Making cross-border trade easier

MASERU – FOR years Lesotho’s businesses have complained about the delays at the country’s commercial borders. Either they are grappling with border clearing systems that are constantly down or they are mired in tedious red tape that delays their exports and imports.

The result is that some trucks spend hours or even days stuck at the borders, waiting for customs clearance.
The huge cost of such delays have hit businesses, most of which are already struggling to survive. Others say they routinely miss delivery deadlines as they wait at the border.
Some have given up altogether after hitting a brick-wall at the border.

With borders slow, trade between Lesotho and its biggest trading partner, South Africa, has suffered severely. The knock-on effects of such delays on Lesotho’s economy have been massive.
Every minute a truck spends at the border represents lost business for a company.
The hard borders have forced some businesses to resort to dishonest ways to push their products through the borders.
Stories of corruption and smuggling are common as businesses try to cut corners.

Both Lesotho and South Africa have lost revenue due to such dubious practices.
But something has been changing over the past few years as both countries take steps to deal with the hard borders.
That is thanks to several initiatives by the Lesotho Revenue Authority (LRA).
The World Bank, through the Public Sector Competitive and Economic Diversification Project (PSCEDP), is assisting the LRA to modernise and improve its customs systems to make cross-border trading easier.

So far the World Bank has funded four projects, three of which are already in operation while one is at the initial stages.
The PSCEDP, a government project under the Ministry of Trade and Industry, Cooperatives and Marketing, is funded by the World Bank. Its other components are financed by the African Development Bank (AfDB).

The project seeks to improve Lesotho’s business environment and diversify sources of economic growth. It is the implementing partner in the LRA’s four projects.
Tebello Makhechane, LRA’s Deputy Commissioner Customs, says businesses are already reaping the benefits of the three customs modernisation projects funded by the World Bank through the PSCEDP. The PSCED is the implementing partner in all the four projects.

Makhechane says the initiatives are part of the LRA’s drive to bring its customs systems in line with global trends as stipulated by the World Customs Organisation.
He says the modernisation projects are urgent for Lesotho because it relies heavily on the revenue generated from trade from South Africa.
“Lesotho’s share of the revenue from the South African Customs Union (SACU) depends on how much trade has flowed through the two country’s shared borders,” Makhechane says.
“It therefore follows that Lesotho loses out if its borders are slow and difficult to cross for businesses.”

The first project involved the implementation of the Automated System of Customs Data (ASYCUDA), a computerised system designed by the United Nations Conference on Trade and Development (UNCTAD) for countries to automate and control their core customs processes.
Lesotho launched the ASYCUDA in 2014 but that version of the system ran into technical challenges as it aged. The World Bank chipped in with a M17.7 million-grant to upgrade the system.
“The previous version had become vulnerable and unstable. This meant that our processes were slow and businesses were struggling at our borders,” Makhechane says.
The ASYCUDA is now operational at the country’s five commercial borders, including the Moshoeshoe I International Airport.
The second project was to build a strong backup system for the ASYCUDA to reduce down time. Because ASYCUDA is internet-based LRA needed a backup system that would immediately kick in when the other server is down.

The World Bank provided a M8.1 million-grant for the equipment and system.
“This means that our customers no longer have to spend hours on the queues when the other server is not working,” Makhechane says.
He says the current phase of the modernisation project is to connect the customs systems of LRA and the South African Revenue Authority (SARS).
That project too has been made possible with the help of M508 000-grant from the World Bank.

“In the short-term the project will help the two revenue authorities to have access to the same information so that they know what has been declared on both end of the borders,” says Makhechane.
“The ultimate goal, however, is to have one customs clearance window for both countries. That will cut the time it takes to clear goods and also reduce revenue leakages.”
“The broader agenda is to make it easier for businesses to trade across the borders.”
The LRA, World Bank and PSCEDP are now collaborating on the Lesotho National Single Window that will consolidate all export and import services under one roof and a single automated system.

The idea is that businesses all government agencies dealing with cross-border trading will be accessed through a single window.
In other words businesses can get all export and import permit by submitting one form to a single office. The same applies to port health permits, duty payment, and customs clearance.
“That changes a lot because it significantly cuts the time it takes to get export and import permits and all other documentation,” Makhechane adds.
“It also reduces corrupt tendencies.”

Chaba Mokuku, the project manager of PSCEDP, says the projects will improve the business environment by removing obstacles to cross border trading and enhancing regional integration.
“This is part of efforts to build systems that make it easier for business to thrive. Investors are looking for countries that help their businesses grow instead of stifling them,” Mokuku says.
“To grow our private sector we should ensure that there are no hurdles to trade both with our borders and across them.”
He says the projects will significantly reduce the time it takes to move goods between the borders.

Staff Reporter