16. 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”

  17. 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

  18. 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

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