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MALAWI - TIME RELEASE STUDY REPORT 2019 | 1

Malawi Revenue Authority Malawi Government

Malawi Time Release Study Report 2019

2 | MALAWI - TIME RELEASE STUDY REPORT 2019


Malawi Revenue Authority Malawi Government



CONTENTSForeword ................................................................................................................................................ 6Acknowledgements ....................................................................................................................................7TRS Task Force ......................................................................................................................................... 8Acronyms and Abbreviations .................................................................................................................. 9Executive Summary .......................................................................................................................... 10Analysis and Findings .............................................................................................................................11Background ..............................................................................................................................................13Malawi’s Trade Facilitation Profile .........................................................................................................13Overview of Songwe Border Station........................................................................................................15Objectives of the Study ..................................................................................................................... 18Scope and Methodology ...................................................................................................................19Scope ......................................................................................................................................................19Types of Goods .......................................................................................................................................25Methodology ........................................................................................................................................... 20Data Analysis and Results .............................................................................................................. 22Import Procedure ..............................................................................................................................22Import Sub Process Average Time Release Analysis ............................................................................. 27Other Government Agencies ..................................................................................................................28Export Process ................................................................................................................................... 29

Export Sub Processes Time Analysis .................................................................................................... 30

Transit Process 31

Findings and Recommendations ...........................................................................................................33

Impementation of Recomendations ...................................................................................................... 37Conclusion .......................................................................................................................................... 38

Annex 1a :Process Mapping - Import..................................................................................................... 40

Annex 1b :Business Process Map - Export............................................................................................. 41

Annex 1c :Business Process Map - Transit............................................................................................ 42

Annex 2a :Questionnaire -Import.......................................................................................................... 43

Annex 2b :Questionnaire.- Export.......................................................................................................... 46

Annex 2c :Questionnaire.- Transit ........................................................................................................ 48

Annex 3 :Terms of Reference for the Songwe TRS NWG ..................................................................... 50

Time Release Study Action Plan - Malawi ............................................................................................. 51

Map of Malawi ........................................................................................................................................ 55


FOREWORD BY THE COMMISSIONER GENERAL

It gives me pleasure to present the first ever-historic Time Release Study that was conducted at Songwe Border. The Study was conducted based on World Customs Organisations’ tools and guidelines. Since the inception of Malawi Revenue Authority in 2000, there have been significant reforms that have taken place in Customs in order to improve efficiency and effectiveness of our borders. Classical examples include use of Automated Systems for Customs Data, e-payments, use of electronic seals to monitor transit goods, use of non-intrusive inspection. Other reforms that have been implemented include Risk Management, Post Clearance Audits and Authorized Economic Operators programme. These reforms were necessitated by trade liberalisation which resulted into growth of tradeable goods across the globe. Therefore, Malawi as part of the globe trading partner seeks ways to reduce costs of doing business, improve the competitiveness in the region and enhance both producer and consumer welfare by simplifying and streamlining the clearance of goods at border posts.

Furthermore, as a member of the World Customs Organisation (WCO) and of the World Trade Organisation (WTO), Malawi is also trying to fulfil her obligations under the WCO’s Revised Kyoto Convention and the WTO’s Trade Facilitation Agreement, both of which seek to simplify and assure predictability in international trade procedures and practices.

According to the World Bank Doing Business Report 2019, under the Trading across borders Indicator, Malawi is ranked number 126 in terms of the ease to do business. It is the wish of the Government to improve the ranking to be among the top 100, and this could only be achieved if the border systems and procedures keep on being reviewed for improvements.

Since its inception, MRA has implemented a number of reforms such as ASYCUDA, CTVFS, e-payment, risk management, AEO, PCA, DPC, etc. in a bid to improve efficiency in service delivery. Nevertheless, the Authority has not been able to evaluate the impact these reforms have had on service delivery in all its borders.

It is against this background that the Malawi Revenue Authority has conducted the Time Release Study at Songwe Border Station. Time Release Study is a very important trade facilitation tool, as it helps to assess the efficiency of Customs processes and procedures by measuring the actual time taken from the arrival of goods to their physical release. The Study will also act as a baseline study where future studies will be compared with in order to assess the effectiveness of reforms that are still underway.

This study specifically focused on cargo clearance processes, with a view to identify mitigations to bottlenecks so as to reduce clearance times, enhance efficiency, and reduce overall dwell times for transporters, freight and clearing agents as well as the Customs Administration.

The findings and recommendations of this study shall serve to improve the environment for doing business and the attractiveness of our country as a destination for investment.

I would like to thank Mr. Fatch Valeta and his team for an excellent and insightful TRS

Tom Gray Malata COMMISSIONER GENERAL


ACKNOWLEDGMENTS

The TRS Task Force would like to express its appreciation to the Commissioner General Mr. Tom Gray Malata, Commissioner of Customs and Excise, Mr. Fatch Valeta for their support and commitment during the implementation of the project. The TRS Team further extends gratitude to National Working Group for entrusting the team to carry out the study.

Many special thanks to all stakeholders who took part such as the Joint Border Committee for their valuable input, willingness, and commitment towards the success of the project.

Sincere gratitude to the border liaison officers, all Customs Clearing Agents and the staff of Songwe border station for their participation and cooperation during the study. A special mention and thanks to Mr. Innocent Bamusi, Station Manager – Songwe Border, Mrs. Tapiwa Mzunga, the Deputy Station Manager – Songwe Border, Mr. Dan Mkumbwa and Mrs. Trista Nyirongo, Senior Officers for the management and technical support rendered during the study period.

Special thanks to Mr. Trevor Zinyemba who was part of the TRS task force but left the organization towards the end of the study for his contribution. The team would also like to thank Mr. Backson Mankhwazi, the Songwe Border Station Customs Clearing Agent’s chairperson for the continuous support rendered during the whole study period.

Finally, our special gratitude to the Secretary General and Staff for WCO for the capacity building support it gave to Malawi, which has assisted the Administration to implement TRS without external technical support.


TRS TASK FORCE

Mr. Patrick Kachingwe Deputy Commissioner Customs and Excise Enforcement Department, TRS Team Leader

Mrs. Balness Sumani Deputy Station Manager, Mwanza Border

Miss Mercy Sam Njolomole Manager Research and Statistics (PPR)

Mrs. Chitsanzo Thindwa Team Leader Enforcement Department

Mr. Trevor Zinyemba Senior Programmer - Information and Communications Technology

Mr. Oscar Patson Kamanga Management Information System Officer, Information and Communications Technology


ACRONYMS AND ABBREVIATIONS

AEO Authorized Economic Operator

ASYCUDA Automated System for Customs Data

AW ASYCUDA World

CAFAAM Clearing and Forwarding Agents Association of Malawi

COMESA Common Market for Eastern and Southern Africa

COSOMA Copyright Association of Malawi

CVTFS COMESA Virtual Trade Facilitation System

DCCE-E Deputy Commissioner Customs & Excise Enforcement

DIF Destination Inspection Fees

DPC Declaration Processing Centre

ICCAFA Indigenous Customs Clearing and Forwarding Association

ICT Information & Communication Technology

MBS Malawi Bureau of Standard

MRA Malawi Revenue Authority

NWG National Working Group

OGAs Other Government Agents

OSBP One Stop Border Post

PCV Post Clearance Verification

PE Physical Examination

PF Processing Fees

PPR Policy Planning and Research Division

SDO Special Delivery Order

T1 Transit Document

TFA Trade Facilitation Agreement

TIP Temporary Importation Permit

TOR Terms of Reference

TRA Tanzania Revenue Authority

TRS Time Release Study

VDP Value for Duty Purposes

WCO World Customs Organization

WTO World Trade Organization


EXECUTIVE SUMMARY

The Malawi Revenue Authority (MRA) was established by an Act of Parliament in 1998 and launched in February 2000. The Authority operates as a Government Tax Administration Agency under the Ministry of Finance, Economic Planning and Development. The Customs & Excise Division is one of the revenue divisions in the Malawi Revenue Authority and is responsible for the collection of International Trade Tax, which comprise of Import duty, Import Excise Duty, Import Value Added. It also collects Export Duties on selected products. Currently, the Division collects approximately 31% of the total revenue collected by MRA.

In addition to the collection of revenue, the Customs & Excise division in Malawi is also mandated to facilitate international legitimate trade, protect society from importation and exportation of hazardous goods, collect Trade Statistics and implement several trade agreements, which Malawi is party to.

The World Bank Doing Business Report 2019, under the Trading across Borders Indicator, ranked Malawi number 126 in terms of the ease to do business. It is in the wish of our country to be rank among the top 100, and this can only be achieved if the border systems and procedures keep on being reviewed for improvements. Malawi also is a contracting party to various international bodies such as the World Customs Organization, World Trade Organization whose emphasis is now trade facilitation. As a Customs Administration, Malawi has to comply with obligations under such agreements, one of which is Time Release Study (TRS) to measure the efficiency of Customs and other border agencies. This time release study will also be used as a baseline for future studies to assess whether further reforms are beneficial to the organization.

