HIGH COST OF DOING BUSINESS AT GHANAS PORT & BORDERS

TABLE OF CONTENT

INTRODUCTION MAJOR CAUSES OF HIGH COST OF TRADE IN GHANA

INTERVENTIONS NEEDED TO REDUCE THE COST OF DOING BUSINESS IN GHANA

CONCLUTION

INTRODUCTION
Total maritime trade in Ghana for the period January to March, 2013 amounted to over 4.7 million tons. This was made up of about 3.5 million tons of imports which is 74% of total trade and 1.2 million tons of exports which is 26% of total trade.
Total transit cargo that passed through the ports of Ghana for the period amounted 173,551 tons. This was made up of 154,855 tons of imports and 18,696 tons of exports. International trade remains the single largest driver of economies the world over. It account for over 80% of the world economic activity. It involves the movement or trading of goods and services across borders, counties or communities. Without which each country would remain an island on its own. International trade and transport activities are at the heart of major global discussions either at the World Trade Organization (WTO) or the United Nations trade Agency for Development (UNCTAD) aimed at setting the rules, regulations and procedures in order to maximize trade benefit for all the players in the global economy. One of the key concerns of trade policy makers is how to make trade competitive through the application of optimum tariff regimes or at responsible cost which enhances competitiveness for the benefit of producers, manufactures and the traders of goods and services.

This desire has led to the formation of organization such as the WTO, UNCTAD, and regional trading blocs such as the European Union, ECOWAS, and SADC etc., in furtherance of the objectives of creating of the global competitive and fair trading regime.

However, Africa remains the least performer in global trade with a low share of international trade. This is largely on account of many factors acting against Africa`s ability to complete favorably in the global trade arena. You have a situation whereby trade transaction suffers additional charges by shippers owing to procedural and operational inefficiencies by service providers. This situation renders shipping business uncompetitive and increases their operational cost. The factors that lead to high cost of doing business stem from the challenges within the business environment.

Key among these challenges include the lack of value added exports, poor infrastructure, and Poorly harmonized customs regime, which most often, lead to high cost of doing business for African importers or exporters. Overall Africas trade performance reflects its inability to tap into cheaper finance inefficient logistics and increase capital resource skills. All of which play a key role in international trade thus supply side constraints

Agriculture which controls 60% of trade is still largely rain fed. Hence little export market share. Mechanization still a huge problem and inadequate storage, especially cold facilities hamper trade

Transport and logistic challenges in ports of Africa have constrained vessel calls. The higher level of vessel dwell times have also resorted in added cost.

In the case of Ghana, cost of doing business remains one of the biggest disincentives to the growth of import and export business in the shipping industry.

MAJOR CAUSES OF HIGH COST OF TRADE IN GHANA

A number of factors have been noted to be contributing to the high cost of doing business at the countrys port and borders. These include

Illegitimate and indiscriminate charges by clearing shipping agents,

Charges of clearing agents, freight forwarders Charges of consolidators among others. Space and logistics constrains within the port and out terminals. E.g. lack of equipment for delivering containers and inadequate packing for trucks both within and outside freight station Others factors include: cumbersome customs clearance procedure,

delay by shipping lines/agents in processing and releasing cargo documents, cumbersome processes involved in obtaining the necessary licenses and permits from statutory bodies, delays in obtaining final classification and valuation reports from destination inspection companies, cost of securing adequate infrastructure at the ports Poor management of port infrastructures e.g. sitting of port scanners in Ghana Insufficient knowledge on the part of port officials and operators. E.g. wrong documentation and delays by official.

Port congestion; partly because of increase in TROUGHPUT. Especially containerization. Container cargo has increased over 20% as compared to the same period last year. Duplication of functions by state organization especially in dealing with food items.(Customs Chemist, FDB, GSA and Plant Quarantine). Studies carried out by the Ghana shippers Authority in 2010 estimated the payment to shipping lines of demurrage charges by shippers of about US$40 million and payment of GH 20 million in rent charges as a result of delays in the clearance of their cargoes. It is common knowledge that high imported goods and high payments in the port impact on the price level of the basket of consumer goods. Conversely, excessive freight rates for exports affect the trader competitiveness of the products of a country in the global markets. Hence there is the need to define approaches to reduce inbound and outbound freight cost.

INTERVENTIONS NEEDED TO REDUCE THE COST OF DOING BUSINESS IN GHANA Compliance with World Trade Organization (WTO) Rules and Regulations. WTO Members formally agreed to launch negotiations on trade facilitation in July 2004. The objective of the negotiations is to clarify and improve three articles of the General Agreement on Tariffs and trade (GATT) relating to the transit of goods, fees and formalities (documentation and procedures) and the transparency of laws and regulations. The aim is to ease border procedures and to facilitate the movement, release and clearance of the goods at ports of member counties.

