Trade Hub Reduces Trade Costs

High transport costs limit export growth, restrict product diversification and reduce welfare through increasing the price to consumers. This is a serious problem in Southern Africa where transport-related costs are double the global average of 6-8%. The landlocked countries in Southern Africa experience some of the highest transport costs in the world. Indeed, one major distributor in Southern Africa reports prices up to 80% higher in non-SACU SADC countries relative to the same products in SACU, to account for transport charges and the higher cost of doing business.

Since its inception in 2002, the USAID Southern Africa Trade Hub has worked extensively to reduce these costs, partnering with customs agencies in SADC member states and a broad range of other stakeholders and regional associations, such as the Federation of East and Southern African Road Transport associations (FESARTA).

One of SATH's most significant contributions have been the introduction of a single customs declaration form – the SAD 500, which replaced up to 15 different forms previously used – along the Trans-Kalahari Corridor (TKC), and its eventual adoption across SADC.

SATH's efforts to reduce trade costs have been premised on public-private partnership aimed at building consensus for modernization and reform. For example, SATH supported the establishment and institutional strengthening of Transport Corridor Management Institutions. These institutions bring together public and private stakeholders along the corridors in regular dialogue, monitor corridor performance and provide consistency. SATH supported the development of institutional frameworks, capacity building of personnel, and measures to ensure the sustainability of these institutions, such as public-private financing mechanisms.

A recent World Bank study showed that only 25% of transportation delays are due to infrastructure, while 75% are due to lack of facilitation, such as the streamlining of border post procedures. SATH partnered with the World Customs Organization (WCO) to carry out Time Release Studies with regional customs authorities to measure the average time taken between the arrival of goods in a country and their release by customs. These studies identified constraints to trade, identifying areas of intervention to simplify procedures and shorten clearance times. SATH continues to work with SADC member states to ensure those studies' recommendations are implemented and addressed.

SATH successfully piloted an electronic data interchange system called the Revenue Authority Digital Data Exchange System (RADDEx) between the customs authorities of Malawi and Tanzania. This modern system enables, for the first time, the electronic transmission of customs documentation from one border to another, significantly reducing delays and improving the accuracy of goods verification and delivery.

Following on the success of the electronic customs interchange SATH is now working with customs administrations and other stakeholders to implement effective risk management programs. This will allow certain businesses to be classified as 'authorized economic operators' and be fast-tracked through customs and border posts, enabling faster trade.

Efforts to support competitive trade have been multifaceted, multi-pronged, demand-driven and complementary. SATH facilitated World Trade Organization (WTO) Trade Facilitation Needs Assessments for eight SADC Member States, which identified and prioritized technical assistance and actions necessary to facilitate trade.

All these initiatives on trade and customs reform will have limited impact in the long term to reduce border delays unless other agencies involved in cross-border formalities are integrated, such as immigration, agriculture, security and road agencies. A One-Stop Border Post (OSBP) brings together different agencies from two countries into a single operational space, where people, vehicles and goods are cleared to exit one country and enter another through a single point. On the basis of a feasibility study carried out by SATH on the establishment of an OSBP at the Botswana/Namibia border, the two governments have agreed to establish a OSBP at the Mamuno/Trans-Kalahari border posts in 2011. SATH is in the process of conducting a similar feasibility study at a border post between Botswana/South Africa.

SATH remains committed to efforts to reduce trade costs in Southern Africa through reform and modernization.