It is against the background Malawi Revenue Authority decided to conduct TRS at Songwe Border. According to TRS Guide Version 3, TRS is a strategic, internationally recognised tool to measure the actual time required for the release and/or clearance of goods, from the time of arrival until the physical release of cargo with a view to finding bottlenecks in the trade flow process and taking the corresponding necessary measures to improve the effectiveness and efficiency of border procedures.

Songwe Border Station is situated in the Northern Region district of Karonga in Malawi. It is a border crossing between Malawi and Tanzania. Official designated working hours for the Station is from 06:00 hours to 18:00 hours. The Station handles goods to and from the Northern and Dar corridors. It handles more volumes of imports than exports.

According to data extracted from the system, used motor vehicles top the list of imports cleared at Songwe Border Station. In terms of revenue collection, the station collected 15 % of the total revenue collected by the Customs Division, during the 2018/2019 Fiscal Year. Songwe is the second largest border station in Malawi after Mwanza border based on the revenue contribution and volume of transactions handled.

Apart from Customs, there are other agencies which are involved in clearance of goods at the station such as Malawi Bureau of Standards, Ministry of Agriculture, Irrigation and Water Development, Directorate of Road Traffic and Safety Services and Malawi Police Service.

The main objective of this study was to find out the average time taken for the clearance of goods from the time of entry into the Customs area to the time of exit from the Customs area. The TRS further aimed at identifying bottlenecks in the clearance chain, identifying opportunities for trade facilitation improvements and establishing a baseline trade facilitation performance measurement.

The study covered Import Processes, Transit (inward) Processes, and Exports Processes. Under the Import process, the study focused on goods with a VDP exceeding $700 (K500,000). Under the Transit process, the study focused on containerized goods which were cleared at an Inland Stations as per administrative policy whilst the Export process focused on goods which were cleared at Inland Stations and were meant to exit Songwe Border. The study was based on both automated and manual clearance processes and covered all processes from arrival to departure. OGAs were involved in the study.

The actual study was conducted for seven consecutive days from 9th-15th April 2019 through the use of WCO TRS Guidelines and tools.


ANALYSIS AND FINDINGSData analysis was done using the WCO TRS online software and excel. This study not only estimates the average time between the arrival and departure of imports for home consumption, exports and transit for inward processing. The study also measured the time taken for some of the sub-processes in the clearance process (e.g. registration of declarations to payment of duty, OGAs’ interventions, payment of duty, Customs process) as well as the time taken for the clearance of new and used motor vehicles of Tariff Heading 8703.

Data was captured by way of questionnaires that were developed using WCO guidelines. Overall, 888 questionnaires, for import (740), transit (108) and export (40) processes, were distributed but a total of 683 questionnaires corresponding to 683 declarations were received as a sample for the study. Out of the sampled 683 declarations, 591 were for imports, 108 for transit, and 40 for exports. This gives response rates of 80 percent, 55 percent and 83 percent for import, transit, and export respectively. After data verification using both the ASYCUDA System and manual records, 41 import declarations were rejected, 3 for transit and 2 for export. The raw data from the questionnaires was recorded onto the WCO TRS platform/system and was analyzed using both the WCO TRS Online Software and Microsoft Excel.

The average release time for the import process from entry to departure of the goods is 15 hours 58 minutes, while the average release time for transit is 1 day 1 hour 34 minutes and 5 hours 35 minutes for exports.

Table 1: Average Release Times for Import, and Transit Processes

Average Release Times

Import TransitOverall 0d 15h 58m 1d 1h 34mPre-Lodgment 0d 13h 45m 0d 13h 11mOn Arrival 1d 2h 38m 1d 4h 43m

Pre-lodged import declarations had a lower average release time of 13 hours 45 minutes than on arrival declarations1. Similarly, at 13 hours 11 minutes, the release time for pre-lodged transit declarations was lower than that of on arrival transit declarations (1 day 4 hours 43 minutes).

Import sub-processes, such as 9 hours 46 minutes between arrival at entry gate and registration of declaration by clearing agents, have higher average time intervals than any of the export’s sub processes whose highest interval was only 1 hour 22 minutes. Songwe border has just implemented cargo scanners, the study also looked at the average time it takes to scan a container. However, it is worth noting that the operation of the scanner is in its infancy hence the staff are yet to master the necessary skills. During the study, only one container for imports was scanned and it took 38 minutes, while two containers for transit were scanned and the average time was 54 minutes. The maximum scanning time for transit was 1 hour and the minimum time was 49 minutes.

OBSERVATIONS FROM FINDINGSOverall, pre-lodged declarations for both import and transit processes had a lower average release time than on arrival declarations. Even the sub-processes such as approval for transit Form 1 for pre-lodged declarations had lower average time intervals

The study found that there are more direct import declarations being pre-lodged (83 percent) than transit declarations (20 percent) even though pre-lodged declarations recorded a lower average release time.

1 On arrival declarations mean declarations submitted after the goods arrive


For imports, the time taken between arrival at the entry gate and registration of the declaration was 9 hours 46 minutes. Additionally, the Customs process, (which starts from the submission of documents by the clearing agent to the time the documents are split and stamped by Customs central filing section) takes an average of 9 hours 5 minutes. For pre-lodged imports, from arrival at entry gate to submission of documents to Customs, it takes 2 hours 22 minutes and the customs process takes an average of 9 hours 2 minutes. On arrival imports, from entry to submission of documents to Customs takes an average of 14 hours 49 minutes while the Customs process takes 9 hours 58 minutes. Pre-lodged declarations had better process times for both processes under review than on arrival declarations. On the other hand, the Customs process time for exports was only 23 minutes indicating that there is room for improvement in the imports’ Customs process.

There were some rather long delays between some of the import sub-processes such as 9 hours 46 minutes between arrival and registration for the import process, and 4 hours 40 minutes between registration and submission of documents by the clearing agent to Customs. While the first delay may be out of the clearing agents’ control, the latter delay is entirely in their control and avoidable.

Several challenges such as unnecessary dwell times, low staff capacity, infrastructure design i.e. insufficient roads, delays in physical examination as the scheduled times are not adhered to etc. affected the average release times to some extent.

RECOMMENDATIONS The following are key findings from the study and the recommendations;

Table 2: A Summary of Some Findings and Recommendations

Findings Recommendations

Shortage of MRA staff-there is critical shortage of staff at the station which is affecting examination of goods, operation of scanners, printing of release orders, issuance of Temporary Importation Permit, transit documents, handling of toll fees, facilitation of exports

MRA to increase the number of Staff and Team leaders at Songwe Border Station. Currently there are 18 technical staff at the station, but according to staff complement, the Station needs 34 technical staff.

Lack of transparency-The trading community are not aware of licensing fees, penalties charged for offences and list of goods which require Other Government Agencies’ intervention. As such Customs Clearing Agents have to call the OGAs now and then to get the various information.

OGAs to consider publication of trade requirements, penalties and licensing fees.

Lack of Technical Skills to operate Scanner-During the study period, the Team observed that non-intrusive cargo Scanner operations were taking too long (over 30 minutes per truck) to be finalized. Customs officers assigned to operate non-intrusive cargo scanning have operating capacity challenges, which lead to delays.

Songwe Border Station to consider building capacity in scanner operations, using the two officers who were already trained

Inadequate infrastructureThe office space at Songwe Border Station is very small with limited parking space for conveyance, used second hand motor vehicles. Barriers and Gate Houses not in good condition and inadequate washrooms for cross border traders.

Improvement of infrastructure capabilities at Songwe Border by fast tracking the establishment of OSBP which is at design stage

Absence of Electronic Single WindowCustoms Clearing Agents, Traders, Customs officials move with documents from one office to another to fulfill clearance formalities and this lead to delays.

Fast-track the implementation of Single Window which is at feasibility level


BACKGROUNDMALAWI REVENUE AUTHORITYThe Malawi Revenue Authority (MRA) was established by an Act of Parliament in 1998 and launched in February 2000. The Authority is a semi-autonomous Government Tax Administration Agency under the Ministry of Finance, Economic Planning and Development. It is an agency which is responsible for assessment, collection and accounting for tax revenues. The MRA absorbed the duties and functions of the previously Customs & Excise and Income Tax Departments.

Its mission statement is to maximize revenue collection and promote voluntary compliance and trade facilitation through fair, efficient and transparent administration of Malawi Laws.

CUSTOMS & EXCISEThe Customs & Excise Division is one of the revenue divisions in the Malawi Revenue Authority. The Division administers the Customs and Excise Act (Chapter 42.01 of the Laws of Malawi). It collects Customs duty, comprising of Import duty, Import Excise Duty, Import Value Added Tax and Export Duties on selected products. Currently, the Division collects approximately 31% of the total revenue collected by MRA. The Division is also mandated to perform the following functions;

• Facilitation of international legitimate trade

• Protection of the society from importation and exportation of hazardous goods

• Enforcement of export proceeds

• Collection of Trade Statistics

• Implementation of trade Agreements

• Combat Smuggling

It should be noted that the Customs and Excise Division also collects Toll Fees on behalf of the Roads Fund Administration and levy on selected items for COSOMA.

