African free trade pact kicks off despite legal hurdles, rigid systems

January 1 has come and gone and the continent is waiting with bated breath to see how the Africa Continental Free Trade Area (AfCFTA) pans out.

But according to the World Customs Organisation (WCO), contradictory and outdated laws and regulations, resistance to change and lack of transparency in Customs administration operations in most African countries have been identified as major challenges to ensuring free trade takes off and continues uninterrupted in the operational phase starting this month.

Some countries, unable to establish clearly the regulatory basis for their modernisation efforts and amending their existing laws or adopting new legal frameworks, may derail efficiency of goods and services in the continent.

In its strategic document entitled ‘‘Customs in the 21st Century’’, WCO says that Customs modernisation programmes must be part and parcel of all countries to ensure AfCFTA succeeds.

“Resistance to change can be a major stumbling block and new practices can expose corrupt activities. Consequently, change can be seen as an attack on officials and some countries have laws and regulations which are out-of-date, confusing, and sometimes contradictory,” reads part of the document.

Lack of co-operation and connectedness among government agencies has also been cited as a hindrance to intra-Africa trade thus WCO recommends agencies involved in border management to step in and play their part to boost inter-agency co-operation.

The CEO of Shippers Council for Eastern Africa and chair of Mombasa Port Charter Gilbert Lagat, says businesses suffer both direct border-related costs, such as expenses related to supplying information and documents to relevant authorities, and indirect costs, such as those arising from procedural delays, lost business opportunities and lack of predictability in regulations.

“Inefficient border procedures cost governments in terms of lost revenue, smuggling and difficulties implementing trade policy, due to failure in determining the origin of products or in collecting accurate statistics. In Kenya, 25 percent revenue is “lost” due to delays in collecting it on time,” said Mr Lagat.

Global best practices

Recent surveys to calculate these costs show they range between two and 15 percent of the value of traded goods in developed countries and up to 30 to 42 per cent in production costs in developing countries such as Kenya.

Despite recent reforms, trade-related procedures still remain lengthy, cumbersome and costly an aspect which has negatively impacted intra-region trade.

Implementation of policies and laws by countries within EAC has failed to unlock borders causing delays such as during the Covid-19 pandemic where trucks carrying essential goods queued for days awaiting clearance.

In Kenya, the rationale for implementing the Single Window System was a result of such weaknesses and seeks to reduce number of players handling goods before clearance from 27 days to at five to eradicate duty duplication.

Success of the system will also come as a result of government strict enforcement of the 24-hour economy in port operations, shippers paying duties, and employing global best practices.