Enhancing trade facilitation: Transforming border posts into one stop solutions
1.0 Introduction
The Ministry of Commerce, Trade, and Industry plays a critical role in developing and implementing trade policies, promoting trade facilitation, managing border infrastructure, coordinating border management efforts, and supporting businesses in accessing international markets. Its activities contribute to enhancing trade competitiveness, facilitating economic growth, and ensuring smooth cross-border trade operations as espoused in the 8NDP and vision 2030 thereby contributing to wealth and job creation.
2.0 Trade Facilitation
Trade facilitation plays a crucial role in promoting international trade and economic growth by reducing transaction costs, improving efficiency, and enhancing transparency in the movement of goods and services across borders. Here are some key reasons why trade facilitation is important:
Cost reduction: Trade facilitation measures aim to streamline and simplify customs procedures, documentation requirements, and border controls. By reducing unnecessary delays, bureaucracy, and red tape, trade facilitation helps lower transaction costs for businesses engaged in international trade. This, in turn, makes products more competitive and affordable for consumers, leading to increased trade volumes and economic growth.
Enhancing Efficiency: Trade facilitation measures focus on enhancing the efficiency and speed of cross-border trade processes. This includes automating customs procedures, implementing risk management systems, and promoting the use of electronic documentation and data exchange. By improving efficiency, trade facilitation enables faster clearance of goods at borders, reduces transit times, and facilitates just-in-time production and delivery, benefiting both exporters and importers.
Enhanced competitiveness: Trade facilitation measures contribute to improving the overall business environment and competitiveness of a country. By simplifying trade procedures, reducing trade barriers, and enhancing transparency, trade facilitation helps attract foreign investment, encourages domestic entrepreneurship, and promotes job creation. It also facilitates the integration of small and medium-sized enterprises (SMEs) into global value chains, enabling them to access new markets and expand their operations.
Trade diversification: Trade facilitation measures can promote trade diversification by making it easier for businesses to access new markets and expand their export opportunities. By reducing trade barriers, facilitating customs procedures, and providing transparent trade rules, trade facilitation encourages businesses to explore new trading partners and export markets beyond traditional ones. This diversification helps countries reduce their dependence on a few markets or commodities, mitigating risks and fostering economic resilience.
Development impact: Trade facilitation plays a crucial role in supporting economic development, poverty reduction, and sustainable growth. By enabling greater trade flows, trade facilitation creates employment opportunities, increases tax revenues for governments, and generates economic benefits that can be reinvested in critical sectors such as education, healthcare, and infrastructure development. It also promotes regional integration and cooperation, contributing to political stability and peacebuilding efforts.
Overall, trade facilitation is essential for promoting inclusive and sustainable economic growth, reducing poverty, and fostering global trade integration. By improving efficiency, reducing costs, and enhancing transparency, trade facilitation benefits businesses, consumers, and economies at large.
3.0 Cross Border Trading
Cross-border trading is indeed a crucial tool in facilitating international trade. It refers to the exchange of goods and services between countries, involving the import and export of products across national borders. Here are some key aspects and benefits of cross-border trading:
Market access: Cross-border trading allows businesses to access new markets and reach customers beyond their domestic boundaries. It provides opportunities for businesses to expand their customer base and tap into the demand in foreign markets. By exporting products, businesses can diversify their revenue streams and reduce dependence on a single market.
Increased competitiveness: Engaging in cross-border trading can enhance a company's competitiveness. It exposes businesses to global competition, driving them to improve the quality of their products, innovate, and optimize their operations to meet international standards. This pursuit of competitiveness ultimately benefits consumers by providing them with a wider range of choices and better products at competitive prices.
Economies of scale: Cross-border trading enables businesses to benefit from economies of scale by reaching larger markets. With increased production and sales volume, businesses can optimize their production processes, achieve cost efficiencies, and reduce per-unit production costs. This can lead to improved profitability and competitiveness in the global marketplace.