MALAWI’S TRADE FACILITATION PROFILEMalawi ratified to the World Trade Organization Trade Facilitation Agreement (TFA) in July 2017 and under the TFA Article 7.6.1. Malawi as a member is supposed to measure and publish the average release time of goods periodically. Malawi also acceded to the WCO’s Convention on the Simplification and Harmonization of Customs Procedures in September 2013 which among others, advocates for trade facilitation and trade security.

MALAWI CUSTOMS REFORMS AND MODERNIZATION INITIATIVES AND ACHIEVEMENTS Since its inception MRA has continuously instituted reforms aimed at improving the efficiency and effectiveness of its operations.


To date the Division has implemented the following trade facilitation initiatives:

Table 3: A list of Some Reforms that MRA has implemented and their Achievements

Reform Achievement

1. Migration from manual Customs clearance system to ASYCUDA in 2001. Currently, Malawi Customs is using ASYCUDA World since 2016.

• Reduction of import documents from 22 to 5

• Expedited clearance • Remote Direct Trader

Input (DTI) • Interface with internal and

external systems 2. Establishment of Risk Management and Post Clearance Audit in

2008 • Expedited clearance • Optimum use of resources • Enhanced compliance

3. Establishment of the Declaration Processing Centre (DPC) in 2012. The DPC is located at MRA Head Office in Blantyre and handles declarations with VDP exceeding $700 from all automated stations.

• Uniform application of procedures which has eliminated border shopping

• Allows for monitoring the progress of declarations

4. Usage of non-intrusive cargo scanners at three major selected stations namely; Mwanza, Lilongwe Inland Examination Centre and Songwe Border Station. Plans are underway to roll out scanning operations at Dedza Border and Blantyre station.

• Enhanced compliance • Facilitation of trade • Detection of concealed

goods

5. Usage of Electronic Cargo Seals under the COMESA Virtual Trade Facilitation System since 2016. Based on risk analysis selected cargo is armed with Electronic Seals. CVTFS enables Customs to get real time updates on the actual location of goods providing an effective solution to cargo monitoring and achieve more transparency in the movement of cargo.

• Monitoring of transit goods

6. Rolling out of the Electronic Payment System in 2017.

• Eliminated taxpayer queues at Cashiers

• Provides flexibility and convenience to taxpayers

• Reduced incidences of theft of taxpayers’ money by clearing agents

7. Piloting of Authorized Economic Operator Programme in 2018. Under this Programme, compliant traders eg. Game Stores, Toyota Malawi, CFAO, Safintra and Ceiling and Partition are facilitated through exemptions from some Customs Procedures such as PE checks and immediate payment of Customs Duty. So far a few traders have been approved to participate in the Programme and they enjoy direct release of goods (blue channel).

• Facilitation of trade • Enhanced compliance

8. Establishment of One Stop Border Posts at the following border crossings; - Mchinji/Mwami (border crossing between Malawi and Zambia), Mwanza/Zobue, Dedza/Calomue, Muloza/Milanje (border crossings between Malawi and Mozambique) and Songwe/Kasumulu (border crossing between Malawi and Tanzania).

Work in progress

9. Introduction of an Electronic Single Window is being undertaken. Work in progress


OVERVIEW OF SONGWE BORDER STATIONSongwe Border Station is situated in the Northern Region district of Karonga in Malawi. It is a border crossing between Malawi and Tanzania. Official working hours for the Station are from 06:00 to 18:00 hours.

The Station handles goods to and from the Northern and Dar corridors. It handles more trade volumes of imports than exports (table 1).

Table 4: Volumes of import & exports at Songwe Border Station

Imports Exports

19950 6621155 6225116 10637035 187

Physically, Songwe is the second largest border station (after Mwanza Border Station) in Malawi. But in terms of revenue contribution, Songwe is the largest contributor, among the major border stations, to total revenue by the Customs Division contributing 13 percent during the 2017/2018 Fiscal Year as shown in table 5.

Table 5: Revenue Share of Major Border Stations in Total Customs Revenue Collection

2014/15 2015/16 2016/17 2017/18

8% 8% 5% 5%2% 3% 3% 3%12% 12% 10% 10%9% 10% 10% 13%

The station has a small office space with no examination bay, no demarcated parking space between wet and dry cargo. In addition, there is limited parking space for conveyance and used motor vehicles as well no signage for OGAs.

The following are the main Government agencies available at Songwe Border Station involved in the clearance of goods: -

i. Malawi Revenue Authority

ii. Malawi Immigration and Citizenship Services

iii. Malawi Bureau of Standards

iv. Ministry of Agriculture, Irrigation and Water Development

v. Ministry of Health and Population Services

vi. Department of Parks and Wildlife

vii. Department of Forestry

viii. Department of Fisheries

ix. Department of Veterinaryx. Malawi Police Services

xi. Directorate of Road Traffic and Safety Services

Songwe Customs Border Station comprises of twenty officers including the Station Manager and Deputy Station Manager. The station has the following sections: -


i. Passengers Clearance

ii. Examination

iii. Transit and Export

iv. Verification

v. Cargo Scanning

The current number of officers does not tally with the workload at the station. In this regard, some officers work longer hours instead of shifts.

• When goods arrive at the border, the information on the truck/motor vehicle is recorded in the register. The driver of the truck fills out a gate pass then submits the documents of the consign-ment to a clearing agent and proceeds to the parking yard.

• Restricted goods are inspected by the relevant OGA hence for such consignments Customs Clear-ing Agents submits Imports Documents to OGAs for their intervention.

• However, for some goods such as motor vehicles that do not require OGAs intervention, the Clearing Agents skip the OGAs intervention stage

• After completion of OGAs processes, Customs Clearing Agents register and assess declarations in ASYCUDA World (AW).

• Thereafter, payment is made either electronically or at a bank counter which triggers selectivity based on risk analysis Goods posing low risk are selected under the yellow lane and are subjected to documentary check only, whilst goods posing high risk are selected under the red lane and are subjected to physical examination

• Goods imported by Authorized Economic Operators go to the Blue Lane and are subjected to Post Clearance Audit after clearance.

NB: It should be noted that MRA currently only implements three lanes of selectivity

IMPORTS PROCESS

CONSIGNMENTS SELECTED FOR YELLOW LANE OR DOCUMENTARY CHECK

• DPC officers conducts documentary check and if all is in order, the declaration is re-leased in other words re-routed to green.

• Songwe Customs officer then issues a Release Order. • All documents including the Release Order are then stamped and split, a copy is re-

tained for filing while the original copy is given to the Customs Clearing Agent.


CONSIGNMENTS SELECTED FOR RED LANE

• The system assigns officers to conduct Physical Examination• Customs Officers conduct physical examination • and prepare a Physical Examination report which is uploaded in AW. • The Supervisor for Physical Examination Section assigns the Declaration to DPC.• DPC conducts documentary check with reference to the Physical Examination Report. • If all is in order, the declaration is released in other words re-routed to green. Songwe Customs

Officer then issues a Release Order.• Subsequent processes are the same as for consignments selected for documentary check al-

ready explained above.

TRANSIT PROCESS• Consignments selected for Red Lane• When goods arrive at the border, the information on the truck/motor vehicle is recorded in the

register. The driver of the truck fills out a gate pass then submits the documents of the consign-ment to a clearing agent and proceeds to the parking yard.

• However, for some goods such as motor vehicles that do not require OGAs intervention, the Clearing Agents skip the OGAs intervention stage

• After the completion of OGAs processes, Customs Clearing Agents apply to Customs on Form 1 for goods to enter under the Transit Procedure.

• Upon approval by Customs, the Customs Clearing Agents register and assess declaration. • Thereafter, payment of processing fees is made either electronically or at a bank counter.• Customs Clearing Agents submit documents to Customs• Customs Officer generates T1 and validates departure• Some selected high risk consignments are armed with Electronic Cargo Seals under the COME-

SA CVTFS• Customs Clearing Agents collect documents from Customs

It should be noted that some declarations are pre-lodged prior to the arrival of the goods and are either paid for prior to the arrival of the goods or after the arrival of the goods.

In the case of consignments conveyed in a truck weighing more than 3.5 tonnes, the truck goes to the weight bridge which is operated by the Directorate of Road Traffic and Safety Services. If the consignment complies with weight bridge regulations it proceeds to scanning if necessary. Finally, the consignment is physically released from the border.

In the case of consignments conveyed in a truck weighing more than 3.5 tonnes, the truck goes to the weight bridge which is operated by the Directorate of Road Traffic and Safety Services. If the consignment complies with weight bridge regulations it proceeds to scanning if necessary. Finally, the consignment is physically released from the border.


EXPORT PROCESSMost of the export consignments that pass through the border originate from inland Stations.

• When goods arrive at the border, the information on the truck/motor vehicle is recorded in the register. The driver submits the documents of the consignment to a clearing agent.

