Month: July 2021

We are often preoccupied with what we lack and what we’re doing wrong when the topic of socioeconomic development comes up. With everything that we have collectively experienced in the past 15 months, who can blame people for getting stuck in a negative thought pattern? But, once in a while it is worth reflecting not on where we are but where we’d like to be. After all every good and every service traded is a solution to a problem. If not for hunger, we wouldn’t buy food. And if not for illness and disease health services would be redundant. So what are the opportunities that may arise from the recession and the pandemic? If we had to imagine our country as everything that she could be, what would Namibia look like?

In the years since globalisation took root in public policy, millions around the world have been lifted out of extreme poverty. Where extreme poverty prevailed and development dawdled, it has been observed that cross-border trade was minimal. To consider this from another angle; a strong positive correlation can be observed between the degree of trade by a country and its development. This phenomenon has been further entrenched as trade evolved bringing services to the foreground. High-value-services tend to be exported by advanced nations while underdeveloped countries remain dependent on commodity trade. The main pillar of globalization responsible for poverty reduction, peace & stability and economic development has been trade.

From trade comes competition which sparks productivity which spawns entrepreneurship, industrialisation and innovation. This in turn creates job, business and investment opportunities. Consumer welfare improves as product variety and affordability rise. Developing countries are able to leapfrog because of the access to new technology that they gained through trade. And because competitiveness requires it, infrastructural and human capital development is incentivised. Trade has direct and multiplier effects that ripple throughout the economy which is why a trade-centric development agenda can be considered as the stone that can kill multiple birds.

Both the recession and pandemic have disrupted supply chains the world over. On our continent, various supply chains are yet to be established. This raises a lot of questions. What will we need to overcome the health and economic crises? What is the world going to need coming out of the pandemic? What can we offer and where? Who are our potential domestic and external investors? How do we make use of our existing resources? How can we improve the quality of our trade negotiations e.g. our missions abroad? What resources e.g. skills do we need to import in the short-run? How do we align the skills that are being produced with our development agenda? Aside from mainstream industries, how can the SMEs in Namibia be mobilised and prepared to participate in the emerging value-chains? What are the potential obstacles e.g. unfavourable policies? Questions present problems and problems present opportunities – to improve and to trade.

So what does the Namibia that we hope for look like?

It looks like an environment that is conducive for investment and innovation.

It looks like business opportunities and youth employment.

It looks like a better standard of living for all.

While it is by no means a cure-all for everything that ails our economy and society, trade can bring us pretty close to the Namibia we imagine.

Why the implementation of a Single Window system should be a priority for Namibia

The Single Window (“SW”) system is described as “a facility that allows parties involved in trade and transport to lodge standardized information and documents with a single-entry point to fulfill all import, export, and transit-related regulatory requirements.”  This is the globally accepted definition of the SW system. Article 10.4 of the the World Trade Organization (“WTO”) Trade Facilitation Agreement (“TFA”) has encouraged its member states to establish a SW system.  This is because the main purpose of a SW system is to provide a platform that allows for the exchange of information between traders (national, regional and or global) and government agencies to streamline relevant information on trade procedures. This platform allows for traders to submit and obtain trade documents such as (but not limited to) import and export permits; licenses; commercial invoices; and custom clearance documents. The biggest advantage it provides is for a more efficient and faster processing of trade related documents through the usage of a single-entry point submission point.

According to United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) Recommendation and Guidelines on establishing a Single Window if effectively implemented a SW system can provide the following benefits:

1. “For Governments it can bring better risk management, improved levels of security and increased revenue yields with enhanced trader compliance.” 
2. “Trading communities’ benefit from transparent and predictable interpretation and application of rules, and better deployment of human and financial resources, resulting in appreciable gains in productivity and competitiveness.”

National and international trading stakeholders have long since supported the establishment of a SW system as it offers a simplified solution, whereby government agencies that deal with the movement of cross-border goods provide a streamlined and more efficient system that meet the needs of business (i.e. ease of doing business), while still maintaining the appropriate regulatory controls.  Due to the cost and complex software requirements to develop a SW system, developing countries such as Namibia do not necessarily have to develop high-tech information and communication technology system because at the most basic level, with the cooperation of all national agencies and authorities, it can be implemented in a manual environment.  The concept of a SW system has been promoted by several international organisations such as the United Nations Economic Commission for Europe (“UNECE”) that are concerned with trade facilitation. 