Access to resources and inputs: Cross-border trading allows businesses to access resources, raw materials, and inputs from foreign markets. This is particularly relevant for industries that rely on specific resources that may not be available or cost-effective domestically. By sourcing inputs internationally, businesses can secure reliable and cost-effective supplies, enabling them to maintain competitiveness and product quality.
Knowledge and technology transfer: Engaging in cross-border trading exposes businesses to new markets, cultures, and business practices. This facilitates the transfer of knowledge, best practices, and technological advancements across borders. Companies can learn from foreign markets, adapt successful strategies, and leverage new technologies to enhance their competitiveness and improve their products and services.
Foreign direct investment (FDI): Cross-border trading can attract foreign direct investment by creating a favorable business environment and demonstrating market potential. When companies engage in cross-border trading, they often establish relationships with foreign partners, suppliers, or customers. These connections can lead to foreign direct investment, as businesses may decide to set up production facilities, distribution networks, or subsidiary operations in foreign markets to strengthen their presence and gain a competitive edge.
Overall, cross-border trading is a vital tool for businesses to expand their reach, increase competitiveness, access resources, and benefit from economies of scale. It promotes economic growth, fosters global trade integration, and facilitates the exchange of goods and services between countries.
4.0 Coordinated Border Management (CBM)
Coordinated Border Management (CBM) is an approach that promotes cooperation and coordination among various government agencies and stakeholders involved in managing and facilitating cross-border trade and movement of goods. It aims to enhance efficiency, effectiveness, and security at international borders while facilitating legitimate trade. Here are some key aspects and benefits of Coordinated Border Management:
Multi-agency collaboration: CBM involves the collaboration of multiple government agencies responsible for border control, customs, immigration, transport, trade, and other relevant areas. By working together, these agencies can streamline processes, share information, and harmonize procedures, reducing duplication of efforts and enhancing efficiency. CBM promotes a "one-stop shop" approach where traders can complete necessary border requirements with various agencies at a single location or through coordinated procedures.
Harmonization and standardization: CBM emphasizes the harmonization and standardization of procedures and documentation across different government agencies. This simplifies and aligns processes for traders, reducing administrative burdens and transaction costs. Harmonization may include the adoption of common data requirements, standardized forms, risk assessment methodologies, and information-sharing mechanisms. Such standardization contributes to greater predictability, transparency, and consistency in cross-border transactions.
Information exchange and risk management: CBM relies on enhanced information exchange among government agencies to enable effective risk management and control at the border. Sharing relevant data, such as cargo information, manifests, and customs declarations, allows for better risk assessment and targeting of high-risk shipments or travelers. Timely and accurate information exchange supports faster clearance of low-risk consignments, reducing delays and facilitating trade flows.
Infrastructure and technology integration: CBM encourages the integration of border infrastructure and technology systems to enable seamless and efficient cross-border operations. This may involve the implementation of electronic data interchange (EDI) systems, automated cargo clearance systems, risk management systems, and biometric identification tools. Integration of infrastructure and technology promotes interoperability and data sharing among government agencies, leading to faster and more secure border processes.
Trade facilitation and competitiveness: CBM is closely linked to trade facilitation efforts, aiming to reduce barriers and enhance the ease of doing business across borders. By streamlining procedures, reducing delays, and increasing transparency, CBM supports the competitiveness of traders and promotes economic growth. Efficient border management attracts investment, encourages cross-border trade, and enhances the integration of businesses into global value chains.
Enhanced security and compliance: CBM allows for a balanced approach to border security by focusing on risk management while facilitating legitimate trade. By strengthening cooperation among relevant agencies, CBM improves the ability to detect and prevent illicit activities, including smuggling, fraud, and terrorism. Effective border management enhances the security of the supply chain, protects consumers, and contributes to national and international security efforts.
Overall, Coordinated Border Management promotes collaboration, harmonization, and integration among government agencies involved in cross-border trade processes. By fostering efficiency, transparency, and security, CBM facilitates legitimate trade, reduces costs, and contributes to economic development while ensuring effective border control.