• If the conveyance is either a van or container, it proceeds to non-intrusive cargo scanner for scanning

• If the consignment conforms* to the declaration, the truck proceeds to weighbridge. • Upon weighing and compliance of the same, Customs Clearing Agent submits documents to

OGAs for their intervention depending on the type of goods. • Once OGAs complete their interventions, Customs Clearing Agents submits documents to Cus-

toms for processing.

*N.B If not, then the consignment is seized

• Customs checks the correctness of the declaration• Customs Officers verify the goods declared with the physical goods and if satisfied; • Customs officer discharges the consignment in AW. • Customs officer stamps the documents and retains a copy for filing and gives the Customs

Clearing Agent the original copy• Physical exit of goods from the border

The specific objectives were to: • Measure the average time taken for interventions by Customs and other government agencies

(OGAs)• Identify bottlenecks during clearance times at the border with a view to improve efficiency for

trade facilitation • Establish a baseline trade facilitation performance measurement• Monitor and evaluate the implementation of WTO TFA

Customs Processes at this point include;

The business process maps for Import, Transit, and Export Procedures are attached in Annex 1.

OBJECTIVES OF THE STUDYThe principal objective of this study was to find the average time taken for the clearance of goods from the time of arrival to the actual physical release from the border.


SCOPE AND METHODOLOGY SCOPEThe study was conducted at Songwe border station and was based on both automated and manual clearance processes. The study covered all Import Processes, Transit (inward) Processes, and Exports processes from arrival to the actual physical release of goods. Under the Import process, the study focused on goods with a value exceeding $700 (K500,000). Under the Transit process, the study focused on containerised2 goods to be cleared at Inland Customs Stations. Under the Export process, the study focused on goods whose declarations originated from Inland Customs stations.

Since the process of goods clearance is not the sole responsibility of Customs, Other Government Agencies were also involved in the study. Their role was to provide input into the business process mapping exercise as well as completing questionnaires (survey forms) for their respective processes during the pilot stage and the actual study.

TYPE OF GOODSThe study covered wet and dry cargo that passed through the border during the study period. The mode of conveyance being breakbulk, containers and vans.

2 Customs has an administrative policy which calls for the clearance of containerised goods at inland stations because of a lack of examination bays at the border stations

LimitationsThe study excluded the following: -• Declarations for Imported goods cleared at the border with a value not exceeding $700

(K500,000) since they are minor consignments and their clearance procedure is different in the sense that they are not processed by DPC

• Declarations for Imported goods cleared at the border under Special Delivery Order (SDO) because formalities usually take too long to be fulfilled

• Declarations for goods transiting through Malawi because there were outside the scope of the study whose main focus was Songwe

• Declarations for exports originating at Songwe Border Station- they are almost non - existent

The following OGAs were involved in the study: -

• i. Malawi Bureau of Standards• ii. Ministry of Agriculture, Irrigation and Water Development• iii. Ministry of Health and Population• iv. Department of Parks and Wildlife• v. Department of Forestry• vi. Department of Fisheries• vii. Department of Veterinary• viii. Directorate of Road Traffic and Safety Services• ix. Malawi Police Services


METHODOLOGY

The following phases as depicted in figure 1, were followed when conducting the Songwe TRS and were based on the WCO TRS Guide:

Figure 1: Time Release Study First Three Core Phases

I. PREPARATION OF THE STUDYESTABLISHMENT OF THE TRS NATIONAL WORKING GROUP (NWG). • On October 12th 2018, the Commissioner General of the Malawi Revenue Authority appointed the TRS NWG

comprising of senior officials from Malawi Bureau of Standards (MBS), Ministry of Agriculture, Irrigation and Water Development, Ministry of Industry, Trade and Tourism, Malawi Police Services, Department of Immigration and Citizen Services, CAFAAM and ICCAFA to oversee the implementation of the study. Terms of Reference (ToRs) for the NWG were developed and approved by the Commissioner General as per attached Annex 3. The chairperson for the TRS NWG was the Commissioner of Customs and Excise, Mr. Fatch Valeta. The first meeting of the TRS NWG was held on 4th December 2018. The aim of the meeting was to sensitise the NWG on the TRS concept, and mandate the NWG to oversee its implementation. To that end, the TRS NWG appointed a TRS task force comprising of officials from various divisions of MRA to carry out the study selected based on their expertise and experience in conducting TRS

The TRS task force conducted the following activities from February 18th to 23rd 2019;

• Engagement and sensitization: the task force presented the TRS concept and discussed the objectives of the study with Customs staff, clearing agents, other government agencies’ employees and security guards in order to get their buy in.

• Environmental Scanning: the task force surveyed the set-up of the border in order to get a feel of the movement of goods, infrastructure, dynamics of the players, etc.

• Development of business process maps: with the help of the various stakeholders involved in the goods clearance chain including Custom liaison officers, the task force documented and developed business process maps for import, export and transit procedures.

• Development of questionnaires: based on the business process maps, draft questionnaires were developed. The initial import questionnaire had 116 fields; transit questionnaire had 100 fields while the export questionnaire had 84 fields. After engaging the TRS NWG and conducting the test run, the fields were reduced to 37, 22 and 29 for import, export and transit respectively.


• Training and Test Run: training on how the TRS will be conducted and how to fill the questionnaires was provided for Customs staff, clearing agents, other government agencies’ employees and security guards. A test run for export, transit, and import procedures was conducted in order to identify any shortcomings in the design of the questionnaires and familiarise the stakeholders with the process of filling the questionnaires. A test run sample was identified for imports, exports and transit procedures and the survey was conducted for two and a half days. Following the results from the test run and recommendations from both customs staff and clearing agents, the TRS task force made some improvements to the questionnaires as highlighted in the preceding paragraph. Table, show some of the challenges encountered by the task force during the test run and how they were resolved before the actual study;

Table 6: Challenges Encountered During the Test Run and their Mitigations

Challenge Mitigation

1. Unwillingness to participate and complete ques-tionnaires by some border and Customs officials

The task force engaged the TRS NWG and the TRS NWG engaged heads of the various border insti-tutions to stamp authority to compel them to fully participate in the study

2. Poor cooperation by some border agencies

3. Soliciting of participation allowance by some OGA Officials

4. Poor coordination between drivers and clearing agents

Encouraged customs clearing agents to be present when goods arrive at the entry gate

5. Incomplete and inaccurate questionnaires The stakeholders were retrained

6. Missing questionnaires The task team positioned to monitor movement of documents

II. COLLECTION AND RECORDING OF DATA –

The collection and recording of data took place from April 8th to 15th April 2019. Due to some of the challenges encountered during the test run, customs staff, clearing agents, other government agencies’ employees and security were provided with refresher training to ensure data was being correctly captured. However, it was also noted during the test run that using systematic sampling method was not yielding the intended results due to low volumes of traffic. Consequently, the task team decided to cover all eligible declarations (as stipulated in Scope and Methodology) filed during the sample period of seven days (April 9th to 15th 2019).

• Data collection: data was gathered through questionnaires that were attached to import, export and transit documents at the entry gate and collected at the exit gate upon the physical release of goods. The questionnaires were distributed and collected for seven consecutive days (from April 9th to 15th 2019). But collection of the remaining questionnaires continued until April 19th 2019. To enhance data quality, the TRS task force members strategically positioned themselves around the border station to monitor movement of documents.

• Data cleaning and verification 3: the information, such as time, declaration date and numbers etc. recorded by the stakeholders was verified using Asycuda World and the physical registers. This also included recording of very important information, which the respondents were unable to record because the process was done at DPC.

3 Datacleaning,verification,dataentryandvalidationwasconductedfromMay5thto11th2019


• Data entry: the verified data was then entered into the WCO TRS online software,

• Data validation: the entered data was validated using the WCO TRS online software and Microsoft Excel

III. ANALYSIS OF DATA AND CONCLUSIONUsing the WCO TRS online software system and Microsoft excel, the recorded data was analysed to find the average release time for custom’s processes such as imports, exports, and transit.

Stakeholders’ validation workshops - After the first draft report was written, the TRS task team presented the findings to the TRS NWG at a stakeholder validation workshop to get their input into the report. The validation took place on July 19th 2019.

DATA ANALYSIS AND RESULTS

Procedure Number of Questionnaires Issued

Number of Questionnaires Collected

Response Rate

Number of Ques-tionnaires Rejected

Rejection Rate

Number of Eligible Ques-tionnaires

Acceptance Rate

IMPORTS 740 591 80% 41 7% 550 93%EXPORTS 40 33 83% 2 6% 31 94%TRANSIT 108 59 55% 3 5^% 56 95%TOTAL 888 683 73% 46 6% 637 94%

Table 7: Distribution of the Questionnaires

Table 7 summarises the number of distributed, collected, rejected and eligible declarations for the study.

IMPORT PROCEDURERegistration, assessment and or payment of imported goods for customs clearance is done either before the goods physically arrive at the border (pre-lodged) or when they have physically crossed the border into Malawi (on arrival). Pre-lodging declarations allow for processing of documents before the arrival of goods thereby cutting on release time. During the study period, 740 questionnaires for imports were distributed, 591 were collected representing a response rate of 80 percent irrespective of whether the questionnaire was correctly filled out or not. Out of the collected questionnaires, 41 questionnaires (7 percent) were rejected because they were either incomplete or inaccurate.