ESTABLISHMENT OF SINGLE WINDOW SYSTEM & ONE STOP OPERATIONS

The establishment of an efficient and effective single window system would go a long way to reduce the cost of transacting business by shippers at the country`s ports and borders. The single-window is a trade facilitation concept, the implementation of which enables shippers to submit their cargo clearing documents at a single location and/or single entity. Such documents are typically customs declarations, application for import/export permits, FCVRs and other supporting document such as certificates of origin, trading invoices, etc. The main value proposition for having a single window for a country or economy is to increase the efficiency through time and cost saving for shippers in their dealings with shipping services providers for obtaining the relevant clearance and permit(s) for clearing and moving cargoes across national or economic borders. In a traditional pre-single-window environment, as is the case currently, shippers have to contend with dealings with multiple government and private agencies in the multiple locations to obtain the necessary papers, permits and clearances to complete their import or export processes. e.g. FDB and Standards Board in Ghana.

 SIMPLIFIED

CUSTOMS PROCEDURES

The cumbersome clearance procedure should be streamlined as much as possible. The use of the Computer Risk Management System (CRMS) embedded in the scanning system at the port must be allowed to work. This would substantially reduce the delays and added costs such as demurrage, and rent payments which render shippers uncompetitive. Simplified procedures are an important part of modern customs administration. These procedures can make the customs treatment of imported goods much less complicated and also, depending on the type of procedure, less time consuming. Simplified procedures are intended to reduce import and export clearance times and cost for traders who have history of compliance of customs legal and regulatory requirements, and who consequently are categorized as low-risk. The customs Division of the Ghana Revenue Authority (GRA) already has in place a system for shippers who have been compliant for a period of time and these are known as Gold Card Members

In order to benefit from this Gold Card Membership one needs to be transparent, have a proper accounting system in the place and be seen and known to show a high level compliance with all trade-related laws and regulations. In such insurance a trader enjoys simplified import, export formalities and will not go through the cumbersome clearance procedures thereby avoiding additional cost. The task of the customs Division of GRA in reducing the cost of doing business at the port and borders is very crucial in the finding a good balance between their roles as revenue collectors and trade facilitators. It is crucial that the customs division of GRA continues to build capacity and streamline their procedures to improve their efficiency in handling cargo processing.

AUTOMATION OF THE ENTIRE CLEARING PROCESS

One of the areas that have over time been associated with bribery and corruption are the country`s Ports and Borders. In june,2013 investigations conducted by the centre for freedom and accuracy in partnership with Tiger Eye PI, promoters of the national anti-corruption campaign indicated that the country was losing more than $150 million every month to individuals, foreigners and private companies in the tax evasion, import levies and excise duties at the Tema port. As a way of dealing with the canker of bribery and corruption it has been suggested by several experts in the maritime transport subsector that a full automation of the entire clearing process is necessary in reducing the need for human intervention. The era of paper work should give way to a paperless system in issuing delivery orders in shipping line/agents operations. Electronic clearing does not only remove bribery and corruption but also saves a lot of time and less expensive.

Since the establishment of the Ghana Community Network Services Limited (GCNet) in 1999 it was envisaged that all the operators within the clearing process will collaborate towards the development of comprehensive electronic system for processing trade and customs documents. The time has come for all stakeholders in the maritime transport industry and government to reconsider the need for automating the entire clearing process at the country`s ports and borders in order to

assist in reducing the cost of doing business in the country.

IMPROVING THE CAPACITY OF PORT INFRASTRCTURE AND OPERATIONS The Ghana Ports and Harbors Authority (GPHA) has over the years invested substantial amounts of funds in expanding infrastructure at the country`s ports. For instance, the Tema port has been dredged to enable it receive larger vessels. New container depots have been contracted for Ghana bound cargo and facilitate the transit trade; Gantry cranes have been purchased, etc. Agreement with the China Harbor Engineering Company (CHEC) for work to begin on the first phase of the 150 milliondollar Takoradi Port Infrastructure Development Project. The various investments have brought some relief to shippers giving the rising cargo volumes at the ports. However, in the last decade, container traffic at the port of Tema and Takoradi has seen a 40% and 28% increases respectively. This has lead to congestion at the ports leading to delays and of course added cost to shipper. The high turnaround time and vessel processing time at the ports have led to the imposition of surcharges on shippers by shipping lines. It is therefore imperative that more investments are made in the area of improving the capacity of the ports enhance greater efficiency there by reducing cost to shippers.

