International trade is crucial to global economics, and customs regulations play a significant role in facilitating the smooth movement of goods across national borders. Customs harmonisation has been proposed as a strategy to minimise trade friction by standardising customs procedures and regulations to improve trade, reduce costs, and enhance efficiency.
Customs harmonisation involves creating a set of rules and procedures for international trade and navigating cross-border transactions. James Clark and Danielle A. Bernard (2022) highlight that “streamlining customs formalities for imports, exports, and transit of goods has multiple benefits, including increasing trade activity while reducing bureaucratic red tape and costly delays for traders.”
The World Trade Report 2015 reveals that developing countries could see an average gain of 16.73% from improvements in trade facilitation due to reductions in the cost of moving goods from exporters to importers’ markets.
In 2020, AZA Finance, a UK-based financial company, reported that total intra-Africa trade was USD 61 billion, the lowest figure in the past five years, primarily due to the COVID-19 pandemic. The top intra-Africa exporters in 2020 were South Africa (32%), Nigeria (10%), the DRC (8%), Egypt (6%), Zimbabwe (4%), and other African countries (40%).
This data underscores the importance of intra-African trade and the need to ease the administrative burden on businesses. Streamlining customs procedures and reducing multiple sets of documentation can help minimise operational expenses, especially for small and medium-sized enterprises (SMEs) that may lack the resources to navigate complex customs landscapes.
However, customs harmonisation in Africa faces several challenges and criticisms that hinder its effective implementation. Aligning regulations across diverse jurisdictions is time-consuming, as each country has its own set of interests, priorities, and regulatory frameworks, making it difficult to reach a consensus on harmonised rules.
Disparities in the capacity and capability of different countries to adopt and enforce harmonised standards are a significant challenge, leading to inconsistent application. These disparities can result in unintended consequences, such as increased bureaucracy or the emergence of new trade barriers.
One crucial reason for the delay in harmonising customs regulations in Africa is the need for substantial compromises during negotiations. Some stakeholders feel that their interests are inadequately represented or that the harmonised framework disproportionately favours larger, more influential players, to the detriment of smaller or less developed markets.
Harmonising trade within Africa holds immense potential. To realise this potential, it is essential to involve a broad range of stakeholders in the process, including governments, businesses, and industry associations. A formal engagement process is necessary to guide various programme areas in identifying stakeholders and methods of engagement, compiling issues, and reporting findings.
Emphasising transparency and accountability as part of good governance and integrity programmes in customs administrations will help achieve customs harmonisation in Africa. Implementing mechanisms to ensure transparency and accountability will encourage public officials to act in the public interest and enterprise representatives to protect shareholders’ interests.
Customs harmonisation presents both opportunities and challenges for intra-African trade. It holds significant potential for easing trade, reducing costs, and enhancing efficiency, but it also has the potential to create new obstacles and complexities. Africa needs to strike a balance between standardisation and flexibility to ensure that customs harmonisation meets its goals without compromising the interests of businesses and countries.