In the end, 550 questionnaires (93 Percent of the collected questionnaires) were analysed to establish the release time for goods passing through the Songwe border as shown in Figure 1. Out of the 550 questionnaires, 456 questionnaires (83 percent) were pre-lodged while 94 (17 percent) made up questionnaires for declarations registered and assessed on arrival as depicted in figure 1.


Figure 2: Composition of Declarations

Total

(550)

Prelodged (456)

OnArrival

(94)

Figure 3: Share of Pre-Lodged and On Arrival Declaration

83%

17%

Prelodgement OnArrival


Figure 4: Import Procedure Release Time for Pre-lodged and On Arrival Declarations

13:45

24:02:38

15:58

456

94

550

0

100

200

300

400

500

600

0:00

4:48

9:36

14:24

19:12

0:00

4:48

Prelodgement OnArrival TotalBillsofEntry

NumberofDeclarations

TimeinHours

AxisTitle

PrelodgedvsOnArrivalDeclarations

ReleaseTime inHours NumberDeclarations

Figure 4 presents import average release time from entry to departure of pre-lodged and on arrival declarations. The figure shows that for all declarations, the average release time from entry to departure was 15 hours 58 minutes. On one hand, for pre lodged declarations, the release time from entry to departure was 13 hours 45 minutes while for on arrival declarations, it took an average of 1 day 2 hours 38 minutes. This indicates that pre-lodgement of declarations cuts on the release time.

Table 8, presents the descriptive statistics of data which includes all the 550 observations. These observations include two outliers. The two declarations were regarded as outliers because one of the declarations had an unusual delay of 2 days and 35 minutes from arrival at the entry gate to the time the consignment was registered in ASYCUDA World for assessment. After an assessment, the importer took another 2 days 21 hours and 10 minutes to effect payment of duty. However, Customs process for this declaration, which starts from the time the clearing agent, submits the declaration to customs through face vet to the time the documents are split and stamped by Customs central filing, took only 3 hours 20 minutes. For the second declaration, the unusual delay occurred between when the goods were released from customs control at exit gate 1 and when goods left Customs premises through exit gate 2. It took 2 days 19 hours 3 minutes for the consignment to exit at the second and final gate even though the customs process for the second outlier took 1 day 2 hours and 9 minutes.

With the two outliers included in the analysis, Table 3 shows that the average release time from entry to departure was 15 hours 58 minutes with a minimum time of minutes and maximum time of 5 days 1 hour and 54 minutes. For the pre-lodged consignments, the average time taken was 13 hours 45 minutes whereas as on arrival consignments, the average time was 1 day 2 hours 38 minutes.


Table 8: Average Release Time Taken from Arrival at Entry Gate to Departure of Truck for the Import Procedure

Based on cargo type, full container load (FCL) cargo average time was 3 hours 59 minutes, break bulk average release time was 20 hours 6 minutes and 15 hours 59 minutes for other cargo category. With regard to Customs selectivity, the release time for red lane consignments was 16 hours 8 minutes whereas yellow lane average time was 12 hours 54 minutes indicating that red lane took more hours to be released than yellow lane.

Table 9, presents descriptive statistics of the data excluding the two outliers. The results from the table indicate that the average release time from entry to the departure was 15 hours 35 minutes with a standard deviation of 15 hours 3 minutes and a maximum release time of 4 days 1 hour and 1 minute. For the pre-lodged consignments, the average time taken was 13 hours 32 minutes and on arrival consignments, took 1 day 1 hour 32 minutes on average.

FCL cargo averaged 3 hours 59 minutes, break bulk average time was 20 hours 6 minutes and other cargo category averaged 15 hours 59 minutes. Based on Customs selectivity, red lane consignments took 16 hours 8 minutes on average and yellow lane averaged 12 hours 54 minutes.

Description Average Time

Standard Deviation

Minimum Time Maximum Time

Imports (Overall) 0d 15h 58m 0h 16h 19m 0d 0h 50m 5d 1h 54m

By Declaration Type

Pre-lodgement 0d 13h 45m 0d 13h 46m 0d 0h 50m 5d 1h 7m

On Arrival 1d 2h 38m 0d 22h 25m 0d 1h 58m 5d 1h 54m

By Cargo Type

FCL 0d 3h 59m 0d 2h 7m 0d 1h 52m 0d 6h 6m

Break Bulk 0d 20h 6m 0d 16h 48m 0d 1h 28m 2d 5h 49m

Other 0d 15h 59m 0d 16h 20m 0d 0h 50m 5d 1h 54m

By Selectivity

Red 0d 16h 8m 0d 16m 22m 0d 1h 22m 5d 1h 54m

Yellow 0d 12h 54m 0d 14h 57m 0d 0h 50m 2d 5h 49m

Other mostly includes motor vehicles, vans


Table 9: Average Release Time Taken from Arrival at Entry Gate to Physical Release of Goods Excluding Outliers

Description Average Time Standard Deviation

Minimum Time

Maximum Time

Imports (Overall) 0d 15h 58m 0h 16h 19m 0d 0h 50m 5d 1h 54mBy Declaration TypePre-lodgement 0d 13h 45m 0d 13h 46m 0d 0h 50m 5d 1h 7mOn Arrival 1d 2h 38m 0d 22h 25m 0d 1h 58m 5d 1h 54mBy Cargo TypeFCL 0d 3h 59m 0d 2h 7m 0d 1h 52m 0d 6h 6mBreak Bulk 0d 20h 6m 0d 16h 48m 0d 1h 28m 2d 5h 49mOther 0d 15h 59m 0d 16h 20m 0d 0h 50m 5d 1h 54mBy SelectivityRed 0d 16h 8m 0d 16m 22m 0d 1h 22m 5d 1h 54mYellow 0d 12h 54m 0d 14h 57m 0d 0h 50m 2d 5h 49mOther mostly includes motor vehicles, vans

With the existence of two outliers, we conducted a t-test for the data to determine whether the two samples mean are not statistically different from each other. In other words, the null hypothesis was that the difference between the two sample means should equal to zero.

Table 10: Test of Significance

All Observations Observations less Outliers

Mean 958.8527 935.7445Variance 960,740 817,136 Observations 550 548Pooled Variance 889,069 Hypothesized Mean Difference 0 df 1096 t Stat 0.4060 P(T<=t) one-tail 0.3424 t Critical one-tail 1.6462 P(T<=t) two-tail 0.6848 t Critical two-tail 1.9621

The results of the analysis are presented in Table 10. The results from the t-test show that the test statistic is 0.4060 with a p-value of 0.6848, which is more than tabulated p-value of 0.05. Hence, we fail to reject the null hypothesis. Since we have failed to reject the null hypothesis, we can therefore conclude that there was no significant difference between the average release times with and without the two-outlier declarations. The study findings reveal that the average release time was 15 hours 58 minutes.


IMPORTS SUB PROCESSES AVERAGE TIME RELEASE ANALYSISIn addition to Customs, many stakeholders have a hand in the process of goods clearance at the border. Any efforts to improve operations at the border will require the cooperation of all players involved, it was therefore essential to look at some of the processes at the border. We, therefore, proceeded to analyse time interval between when the goods arrived at the entry gate and the time the clearing agent assessed and registered the goods declaration in the ASYCUDA system.

The results show that it took an average of 9 hours 46 minutes from the time when the goods arrived at the border to the time the clearing agent registered and assessed the goods declaration in ASYCUDA World as presented in Figure 5. However, between these two processes, the goods underwent document check and inspection by other government agencies (OGAs) such as the Ministry of Agriculture, Forestry and Fisheries Departments, the Malawi Bureau of Standards, the Police and Parks and Wildlife. The average release time for OGAs was only 24 minutes, but the waiting time for clearing agents at these OGAs was rather long due to, in most instances, the unavailability of staff in the respective offices. However, it was observed from the questionnaires answered by the OGAs that the time they recorded was only the time they physically received the documents from the clearing agents, not the time the clearing agents arrived at the respective offices, despite instructions to record the entire period from time of arrival of agent to the time they finish their process. The failure by OGAs to include the waiting time made it difficult for the study to estimate the actual waiting time, hence the study only managed to measure the processing time.

The period between the completion of assessment and registration of goods to when payment for the same and onward submission to customs is effected solely depends on the clearing agents and or the importers. The study results in figure 6 show that it was taking an average of 1 hour 34 minutes from payment to submission.

One of the recommendations in a Benchmark Study on Malawi’s Trade Facilitation Systems and Processes by Crown Agents in 2012 was that Malawi should increase the options/channels for making trade-related payments. The Government introduced alternative channels such as the introduction of banks at the MRA premises as well as electronic payment (e-payment). The study found that for payment of duty, the average release time taken was 4 minutes for electronic payment while for payment at the bank was 19 minutes. The average release time for e-payments was affected mostly by network challenges with the service provider for mobile phones since most of the payments were made via mobile phones.