In Namibia, there is a lack of sufficient communication between the private and public sector. The private sector has for long felt as though policy drafters and regulators do not implement efficient mechanisms to create a more simplified and efficient business environment. By establishing a SW system, Namibia has an opportunity to gain huge financial benefits and increased financial revenue.  This is possible because by establishing trade facilitation tools such as a SW system, government authorities and agencies can collaboratively by data and analyse industry value chains thus positioning themselves in being able to identify hidden revenue opportunities. By creating a SW system, it also reduces the costs of maintaining a paper-based system that due to its complexities creates delays in trade procedures that increase costs where otherwise it can be reduced.

To conclude, the TFA further establishes the requirement that “Each Member of the WTO shall ensure that its authorities and agencies responsible for border controls and procedures dealing with the importation, exportation, and transit of goods co-operate with one another and co-ordinate their activities to facilitate trade.”.  Furthermore, the SW thus places greater responsibility on national authorities to manage the SW system and to ensure that the participating agencies provided with access to the information or are actually given the information by the managing authority. Such co-operation is cooperation is crucial for implementing a SW system.

The SW would eliminate the need for the traders to submit similar information to several different border authorities or agencies. As mentioned above, this inter-alia provides transparency of the complex regulatory processes in Namibia that govern the movement of goods and transport and greatly reduces the risk of corruption.

By

Petrus Shoopala – Trade Policy Consultant, NTF

Wouldn’t it be unfortunate if Uendji managed to get clients in Senegal for her graphic design services but had to pass up the opportunity in the end because she could not receive a deposit? Imagine if Khoetage & Sons Inc. won a bid to supply dairy products to a major Cameroonian retailer but due to limiting payment policies, they ultimately abandon the business venture. What if Zuri from Kenya, gained admission to UNAM but because her parents foresaw challenges with monthly remittances to their daughter, she had to further her studies elsewhere. These are real challenges that businesses and consumers at home and around the continent are facing. 

We’ve come a long way as a continent and yet still we have farther to go. In essence the continental free trade agreement should not only result in a higher volume but also a higher value of trade within Africa. But liberalising trade is complicated, even if it came down to the elimination of tariffs alone, which it certainly does not, it would be a challenge. There are other potential obstacles, a prime example being our payment systems.

Cash is by far the leading form of payment in our part of the world. But when it comes to cross-border trade, online and mobile money transactions are growing in popularity. Why? Because of an increasing access to technology (i.e. internet & cell phones) and convenience. Furthermore, the emergence of the Covid-19 pandemic has taken digital payments beyond a matter of convenience and into the realm of necessity as many businesses had to work around in-person transactions.

Successful continental economic integration therefore hinges, to a large extent, on payment system integration. In as much as payments pose a challenge to the AfCFTA, the agreement has brought forth its own solution – the Pan-African Payments & Settlements System (PAPSSS). The PAPSS project, spearheaded by the Africa Import & Export (Afrexim) Bank is meant to facilitate the processing, clearing and settlement of commercial transactions on the continent. Aside from reducing costs and time involved in the processing of cross border payments, other benefits of PAPSS include, “decreasing liquidity requirements of commercial banks; decreasing liquidity requirements of central banks for settlement as well as its own payments; and strengthening Central Banks’ oversight of cross border payment systems” (African Union).                           

For a country like Namibia continental integration presents a unique opportunity for the sourcing of investments and also for the growth of SMEs. Sadly, at this point in time financial sector regulations (and in some cases the lack thereof) could delay the benefits of trade negotiations. While safeguarding the value of our currency is important, we have to consider that some of those protection measures could be hampering the inflow of capital and export receipts. In which case we may be successful at maintaining a certain level of foreign reserves while foregoing the opportunity to diversify sources of export revenue and investments, and thereby losing the chance to sustainably increase our reserves.

At the moment PAPSS is being piloted in The Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone and is expected to be rolled out by the end of 2021. In the meantime there are some interventions that can be made to be prepared for the opportunities that lie ahead. Namibia is among ten countries on the continent that achieved internet affordability in the ten years since 2010. Therefore, infrastructure needs to be enhanced to make the internet more accessible as well. Furthermore, there are exiting payment platforms that are recognised internationally and we could benefit from regulatory reform that factors in the advancements made in fin-tech especially where there’s potential for investment and trade.