5.0 Borders Earmarked for One Stop Border Post
5.0 Border Earmarked to Become a One Stop Border Post
The concept of a One Stop Border Post aims to streamline border procedures and facilitate efficient trade and movement of people between neighboring countries. By implementing an OSBP, the border post operates as a single coordinated checkpoint where officials from both countries work together, sharing facilities, procedures, and information. This approach helps reduce duplication, eliminates unnecessary delays, and enhances trade facilitation.
Zambia has approximately forty-six (46) borders with our eight (8) neighboring countries namely Angola, Malawi, Botswana, Tanzania, Mozambique, Namibia and Democratic Republic of Congo (DRC). With majority of the borders being shared with DRC. Below are a list borders that have been earmarked to develop as a One Stop Border Post (OSBP):
i. Kasumbalesa Border between the DRC and Zambia;
ii. Sakania Border between the DRC and Zambia;
iii. Kipushi Border between the DRC and Zambia
iv. Mokambo Border between the DRC and Zambia;
v. Kambimba Border between the DRC and Zambia;
vi. Jimbe Border between Angola and Zambia;
vii. Nakonde Border between the Republic of Tanzania and Zambia; and
viii. Chanida Border between the Republic of Mozambique and Zambia.
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These border crossings are strategic points for Zambia to enhance trade and the logistics value chain. Establishing OSBPs in these locations is hoped to contribute towards the improvement in trade efficiency, reduce delays in crossing formalities, and enhance cross-border cooperation.
It is important to note that the status and progress of OSBPs can evolve over time, and it is advisable to consult official sources or relevant authorities for the most up-to-date information on the development of One Stop Border Posts in Zambia.
5.0 Milestones
Sakania and Mokambo Border
The Government of the Republic of Zambia, through the Ministry of Commerce, Trade and Industry (MCTI), is in the process of developing infrastructure relating to the design, finance, build, operate, maintain and transfer of Sakania border post infrastructure, Ndola to Mufulira road and the access road to Sakania border in Copperbelt province of Zambia through a Public-Private Partnership arrangement.
Following a directive by the Public-Private Partnership (PPP) Council of Ministers to start negotiations with the preferred bidder, the Ministry of Commerce, Trade and Industry (MCTI), in conjunction with other key Ministries and Institutions, immediately commenced negotiations on 26th of May, 2023 and subsequently Messrs. JiaYou Consortium was awarded the as the most preferred bidder to undertake the project.
The Project is proposed to be financed through the Project Finance model. Under this model the selected Private Party, Messrs JiaYou Consortium, has incorporated a Special Purpose Vehicle (SPV) Jaswin Ports Limited for the sole purpose of executing the requirements of the Project. It is anticipated that substantial funding for the Project will be provided by limited recourse debt made available by lenders who will look primarily to the cash flows generated from the Project to service the debt and equity. The debt shall be provided through shareholder loans.
The specific objective is to construct hard infrastructure at the Sakania Border, reconstruction of the Ndola to Mufulira Road by rehabilitating approximately 59Km of the existing road and constructing approximately 1.5 Km of the access road to Sakania Border. Construction of the Sakania Border and the reconstruction of the Ndola to Mufulira Road will enhance trade facilitation between Zambia and the Democratic Republic of Congo.
The Concession Agreement has been signed for a USD76,129,229.48 for the development of Sakania Border infrastructure and construction of the 61 kilometers Ndola-Mufulira road with concession period is 22 years inclusive of three (3) years construction period. The same concessionaire has also been tasked to develop Mokambo Border as well.
The Concessionaire is required to now reach financial close in order to start constructions planned for April, 2024. Further request has been made by the consortium to be given interim site possession to allow for early works which includes testing and creating of alternative roads for use when construction of the Ndola to Sakania road commences. This work will start this year 2023 while waiting to reach financial close.