Arrival at entry gate

9h 46n

Registration and Assessment

3h 14m Payment 1h

34m Submission 3h 19m

Assign to DPC

1h 48m

Reroute to Green

0h 41m Split & Stamp 0h

25m Collection 3h 4m Weight Bridge 0h 14 Departure of

truck

CustomsInterventions

0d 15h 58m

0d9h5m

Figure 5: Sub Processes Average Time Intervals Analysis


The major involvement of customs begins from submission of documents by the clearing agents to when the customs central filing unit split and stamp the documents ready for collection by the clearing agent. This takes an average of 9 hours 5 minutes. The average time taken between submission of declarations to Customs and the time Customs starts processing the declaration was 55 minutes. Since the introduction of a central processing centre, the Declaration Processing Centre (DPC), declarations with a value above $ 700 (MK500,000) are processed by the DPC. Once declarations are registered and assessed by the clearing agent and submitted to Customs, depending on the selectivity in ASYCUDA World, the declaration may be assigned to DPC straight away, or the station may conduct physical examination then assign the declaration. From submission of documents to Customs through face vet to assignment of the declaration to DPC, the average time taken was 3 hours 19 minutes. In addition, Songwe border has just implemented cargo scanners, the study also looked at the average time it takes to scan a container. However, it is worth noting that the operation of the scanner is in its infancy. During the study, only one container for imports was scanned and it took 38 minutes to complete the scanning process.

The study also analysed the average release time for motor vehicles under the customs tariff heading 8703. This product was selected because motor vehicles principally for carrying persons are among the top revenue contributors (second only to fuel) for the station contributing over 69 percent of the revenue from motor vehicles and percent to total revenue collected by the border station in the 2017/18 fiscal year. During the study period, 408 declarations out of the 550 analysed were for motor vehicles of heading 8703. A number of 339 declarations of motor vehicles of 8703 were pre-lodged while 71 declarations were declared on arrival. The average release time for motor vehicles of 8703 was 16 hours 3 minutes. Customs clearance for motor vehicles took an average of 9 hours 22 minutes and the time from entry to submission of documents to Customs through face vet took 4 hours 22 minutes.

Table 11: Motor Vehicles of Tariff Heading 8703 Average Release Time and Sub Processes

Number of Declarations Average Release Time Arrival at Entry Gate to Submission

Customs Process

Overall 0d 16h 3m 0d 4h 54m 0d 9h 22m

Pre-lodged Declarations 0d 13h 37m 0d 2h 28m 0d 8h 53m

On Arrival 1d 3h 40m 0d 15h 10m 0d 9h 16m

Pre-lodged declarations for motor vehicles had lower overall average release time, lower dwell time between arrival to submission for Customs clearance and a lower Customs process interval (from submission to document splitting and stamping) than on arrival motor vehicle declaration. The results indicate an awareness of the benefits of pre-lodging declarations among the motor vehicle importers.

OTHER GOVERNMENT AGENCIESOther Government Agencies (OGAs) have a very crucial role to play in the clearance of goods. Importers need to comply with such requirements as licenses and permits. There are 10 OGAs operating at the border. These OGAs check for documentation to ensure that consignments have the necessary permits and licenses depending on the conditions for their import eligibility as well as inspect the actual consignments. During the study period, only three OGAs, Ministry of Agriculture, Malawi Bureau of Standards and the Directorate of Road Traffic and Safety Services (DRTSS) intervened in the import process.


Table 12: OGAs Interventions

Description Average Time

Standard Deviation

Minimum Time Interval

Maximum Time

OGAs Intervention 0d 0h 10m 0d 0h 5m 0d 0h 2m 0d 0h 20mMBS 0d 0h 10m 0d 0h 5m 0d 0h 5m 0d 0h 19mDRTSS 0d 0h 2m 0d 0h 1m 0d 0h 1m 0d 0h 5mMinistry of Agriculture 0d 0h 11m 0d 0h 5m 0d 0h 2m 0d 0h 20m

Document checks and inspections by the ministry of agriculture and the MBS were taking an average of 10 minutes with the largest interval of 20 minutes. It was taking DRTSS an average of 4 minutes to weigh trucks at the weight bridge. In essence, there were no long delays of consignments by the OGAs. However, we noted that some of the offices were usually closed and clearing agents had to wait a long time before they were attended to. Even though this is not reflected in the processing time, it still had a negative impact on the flow of goods.

EXPORT PROCESSIt is important to minimise the release time for export consignments since goods from Malawi have to compete with other goods at international markets. Being a landlocked country Malawi relies on neighbouring countries like Tanzania and Mozambique for connection to the rest of the world. Expediting the release of export goods from the country’s borders is not only beneficial to the exporters but to the country as well. In order to measure the average time, it takes to export goods through the Songwe border, we distributed 40 questionnaires, 34 questionnaires were collected representing a response rate of 85 percent. After validation, three questionnaires were rejected because they were either incomplete or the data was inconsistent. However, it is worth noting that there were few Export consignments facilitated through the border during the study period. Of the total (1116) import, transit and export transactions registered at the border during the study period, export transactions made up only 4% of these transactions.

The information from the 31 questionnaires was processed and analysed. The results are presented in table 8. The results from the table show that the average time taken from the time the consignment enters the Songwe border to the time it leaves the border is 5 hours 35 minutes. By cargo type, breakbulk consignments had the average release time of 2 hours 11 minutes as compared to full container load (FCL) which averaged 5 hours 44 minutes and other cargo, which took an average time of 6 hours 24 minutes.

Table 13: Average Time Taken from Entry to Departure of Truck/Vehicle

Description Average Time Standard Deviation Minimum Time

Maximum Time

Exports (Overall) 0d 5h 35m 0h 9h 30m 0d 0h 56m 1d 19h 34mBy Cargo TypeFCL 0d 5h 44m 0d 7h 56m 0d 1h 5m 1d 3h 51mBreak Bulk 0d 2h 11m 0d 1h 25m 0d 1h 00m 0d 4h 11mOther 0d 6h 24m 0d 13h 8m 0d 0h 56m 1d 19h 34mOGAsIntervention 0d 6h 12m 0d 10h 15m 0d 0h 56m 1d 19h 34mNone 0d 2h 25m 0d 1h 4m 0d 1h 0m 0d 4h 11m

The average release time for consignments with no OGAs intervention was 2 hours 25 minutes whereas with OGAs intervention it took 6 hours 12 minutes. The minimum time to release the consignment was 56 minutes and the maximum time was 1 day 19 hours 34 minutes. For the consignment with the maximum average release time, after the goods arrived on April 13th 2019, the conveyance was weighed at weight bridge by the DRTSS 10 minutes later


and the average release time was 3 minutes. After the DRTSS intervention, the next OGAs intervention happened 18 hours 55 minutes. However, OGAs intervention had an average release time of 15 minutes while the average release time for Customs intervention was 1 hour 2 minutes. After the Clearing Agent collected documents from Customs, it took 22 hours 27 minutes for the conveyance to get to Exit Gate 1. The dwell times recorded for this declaration were mostly under the control of the clearing agent and/or the exporter.

We further analysed the number of declarations per period and the results are presented in Table 9.

The majority of the declarations, 42% had a release time of less than 2 hours and 77% had a release time of 4 hours or less while only 10% of the declarations had release times above 12 hours. Since the majority of the declarations 77% had an average release time of less than 4 hours indicates that it is possible to reduce the average release times for export transactions.

Release Time in Hours Number of Declarations Percentage of the Total

0-2 hours 13 42%3-4 hours 11 35%5-8 hours 3 10%9-12 hours 1 3%>12 hours 3 10%Total 31 100%

EXPORTS SUB PROCESSES TIME ANALYSIS An analysis of the sub-processes, Figure 8, show that after the consignments had been weighed by the DRTSS, an average of 1 hour 14 minutes elapsed before the OGAs commenced document checks and inspection. However, the actual intervention by OGAs from start to finish takes an average of 9 minutes. The OGA intervention included both documentary check and inspection of goods.

Figure 6: Sub Processes Average Time Interval Analysis

Arrival at entry

gate0h

11mWeight Bridge

1h 14m

OGAs0h 11m

Submission

0h 5m

Start P/E

0h 9m End P/E 0h

8mExport Release

0h 15m

Collection

1h 22m

Exit Gate 1

0h 36m

Departure of truck

Average Release Time 0d 5h 35m

Customs Intervention 0d 0h 23m


Customs intervention starts when the clearing agent submits the documents to the export supervisor via face vet to the export release. This process takes an average of 23 minutes, with the shortest and the longest time intervals of 11 minutes and 1 hour 5 minutes respectively. The Customs process activities recorded some of the lowest average time intervals in the whole export process such as from the export supervisor receiving the documents to the time physical examination starts.

The longest average time interval was between collection and exit gate 1, this entirely depends on the clearing agent and or driver of the truck/vehicle. Apart from delays caused by clearing agents in submitting documents to the drivers for one reason and another, the team also observed that there was congestion at the gate of exit due to vehicles entering the gate due to lack of adequate space/roads. This is explained by the average time of 36 minutes recorded between the exit gate 1 to the departure of the truck even though the distance between the two points is less 1 kilometer.

