Trade facilitation to save Nigerian N2.4tn annually- Expert

tom-butterly

If implemented, trade facilitation processes of the World Trade Organisation (WTO) could save Nigerian businesses at least N2.4 trillion annually in transaction cost.

The amount is 15 per cent of the country’s average total trade value of N16.4 trillion annually which could be saved if trade facilitation processes, such as automation and Single Window platforms are effectively implemented.

Also, hooking up to the WTO Trade Facilitation Agreement (TFA) could save businesses around the world about $1 trillion annually, according to a WTO consultant and international trade expert, Mr Tom Butterly.

WTO trade facilitation involves the simplification, standardisation and harmonisation of trade procedures and associated information flow required to move goods from seller to buyer and to make payment for the goods. This includes implementation single window platforms for all players in the international trade chain and automation processes for the purpose of trade.

Buttressing a recent WTO report, Butterly said that trade transaction cost can be up to 15 per cent of value of goods traded, where one day delay at the border reduces trade by one per cent.

Managing director of Trade Development and Facilitation Consulting (TDAF) at the World Trade Centre II, Geneva, Switzerland, Butterly stressed that for developing countries such as Nigeria and Ghana, trade transaction cost can be more than 15 per cent, indicating a bigger need for West African countries to embrace the single window reform and ratify the TFA.

Ghana ratified the TFA on January 4, 2017, with Mozambique following up on January 6, making a total of 11 African countries that have ratified the agreement out of a total 106 countries being members of the WTO who have ratified the agreement. Only four countries are now needed to ratify to make the agreement come into force.

In addition to Ghana, other African countries that have ratified the trade facilitation agreement are Mauritius, Niger, Togo, Côte d’Ivoire, Kenya, Zambia, Mali, Madagascar and Gabon.

Butterly said many countries are now focusing on implementing deep trade facilitation reforms, with the single window becoming a game changer.

A facility that allows partners involved in trade and transport of goods to lodge and obtain standardised information, the single window is a major indication of a country’s readiness for trade facilitation and it provides for single entry point by the shipper with the information being shared among government agencies involved in trade and other private sector players, such as banks and insurance.

For a typical West African country, such as Nigeria, or Ghana, there are about 200 pieces of information to be provided by an importer/exporter at offices of about 14 government agencies, banks and insurance and some of these may require a return visit where mistakes occur.

Butterly said the single window reduces time of doing business by 50 per cent and can bring down cost of doing business by 25 per cent.

He said, “The single window reform is now helping to create a fundamental change of the mindset. Countries even in Africa that have embraced and implementing the single window have been able to reduce cost of doing business significantly and are doing so well. They include Coasta Rica and Rwanda and Ghana is also able to save about $200 million in 2015.

“Ghana is also forecast to move up from current global position of 171 to 121 out of 189 countries and Sub-saharan Africa rank of 36 to 16 out of 47 countries in ‘World Bank Trading Across Borders’ (ease of doing business) survey by 2020.”

Nigeria started the Single Window reform since 2013, but the project is being hampered by absence of political will, according to competent sources. The World Bank report has Nigeria on the 182 position out of 189, with Ghana which started much later taking a better position.

The WTO Agreement Article 10.4 discusses the Single Window, while Article 4.1 states that members shall endeavour to establish or maintain single window- single entry point where all trade information can be accessed by government agencies and the private sector.

“By 2020, about 100 economies and some regions would have implemented the Single Window reform, enjoying the benefits of pre-clearance formalities down from four days to 0.5 days and Customs clearance from 18 to nine days. The Single Window reduces export time from 22 to 11 days. But most importantly, Single Window is about people more than technology,” Butterly said.

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