The role of simplified trade regimes for small scale cross border traders

Small scale cross border traders

Simplified trade regimes (STRs) are designed to respond to some of the key challenges which are faced by small scale cross border traders.

Such challenges include lack of information on the rights and privileges of cross border traders, complex border clearance procedures which often create delays and other problems, complex documents and complicated processes of filing customs declaration forms.

However, there are limitations which constrain small scale cross border traders from benefiting from STRs.

These limitations include the absence of STR in Sadc, low Comesa-STR trade regime threshold, lack of full implementation of the Comesa-STR, limited awareness of STRs amongst small scale cross border traders, limited technical capacity for customs officials to implement STR measures and some of the borders operate for limited time during the day.

These limitations need to be addressed through a combination of capacity building, information sensitisation and advocacy efforts at the Sadc and Comesa regional levels.

What are simplified trade regimes

STRs are special mechanisms targeted at facilitating the movement of goods and services across borders by small to medium enterprises who regularly transact in low value consignments.

 STRs facilitate cross border trade by introducing simplified trade rules and procedures for eligible small scale traders so as to help them overcome the challenges they face at the border.

Some of the measures which make up STRs include a common list of products for preferential treatment.

This is a list of goods negotiated and agreed by member states which enjoy preferential treatment when being moved across borders of member states.

 The goods identified on the common list attract low (discounted) customs duty or can be imported free of any customs duty.

Another measure, which characterise STRs is that a threshold of the value of consignment eligible for importation and customs clearance under the STR regime is agreed upon by member states.

Member states also agree on simplified procedures for the clearance of goods by their respective customs authorities at the border posts.

Trade information desks are established at border posts and their duties include educating small scale cross border traders (including women informal cross border traders) about the STR facility, explaining to them if they are eligible for the facility, the procedures and processes, updating traders on any changes that might come into existence, as well as assisting them with the completion of the applicable forms at the border post.

In 2010 the Common Market for East and Southern Africa (Comesa) introduced STR which is known as Comesa-STR.

In June 2021, Comesa reported that nine of its members states had begun implementing the STR.

For example, Malawi launched Comesa STR with Zambia in May 2010 and with Zimbabwe in August 2012.

Currently, Malawi is implementing STR at the following border posts: Nyamanda-Mwanza (for goods moving between Malawi and Zimbabwe) and Mwami–Mchinji(for goods moving between Malawi and Zambia).

 Malawi has also agreed with Zimbabwe and Zambia on a common list of products to be accorded preferential treatment, including customs duty free imports provided the goods have wholly originated from any of the three Comesa member states.

The list of eligible products includes agricultural products, live animals, food products, furniture, stationery and other assorted items. The goods should be for re-sale or use in the business.

In order to ensure transparency, the common list of qualifying goods must be gazetted by each member state and notified to the general public, as well as be displayed at the relevant border posts.

The value of the consignment must not exceed US$2000 for them to be cleared under the STR regime.

 The trader will only be charged the processing fee for customs declaration, which is currently pegged at US$1 per consignment. 

However, traders may still be required to provide other documentary requirements such as the Sanitary and Phyto-Sanitary (SPS) certificates,  licences and other relevant certificates.

They may also be required to pay other taxes related to the low value consignments such as Value Added Taxi, excise duty and other local taxes.

The benefits of using STRs

When properly implemented, the STR presents a number of economic advantages and trade facilitation-related benefits for small scale cross border traders.

 It can eliminate customs clearance delays. A study conducted by the Vendors Initiative for Social and Economic Transformation (VISET) indicates that informal cross border traders who use the Beitbridge and Plumtree border posts experience delays averaging 24 hours to 48 hours mainly due to complicated customs clearance procedures.

The introduction of simplified customs declaration forms and elimination of customs duty for eligible goods can quicken customs clearance processes.

Quickening the customs and border clearance procedures may also address other challenges which women cross border informal trader’s experiences.

 For example, due to delays at the border some of the traders end up sleeping in trucks or in the open and this exposes them to sexual abuse and other forms of victimisation.

When properly implemented, STRs can reduce the trade costs for cross border traders, through exemptions that are accorded to certain goods (agreed on the common list and meeting the designated threshold value).

 Already, many of the small scale cross border traders, including women informal cross border traders lack capital to finance their businesses.

Customs duty exemptions may also increase the volume of trade, creating more employment and economic empowerment for women and other vulnerable and economically marginalised groups.

STRs can increase transparency and efficiency in the customs clearance process.

For example, one of the requirements under STRs is that the common list of qualifying goods (for discounted customs duty or for duty free imports) must be gazetted by each member state and notified to the general public, as well as be displayed at the relevant border posts.

This may assist to eliminate corruption by customs officials who overcharge customs duty and demand bribes from traders.

Efficiency, which may be achieved by streamlining customs clearance procedures for traders who are eligible for STR may also lead to reduction of congestion at the border posts.

 On most of the border posts, customs clearance is done through physically checking each consignment of merchandise and calculating the value.

This often causes congestion at the border.

Due to congestion, women cross border traders interviewed during a recent study by VISET said travelers are often forced to pay bribes in order for their buses or vehicles to be prioritized for clearance by the customs officials.

Notwithstanding the above mentioned benefits of the STRs, for them to be effective there is a need to provide capacity development training for trade information officers who man the trade information desks established at each border post under the STR.

Such capacity development should include training on STR measures to equip these officers with the relevant knowledge that is needed for them to assist small scale cross border traders who need help to clear their goods using the STR regime.

Capacity building should also include gender sensitisation training, to mitigate against gender based abuse which is experienced by small scale cross border traders when they seek help from these officers and other border authorities.

*Wadzai is the executive director of Vendors Initiative for Social Economic Transformation.

These weekly articles are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Private) Limited, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe . Email- [email protected] and Mobile No. +263 772 382 852

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