TRANSIT PROCESS For the transit process, the study focussed on inward transit and excluded international transit transactions. The transit release time is defined as the average time taken for the transit of cargo, starting with the time when transit goods arrive at the entry gate until they depart from exit gate 2 for inward processing. The study included all domestic transit transactions and just like for imports, importers can pre-lodge the declarations for domestic transit. During the study period, of the 108 questionnaires were distributed for transit and collected 59 questionnaires representing a response rate of 55 percent. However, 5 questionnaires were excluded due to incomplete data or filled out wrong. Figure 7 presents the distribution of questionnaires collected, pre-lodged, on arrival and rejected.

Figure 7: Number of Pre-Lodged Versus On Arrival Declarations

We analyzed data on transit process and the analysis results presented in figure 8. The figure shows that there was a marked difference between the average release times from arrival at the entry gate to the departure of the truck/vehicle for pre-lodged and on arrival declarations.

The study results show that pre-lodged declarations have an average release time of 13 hours 11 minutes while on arrival declarations took an average release time of 1 day 4 hours 43 minutes. On the other hand, the average release time for transit transactions was 1 day 1 hour 34 minutes.


Figure 8: Time release for transit Pre-Lodged Versus On Arrival Declarations

43

11

54

OnArrival,25.34

Prelodgement,13.11

Total,28.43

0

5

10

15

20

25

30

0

10

20

30

40

50

60

OnArrival Prelodgement Total

TimeinHours

NumberofDeclarations

AxisTitle

AverageReleaseTimeforPrelodgedandOnArrivalDeclarations

NumberofDeclarations Average ReleaseTime inHours

The study also measured the time taken for different sub-processes of the transit process:

i. Time taken from submission of Form 1 till approval is granted

ii. Time taken from registration to Payment,

iii. Total time taken from submission of documents to generation of T1,

iv. Time taken from T1 generation to departure validation,

v. Time from departure validation to collection,

vi. Time from Weight Bridge to the departure of the truck/vehicle.

T P/EThe team measured the average time taken between the submission of Form 1 until approval was granted. The study found that it takes an average of 1 hour 59 minutes between submission and approval. Approvals for pre-lodged declarations take an average of 29 minutes while on arrival declarations take 2 hours 22 minutes.

The study further revealed that after approval for Form 1 has been granted, the clearing agent registers the declaration in ASYCUDA World then has to pay for the declaration. There was a waiting time of 7 hours 23 minutes between registration and effecting payment. The largest time interval is 1 day 23 hours 43 minutes. It was further discovered that from the time of the submission of documents to the generation of T1, it takes an average of 28 minutes.

The average time between T1 generation and validating departure by a transit officer for pre-lodged is 33 minutes while on arrival declarations it is 18 minutes. Overall, it takes 21 minutes on average from the time of submission of documents to the generation of T1.

After a transit officer has validated departure, it took an average of 1 hour 24 minutes for the clearing agent to collect the documents.

Furthermore, two containers for transit were scanned and the average time was 54 minutes. The maximum scanning time for transit was 1 hour and the minimum time was 49 minutes.


CHALLENGES The following are critical challenges that were encountered during the study;

Challenge Solution

Differences in time zones Tanzania is one hour ahead of Malawi. This resulted in quoting of wrong times in certain cases questionnaires were completed by Tanzanian drivers at the entry gate.

The TRS Task Force were strategically positioned to verify the correctness of the time endorsed on the questionnaires

Inadequate ResourcesResources to cover the entire study were cut towards the end of the study

Some of the activities for instance; data entry, data cleaning, data verification and data validation were combined.

Inadequate time allocated to the TRS by the Task ForceThe availability of members of the TRS task force was largely affected by their core responsibilities

The TRS Task Force were very much dedicated despite their core responsibilities

Language Barrier Most of the drivers that pass through Songwe Border Station speak Swahili and have English communication challenges

The TRS Task Force engaged Translators

Resistance by Customs Officers and Clearing Agents

During the pilot study and even during implementation, some of the Customs officers and Clearing Agents were not willing to participate in the study.

For Clearing Agents- The Authority formally engaged the two Associations namely; CAFFAM and ICCAFA to encourage their members to participate fully in the Study

FINDINGS AND RECOMMENDATIONSFor imports, the time taken between arrival at the entry gate and registration of the declaration was 9 hours 46 minutes. Additionally, the Customs process, which starts from submission of documents by the clearing agent to the time the documents are split and stamped by Customs central filing section, took an average of 9 hours 5 minutes. On the other hand, the Customs process time for exports was only 23 minutes. This indicates that there is room for improvement in the imports’ Customs process.

There were some rather long delays between some of the import sub-processes such 9 hours 46 minutes between arrival and registration for the import process, and 4 hours 40 minutes between registration and submission.

While the first delay may be out of the clearing agents’ control, the latter delay is entirely in their control and avoidable. Furthermore, the scanning of containers was taking longer than it had to due to a lack of experience on the part of the some of the scanning officers.

A number of challenges such as unnecessary dwell times, low staff capacity, infrastructure design i.e. insufficient roads, etc. affected the average release times to some extent.


Table 15: A Summary of Study Findings and Recommendations


Shortage of MRA staff

-There is critical shortage of staff at the station which is affecting examination of goods, operation of scanners, printing of release orders, issuance of Temporary Importation Permit, transit documents, handling of toll fees, and facilitation of exports


Lack of transparency

-The trading community are not aware of licensing fees, penalties charged for offences and list of goods which require Other Government Agencies’ intervention. As such Customs Clearing Agents have to call the OGAs now and then to get the various information.


In-adequate resources in the part of Customs, OGAs and Clearing Agents

Some border agencies do not have facilities such as generators and computers and some Customs Clearing Agents do not even have offices. When there is power outage, only Customs and some OGAs operate while others do not. This contribute to delays in clearing of goods as some have to wait for electricity to come even if other agencies have already done their part.

MRA and OGAs should consider pooling resources for the acquisition of a generator to cover all concerned offices at the border

MRA should de-register all Customs Clearing agents who don’t have facilities which is a requirement when they are being assessed.

Lack of Technical Skills to operate Scanner

- It was observed that non-intrusive cargo Scanner operations were taking too long (over 30 minutes per truck) to be finalized. Customs officers assigned to operate non-intrusive cargo scanning have operating capacity challenges which lead to delays.


Inadequate infrastructure

-The office space at Songwe Border Station is very small with limited parking space for conveyance, and used second hand motor vehicles. Barriers and Gate Houses not in good condition and inadequate washrooms for cross border traders.

MRA should consider the improvement of infrastructure capabilities at Songwe Border by fast tracking the establishment of OSBP which is at design stage

Absence of Electronic Single Window

-Customs Clearing Agents, Traders, Customs officials move with documents from one office to another to fulfill clearance formalities and this lead to delays.



Physical Examinations not Risk Based

Looking at the volumes of traffic passing through Songwe Border, second hand motor vehicles represent about 90%. ASYCUDA System Selectivity for second hand motor vehicles requires 100% physical examination. This situation compounded with shortage of staff only makes matters worse, hence the Songwe Border station decided to be doing scheduled physical examinations. The schedule starts from 07: 00 hours, and goes for every one and a half hour, up to 17:30 hours. Practically, the examination times are not strictly followed due to shortage of staff and this causes delays

Consider removing the scheduled Physical Examination times, instead conduct physical examination soon after goods arrive

MRA should consider doing physical examination for second hand motor vehicles based on Risk Analysis. Most of the motor vehicles which pass through Songwe Border Station originate from Japan, and valuation risks are minimal hence documentary checks can be effected.

Opening and Closing hours not adhered to by Customs Officers, bank officials and OGAs staff.

Official opening and closing hours for Songwe Border Station is from 06:00 to 18: 00 hours. However, these working hours are not observed. Mostly, the entry gate is opened at 06:00 hours by Security guards and traffic is allowed in. The middle exit gate is lockable, and normally opened around 07: 00 hours by Customs officers. At the middle exit gate, traffic does not pass through, despite the fact that they are done with Customs formalities the previous night and they have been given release orders. (since DPC closes at 22:00 hours) In the following morning, they queue waiting for the officer on duty to arrive and open the gate. Furthermore, due to shortage of staff, during lunch time which is normally around 14:00 hours, this gate is sometimes closed and traffic queue again.

The bank officially opens at 8:00 hours and those traders who did not finalize payments the previous day have to wait.

OGAs normally come around 8:00 hours and all goods requiring their intervention earlier than that have to wait.

