‘Delays affecting export earnings’

Source: ‘Delays affecting export earnings’ | The Herald July 6, 2016

Business Reporter

ZIMBABWE could lose hundreds of millions of dollars in revenue if Government does not urgently eliminate cumbersome processes delaying the efficient movement of exports. Delays in the movement of goods into the export market have been cited as one of the major reasons affecting export earnings. Exporters have raised concerns and highlighted key impediments to exports. The impediments have been extensively documented by such organisations as the Confederation of Zimbabwe Industries, the World Trade Organisation, ZimTrade and the Zimbabwe Economic Policy Analysis and Research Unit, among others.

A World Bank research says that a one-day reduction in inland travel times leads to a 7 percent increase in exports. Put another way, a one-day reduction in inland travel times translates to a 1,5 percentage point decrease in all importing-country tariffs.

Addressing a Public Private Dialogue on Simplification of Zimbabwe’s Export Processes yesterday, the chief of Trade Facilitation and Policy for Business Section, International Trade Centre Rajesh Aggarwal said delays in processing exports have a negative on exports.

“If you delay your exports by one day you can actually make one day loss in export profits,” said Mr Aggarwal.

The World Bank says in another study that the extent to which the time to move goods from the factory to the ship influences the volume of exports.

The paper examined the effects of transit, documentation, and ports and customs delays on Africa’s exports.

Longer time delays act as a tax on exports, especially on high-value goods, since they are effectively depreciating during the delay. In addition, the exporter must expend capital on the exporting process and storage/transport of the goods during the delay. The research says long time delays are likely to be associated with more uncertainty about delivery times, which would further depress exports.

“Earlier work has shown that delays in getting goods from the factory gate onto the ship hinder exports more than foreign tariffs do. This is especially debilitating for Africa’s exports because of extreme delays. This suggests that improving trade facilitation in Africa would significantly boost exports,” the research shows.

Some of the delays in processing exports emanate from the time it takes to receive approvals for exports; approvals which are only processed in Harare and sometimes in Bulawayo and 90-day limit to acquit CD1 forms, among other impediments.

Processing of approvals in Harare and Bulawayo alone is an inconvenience and costly exercise to small exporters such as Small and Medium Enterprises and to established companies outside these two cities.

ZimTrade chief executive officer Sithembile Priscilla Pilime told the dialogue that punitive penalties charged by Reserve Bank of Zimbabwe for late acquittals were also affecting exports.

“It is also costly and cumbersome for companies to apply to RBZ to be given concessions. The country is imposing too many restrictions on its exporters,” said Ms Pilime.

This leads to lack of cost competitiveness arising from a plethora of regulations/permits (for both exports and import of raw materials and other inputs), attendant levies/fees associated with regulations/permits and different and scattered offices for export documentation.

Ms Pilime said also long periods of processing permits and approvals, high production costs arising from obsolete machinery, high cost of utilities and other inputs were some of the impediments to export growth.

“Delays in issuance of permits has led to exporters failing to exhibit at Regional and International Trade Fairs leading to loss of trade opportunities,” she said.

ZimTrade recommended streamline export documentation – this reduces the processing time for export documentation.