1. Trading Across Borders In Mozambique

2. Introduction What were the results ? Why these results ? How to improve results ?

3. Ranking: Overall Ease of DB vs Ease of Trading

4. Total Import Time Break Down

5. Total Export Costs Break Down

6. Import Time – Mozambique Costs Documents Time Bank L/C Institution Pre-shipment Inspections Comments 15days free Clean report findings Intertek Burdensome 2 weeks Min $350 L/C Bank High Risk environment

7. Import Time – Mozambique Customs Costs Documents Time Other documents Institution Comments 3 days $55 for courier Original B/L, COO, Com. Invoice, Packing list Too much paper work 2-3 days $160 DU, manifest, cargo release, Packing list Exporter, MCC Bureaucratic and manual processes

8. Import Time - Mozambique Costs Documents Time TransportationPorts Institution Comments Scanner few hours $120 Inspection report KUDUMBA 80% scanning 5-7 days $260 Stowage plan, THC, Cargo manifest MIPS, container terminal Low port productivity 2 days. Poor roads going north or west hampers transit trade $240 Shipping line, Freight forwarder Delivery order

9. Export Time - Mozambique Customs Costs Documents Time Other documents Institution Securing bank L/C Comments 2 weeks Min. $350 L/C Banks High risk environment 3 days $55 for courier B/L, Com. Invoice, packing list, CoO($20) Too much paper work 2-3 days $160 DU Importer, firm Bureaucratic and manual processes Customs

10. Export Time - Mozambique Costs Documents Time TransportationPorts Institution Comments 4-5 days $260 Release order MIPS, Terminal, Shipping line Low port productivity 2 days. Includes, arranging, loading and unloading $240 Freight forwarder Few hours $90 Inspection report KUDUMB A Costly Scanner

11. Trading Across Borders - Mozambique Core IssuesAnalysis Banks High fees in L/C (1% to 2.5% of transaction value) Perceived by banks as high risk lending Lack of credit information on traders High T-Bill interest rates (16%) Lack of competition in banking sector Hence low usage of L/C (10%), majority use advance payments, telegraphic transfers, with attendant risks and associated costs.

12. Trading Across Borders - Mozambique Core IssuesAnalysis Customs Duplicatory/repetitive procedures Manual (face-to-face paper pushing) No risk management system in place Corruption Unprofessionalism among customs services Use reference prices, even when evidence for transactions value exists. VAT re-imbursements are slow

13. Clearance Process at Customs Customs broker fills the DU Customs broker fills the DU First screening at Customs for Complete DU (Aceitação) First screening at Customs for Complete DU (Aceitação) Data registered In computer and (Entrada) Notice for payment Provided (Aviso de pagamento) Data registered In computer and (Entrada) Notice for payment Provided (Aviso de pagamento) Pay duties at Treasury. (Tesouraria) Revenue Dept Also verifies. (Receita) Pay duties at Treasury. (Tesouraria) Revenue Dept Also verifies. (Receita) Verification of DU (prices, tariffs, quantities etc). (Verificação) Signed-off by Management (Gestão) Verification of DU (prices, tariffs, quantities etc). (Verificação) Signed-off by Management (Gestão) Separator gives You Copy of approved Document (Separação) Separator gives You Copy of approved Document (Separação)

14. Trading Across Borders - Mozambique Core IssuesAnalysis PSI Send pro-forma invoice to ITS (Intertek) for a MOZ reference = take 2 days to obtain this number. After which the reference number is transmitted to the supplier. Supplier arranges for the inspection to be carried out, = take some 5-6 days. It could then take some 4 days to issue the inspection report and transmit to importer. It is not uncommon for there to be some rejection in the inspection process thus requiring a recommencement of the process.

15. Trading Across Borders - Mozambique Core IssuesAnalysis Cross-border trade Delays at border crossings (Ressano Garcia/FRIGO) of 2-3 days. Due to inter alia: Further border co-operation, harmonised procedures, forms, systems and interfaces. Hours of customs operation at the border Weak road/rail network to land-locked countries is a hindrance to the development of transit trade.

16. Recommendations - Administrative Scanning should be applied on a selective basis and not more than 20% of cargo. Abolish pre-shipment inspection Allow for complete pre-good arrival clearance Allow clearance without showing originals for reliable and trust worthy traders. Streamline VAT rebate system. Increased transparency in Customs decisions Involve private sector in decision making: national trade facilitation committee. Abolish “Aviso 2”

17. Recommendations – Short to Medium Term Establish a properly functioning EDI system Create a single window, linking, customs with banks and port authorities. Apply computerized risk management procedures using existing database on customers Implement an E-manifest system Border posts to increase hours of operation IFC’s Global Trade Finance Program Lower T-bill rates

18. Recommendations – Longer term Roads and ports facilities need significant investment, if Mozambique is to become a regional hub. Creation of a single cross-border posts requiring only one inspection. Improve risk assessment of traders to banks by improving the functioning of public credit bureau. Allow more entries into the banking sector to stimulate competition. EXIM bank to provide trade finance