Customs officers, OGAs staff and bank staff should observe opening and closing hours as well as working hours in general

Poor Handling of Customs Documents by Commissionaires

After printing of Release Orders by Customs officer at Long room, the documents are given to Commissionaires to deliver to the Splitting and Stamping Section. Similarly, Customs Documents

MRA needs to properly train the Commissionaires to ensure that they are conversant with the different documentation that they handle






















which have already been split and stamped are also given back to the Commissionaires to deliver to the Customs Clearing Agents. In some cases, due to unknown reasons, the Commissionaires, would get the whole set of Customs Documents and deliver to Customs Clearing Agents, bypassing the Splitting and Stamping Section. Upon arriving at the middle exit gate the Customs Clearing Agents are sent back to have the Customs Documents split and stamped thereby contributing to delays

Pre-lodgment

Overall, pre-lodged declarations for both import and transit processes had a much lower average release time than on arrival declarations. Even the sub-processes such as approval for transit Form 1 for pre-lodged declarations had lower average time intervals

In addition, unlike imports where most of the transactions were pre-lodged (83%), only 20% of the transit transactions were pre-lodged.

MRA should keep on sensitizing traders to use the prelodgement facility in a bid to reduce clearance times

TIPs and Toll Fees Payments

Due to the absence of an option to pay for TIPs and Toll Fees using e - payment platform, all TIPs and Toll Fee payments are done manually. As a result, the process of TIP and Toll Fees have contributed to delays of Trucks to depart despite the consignment having sufficed all the Customs clearance processes and released

MRA to speed up inclusion of TIP and Road Toll Fee payments through e-payment

No Signage for OGAs and Inadequate Public Notices

Songwe Border Station has no signage’s for all OGAs except for MBS. One can hardly tell their location unless you ask. This gives room for unofficial border assistants (dobadobas) to take charge. This practice lead to extra costs and delays to new importers.

OGAs should put effort to display signage/labelling of their buildings for instance; Ministry of Agriculture, Irrigation and Water Development, Departments of Forestry, Veterinary and Fisheries respectively, and Directorate of Road Traffic and Safety Services. MRA should also consider to put up public notices of basic information, in languages that are frequently used for communication at Songwe Border Station.






















Since this is the first time that MRA has conducted a TRS at Songwe border, the expectation is that the findings from this study will form the baseline for future studies.

IMPLEMENTATION OF RECOMMENDATIONSTable 16 provides an action plan for the implementation of some of the long term recommendations in line with the WTO TFA.

Table 16: Action plan for the implementation of Some Long Term TRS recommendations

No. Activities Reference to substantial measure in the WTO TFA

Output (National & International Instruments)

Parties Responsible

Time frame for implementation

Comments

1. Implement an electronic national Single Window System

Article 10.4- Single Window

Streamline border procedures, reduce costs and time, and reduce paper documents

Ministry of Industry, Trade and tourism, Malawi Revenue Authority, National Roads Authority

By year 2020 At feasibility stage

2. Establish One Stop Border Post

Article 8.2- One Stop Border Post

Reduce costs and time, Streamline border procedures and Sharing of resources

Ministry of Industry, Trade and tourism, Malawi Revenue Authority, National Roads Authority

By year 2020 for Mchinji, Mwanza, Dedza, and Muloza Border Stations, by year 2021 for Songwe Border Station

Construction is underway at Mchinji Border Station

Construction about to commence at Dedza and feasibility stage for Songwe Border Stations


CONCLUSIONThe expanding role of Customs as a regulator to encapsulate that of a facilitator has resulted in a paradigm shift in terms of Customs processes. The focus of Customs is increasing the level of trade facilitation whilst employing risk management in the processes. One of the trade facilitation strategies that Malawi Revenue Authority has employed is encouraging importers to lodge their declarations prior to the arrival of the goods. Most of the importers have embraced the initiative by customs as evidenced by the share of pre-lodged declarations in the total declarations studied during this period.

The study revealed large time intervals in between processes. In other words, after a process was completed, the stakeholder involved was taking too long to pass it on to the next stakeholder to start the consecutive process. This shows that every stakeholder has an important role to play in the goods clearance process and there is room for improvement in terms of coordination of activities between the stakeholders operating at the border.

Finally, since the current study was limited to goods clearance processes at the border, a more comprehensive study to measure the release time for goods clearance from the border to inland ports would provide a more complete picture. Additionally, MRA should ensure that after a reasonable period of time, subsequent studies should be conducted in order to evaluate the progress based on the suggested measures


ANNEXES


Annex 1a: Business Process Map – Import


Annex 1b: Business Process Map – Export


Annex 1c: Business Process Map – Transit


Annex 2a: Questionnaire - Import


end of import questionnaire


Annex 2b: Questionnaire – Export


End of export questionnaire


Annex 2c: Questionnaire - Transit


end of transit questionnaire


Annex 3: Terms of Reference for the Songwe TRS NWG

ToRs for National Working Group Term of Reference Actual activities

1.Develop Scope for the TRS - Develop guidelines for entering data

- Develop Sampling Strategies

- Develop Methodology of the TRS

2.Desgn Data Collection Tools - Conduct Environmental Scan

- Develop business process maps

-Develop Questionnaires

3.Training & Sensitization of Stakeholders

-Sensitization and Training

4.Test - Run - Distribution of Questionnaires

- Collection and Recording of Data

- Ensure return of all Questionnaires

5.Data Collection - Distribution of Questionnaires

- Collection and Recording of Data

- Ensure return of all Questionnaires

6.Data Verification - Verification of data in ASYCUDA World

7.Compilation of Draft and Final Report

-Writing report


TIME RELEASE STUDY ACTION PLAN – MALAWIDecember, 2018 – September, 2019

SPECIFIC ACTION RESPONSIBILE PERSON TIME FRAME PERFOMANCE

INDICATOR REMARK

PHASE 1: PREPARATION OF THE TRS

Detailed preparation is necessary to ensure success of the study and credible results.

Standard study period between 4 - 6 months – from the time of preparation to the time the final report is released for publicity

Meeting to discuss and to nominate mem-bers of the NWG responsible for the project

Consultative meeting with Stakeholders involved in the NWG & estab-lish

· Customs Management

· Customs Management with Project Team

3rd December, 2018

17thDecember,2018

NWG Created It is recommended that the NWG should be Chaired by a Senior Customs Official.

Necessary to engage all officials who will be involved in the project from the very begin-ning.

· Develop ToR for the NWG


Terms of Refer-ence developed

To clearly define what is expected of the working group

· Develop scope for the TRS


· Selection of traffic

· Duration of the study

· Types of goods to be covered in the study

The study should in-clude a comprehensive description of all areas to be covered and all events in the clearance chain



INDICATOR REMARK

Develop guide lines for enter-ing data and define roles and activities

· National Working Group

30thDecember,2018 Guide lines devel-oped

To ensure uniform interpretation during implementation

Develop sam-pling strategy and methodolo-gy to be used in the TRS


Strategies & methodologies developed

Sampling strategy to be developed.

Samples to be repre-sentation of the trans-actions to be covered by the study

Consult Statician for sampling strategies

Conduct envi-ronmental scan


14th January, 2019

Develop Busi-ness process maps and work flows


28th January,2019 Business Process Maps developed

Identify who, where, which, what, when and how the TRS will be carried out

Development of questionnaire


By 11th Febru-ary,2019

Questionnaires developed

Training and sensitization of other players involved

· Customs Man-agement National Working Group

25th February,2019 Train & sensitize all players before test run

Test – run

· MWG and Station manager

4th – 8th March,2019

Test run provides the opportunity to remedy any problems that might be encoun-tered due to lack of understanding by the personnel collecting and recording data. This should done for a duration of at least 3-5 days

Observe at least 2 weeks’ difference between test-run and period of actual study



INDICATOR REMARK

PHASE ll- DATA COL-LECTION AND RE-CORDING

Distribution of questionnaires.

· NWG and designated Customs Officers

24th March, 2019 Questionnaires distributed

Collection and recording of data


8 - 15 April, 2019 Data collected and recorded

1 month for collection and recording of ques-tionnaires using the WCO TRS software.

Retrospective collection of data


By 19 April, 2019 2 weeks to collect data retrospectively

PHASE lll DATA ANALYSIS AND CONCLUSION

Ensure all ques-tionnaires are returned

· NWG By 26th April, 2019 All questionnaires collected

Verifying data · NWG 5 – 11 May, 2019 Data verified 4 days for verification of data

Analysis of data · NWG By 17th June, 2019 Data analyzed

Draft report · National Working Group & TRS Participants

By 2nd July , 2019 Report drafted 15 days first draft report



INDICATOR REMARK

Consultation meeting on the draft report

(Validation)

· Customs Management & senior officials from 5 agencies

19th July, 2019

Final report · NWG 15th September, 2019

Finalized report Final Report to be shared with members of the NWG and WCO

Press release · Chairman of the NWG

30th September, 2019


Malawi Revenue Authority

Develop Malawi, Pay Taxes

MRA STATIONS COUNTRYWIDE

SongweKaporo

Katumbi

Chitipa

Chisenga Karonga

ZombaLiwonde

BalakaNayuchi

MangochiChiponde

Muloza

Blantyre

Mulanje

Marka NyathandoNsanje

ChikombeSandama

Mwanza

Mzimba

Mzuzu

Biriwiri

MchinjiLilongwe

Salima

KasunguDwangwa

Nkhata-Bay

Chisinga

Mqocha

Dedza

MAP OF MALAWI