IFC, Customs Commission sign agreement to reform Ethiopia’s customs, trade logistics
IFC, a member of the World Bank Group, has signed a cooperation agreement with the Ethiopian Customs Commission (ECC) to provide advisory support aimed at supporting the ECC’s efforts to reform the trade logistics landscape of Ethiopia.
The agreement provides a framework for advisory support to be implemented in a three-year program in partnership with ECC as well as other public and private sector stakeholders.
The time and costs related to import-export are one of the major impediments to Ethiopia’s economic growth, where bureaucratic hurdles, inefficient regulatory framework, and poor coordination between government agencies have been affecting the efficiency of cross-border trade.
IFC, through its Investment Climate facility, has been working with the Ethiopian Revenue and Customs Authority (ERCA), ECC’s predecessor, since 2013 to improve the country’s investment climate. The cooperation resulted in improved trade facilitation environment, particularly by reforming the legal and regulatory frameworks, initiating customs risk management, launching the national Electronic Single Window (eSW) system, and streamlining of documents and procedures.
The agreement is a continuation of the previous initiative and has the following major expected outcomes:
· Improve ECC’s Customs Risk Management: ECC applies risk management and classifies import and export shipments in to different risk channels (red, yellow, green, and blue) to control consignments that present a risk and to facilitate legitimate trade
With the aim of facilitating trade, thus cutting down time and costs of trading, the program targets reducing red-channel rates for import from the current 30 percent, increasing the green channel up from 15 percent, and significantly boosting risk management implementation for export cargo that is in its infancy.
· Establish Streamlined Transit and Border Crossing Procedures: About 95 percent of Ethiopia’s import-export trade passes through the Djibouti transit corridor, so improving trade logistics of this corridor is vital. The bilateral agreement between Ethiopia and Djibouti provides a related legal framework, which is not fully implemented. Therefore, the program will identify opportunities to implement common or harmonized procedures, and supporting the operation of a joint border committee within the framework agreement.
· Implementation of the National eSW: The Government of Ethiopia (GoE) had partnered with IFC and launched the eSW in 2013 as one of the tools to improve the country’s investment climate. The eSW serves as a common electronic platform integrating all regulatory agencies and stakeholders involved in international trade, and enables electronic submission and processing of trade documents and data required for customs clearance.
IFC promised support the rollout and development of eSW through streamlining the various laws and regulations and their alignment with the newly designed Business Process Reengineering (BPR) at government agencies; provide capacity building of participating agencies; and designate proper procedures to integrate risk management.
The cooperation agreement was signed at ECC’s office between Dahlia Khalifa, Senior Manager at IFC; and Debele Kabeta, Commissioner of ECC.
During the signing ceremony, Commissioner Debele said, “IFC’s advisory support will tackle significant drawbacks in the trade logistics sector. This partnership aligns with the Government of Ethiopia’s priorities for improving the trade logistics landscape and coincides with the National Doing Business Reform Initiative spearheaded by the Prime Minister Dr Abiy Ahmed.”
Dahlia Khalifa said “Supporting an improved environment for business to trade helps expand opportunities for private investors to play a bigger role in Ethiopia’s development. Today’s agreement continues and expands our longstanding partnership with the Commission through a renewed deal to improve the trade logistics sector. The Commission has again demonstrated its commitment to realize concrete reforms that will positively impact the economy at large.”