The primary port infrastructure should be in place to give the needed support to private sector investment s in high end value chain within the oil and gas sector. The port must also expansion to cope with the current level of cargo traffic, meaning more investments in port facilities, equipment, and skilled staff to handle cargo efficiently thereby reducing cost to shippers. In the long term, there will be the need for the promoters of the Boankra Inland port project the Ghana Shippers Authority and the Ghana Ports and Harbours Authority to ensure the early completion of the facility in order to assist in easing congestion at the Tema and Takoradi ports. Aside from port expansion, the GPHA will also need to consider developing alternative port to the existing ones. Multi-modal transport, placing of scanners at all freight stations will drastically reduce port congestion.

INTENSIFICATION OF SHIPPER EDUCATION The importer or exporter has a major role to play in the quest to the cost of doing business at the port and borders. Studies shown that about 40% of documents which are rejected the customs Division of GRA are as a result of errors or falsified documents presented by the importers or the exporters or their clearing agents. Wrong documentation is the major cause of delays at the inspection companies. There is therefore the need for the Ghana Shippers Authority, the organization mandated to protect the interest of the imports/exporters to intensify its education activities by encouraging the shippers to present genuine documents, employ the services of the professional Custom brokers and make adequate preparations for clearing before the arrival of their cargo.

Shippers are also urged to take advantage of the pre-arrival processing of documents, as this will facilitate the clearance of their cargo and enable them avoid payment of demurrage charges resulting from delays. Timely information to shippers in respect of the arrival dates of vessels at the ports is very crucial in the efforts to reduce cost of doing business to the shipper. This would allow for quick and prompt cargo clearance processing, avoiding undue delays and related cost. Over the years, the Ghana Shippers Authority has been at the front of ensuring for the importer and exporter a cost effective means of doing business at the ports and borders. The bi-weekly publications of the vessel movement schedule, Mobiship service, Shipper Fora / Education, Shipper Complaint and Support Units (SCSU) are all measures adopted by the Authority to make relevant information available to shippers in order for them to expedite action on the clearance of their cargo and thereby reduce the cost of doing business in our ports.

IMPROVED PERFORMANCE BY DESTINATION INSPECTION (DICs)

The issuing of FCVRs has often times contributed to the delays in the clearing process which results in the shippers incurring extra costs such as demurrage and rent charges. DICs should effectively deal with the delays of issuing FCVRs. It is also critical for shippers to provide accurate information to enable the DICs issue FCVRs in good time. Customs must work hand in hand with DICs to arrive at acceptable valuations through the Transaction Price Database Systems of the various DICs to avoid the situation whereby valuations by DICs are rejected by customs leading to undue delays and cost to the shipper.

IMPROVED ROAD TRANSPORT GOVERNANCE.

transport governance plays a key role in the cost of doing business with Ghana trade corridors. Delays, illegal payments demanded by some state officials are a huge cost to shippers. There would therefore be the need for all stake holders in the transport industry to improve road transport governance across the countrys trade corridors. There should be more emphasis on the full implementation of the Inter State Road Transport (ISRT) protocol across the ECOWAS Sub-region to enhance trade competitiveness. The ISRT is a regime that allows the transportation of goods by road from one Customs Office in a Member State to another Customs Office in another Member State through one or more Member States free of duties, taxes and restrictions while transit. Such goods shall be accompanied with a set of customs documents and shall not be off-loaded or transferred while in transit. The scheme ensures that transported goods are transited to their designated destinations and will be checked at their designated locations not more than three checkpoints.

The West African Trade Hub in collaboration with the Ghana Shippers Authority have been at the forefront removing unnecessary checkpoints along West Africas primary corridors in order to facilitate the movement of goods and people and help reduce the cost of trucking. According to the West Africa Trade Hub, the effect of road harassments are far more expensive than just time and money lost, and that the first and foremost step to bring about change and reduce harassment was for truck drivers to lodge complaints with the authorities about road harassment.

CONCLUTION: Relevance of Above Topic to Students and People in India.

India has a big presence in Ghana in terms of investments and since all / most investments involves import and export.
International trade involves many partners including Ghana for that matter Ghana needs to improve its trade practices to meet other nations. Most of the maritime import in Ghana for the first quarter of 2013 came from the Far East, Asia and the North Continent Automation of clearing and imports procedures can be transferred to Ghana through modifications. Improving port capacity and port infrastructure and operation building can be opened to India investors by contacting Port Authority of Ghana.