On the back of President Robert Mugabe's state visit to South Africa in early April, South Africa and Zimbabwe’s Customs Administrations signed a Mutual Assistance Agreement on 08 April 2015. The agreement will be in place for the next 5 years.
In the light of the fact that close to 45% of imports into Zimbabwe originate from South Africa, what does this mean for South African businesses transacting with and supplying goods to Zimbabwe? Could this expedite or slow down the arrival of South African goods on Zimbabwean shelves?
As is typical with agreements of this nature that South Africa has concluded with other countries, both countries have agreed to provide each other with mutual assistance to ensure that the customs laws in their respective countries are properly observed; and to prevent, investigate and combat customs offences, and to deliver documents to each other to ensure proper application of customs laws. There is provision for information sharing either on request, or on own initiative to ensure the correct application of customs law and to prevent, investigate and combat customs offences. Assistance also includes the provision of information to determine the customs value for import duty purposes.
In serious cases that could involve substantial damage to the economy, public health, public security, either of the customs administrations could supply the information on own initiative without delay.
There is provision for the establishment of a joint, one-stop or juxtaposed border post. If operated efficiently this should speed up the clearance process to ensure faster movement of goods from South Africa to Zimbabwe. The one-stop border post concept is designed to facilitate expedited clearance and movement of cargo, travellers and also enhance revenue collection, ultimately reducing the cost of doing business. There is, however, currently no indication as to when the one-stop or juxtaposed border post will be implemented between the two countries.
Each country has undertaken to establish a central co-ordination unit that will be responsible for receiving and co-ordinating all requests for assistance and for maintaining contact with its counterpart in the other country.
There is also provision for sharing insight on new enforcement techniques, new trends and methods of committing customs offences. Further, there is provision for secondments, consultancy and training and exchanges of officials.
The two countries have also agreed to conduct on own initiative or upon request special surveillance over the movement of and entry into or exit from its territory of people who are suspected of being habitual contraveners of customs laws. Surveillance may also be conducted of the movement of suspect storage or movement of goods and methods of payment that give rise to substantial illicit trade. Places and means of transport used to contravene the customs law in connection with illicit trade may also be subject to surveillance. Each country may, subject to its domestic law, maintain routine monitoring over the movement of specified goods and any agreed quantitative restrictions or quotas that may apply to those specific goods.
There is definitely a need for closer monitoring of exports and imports between the two countries from the point of view of duty leakage. From Zimbabwe’s point of view there is a need to clamp down on undervaluation and poor quality goods being imported from South Africa. From South Africa’s point of view there is a dire need to stamp out corruption at the Beitbridge border post, seen as one of the most porous points of entry into South Africa. Of particular concern for South Africa from a tax point of view is the illicit tobacco trade from Zimbabwe. This agreement, if implemented properly would go a long way towards helping South Africa to curb the round-tripping of tobacco and tobacco products that currently costs the South African fiscus millions of Rands in lost excise duties. Illicit trade costs the legitimate tobacco industry in the region of R2 billion in lost revenue. The illicit tobacco trade has been in the spotlight for over a decade and with the mounting pressures to increase revenue and curb tax evasion, the tobacco industry would be the obvious choice for scrutiny as a result of a closer working relationship between the Zimbabwean and South African tax authorities.
Zimbabwe has also recently introduced pre-verification measures which mean that exports to Zimbabwe will have to undergo consignment verification from the middle of May 2015. Zimbabwean Customs is also scrutinising the import processes at the Beitbridge border post to curb the entry of illicit goods and undervaluation of imports into its market. These verification measures have been implemented in many countries worldwide with success and should not delay the supply chain movement. These new measures will assist Zimbabwe to ensure that the correct values are declared and that sub-standard and illicit goods will not seep through the border. Food and agricultural goods, clothing and textiles, building materials, and electrical goods are examples of some of the goods that will be subject to extra scrutiny by Zimbabwe’s Customs Department.