Tips on Cross-Border Business Operation

Oliver Facey, vice-president, DHL Express, sub-Saharan Africa, advises African businesses to understand the diverse regulations governing international trade across borders

|  By Vincent Nzemeke  |  Nov. 4, 2013 @ 01:00 GMT

WITH the emergence of electronic commerce, popularly known as e-commerce and other cutting edge technologies, doing business in various parts of the world has become easier.  Consequently, many African businesses have chosen to trade across borders in order to take advantage of the revenue-generating potentials inherent in the import and export of goods and services.

While there are numerous and exciting business opportunities based on the international demands for local African products, international trade remains a complex process. If not properly managed, the complexities can create unfavourable situations for business owners and their partners, especially small and medium enterprises trying to take advantage of the global market.

In view of this, Oliver Facey, vice president, operations at DHL express sub–Saharan Africa, says that it is important for business owners to be aware of the diverse trade regulations and implications when moving shipments across the various borders in Africa and abroad.

 Facey points to the latest World Bank Doing Business 2013 report which revealed that sub-Saharan Africa boasts of the largest improvement in the rankings from last year, as business regulatory practices in various countries converge and thereby narrow the gap with their European counterparts. However, the region is still the worst-performing, as a result of the challenges that local businesses face in terms of understanding document requirements and customs procedures.

According to Facey, businesses need to have an understanding of customs requirements applicable to their product’s origin and destination, in order to minimise any delay and extra costs at border clearance which could adversely affect their profits and expected transportation service levels.

Facey offered a few tips to local businesses to assist in a smooth shipment process. “First and foremost, customs usually require the importer or exporter to register with them before transacting business internationally. Following this, businesses need to ensure they have the correct paperwork. Typical documents that are required include certificates stating the proof of the products origin as some goods could attract preferred rates of duty depending on their country of origin. There are also goods that require inspection and release by other government agencies, such as the health department, so it is imperative to enquire whether the goods being shipped from specific countries require additional permits.”

Facey added that invoices also need to be provided and must be in specific format which include the purpose for the product and the proof of their values. “Customs reserves the right to stop, detain and physically inspect any shipment entering or exiting the country. During this phase, they subject the clearance of the product to various checks, such as valuation, to determine whether the value paid to the supplier is the value declared for Customs purposes. There are legal, financial and service implications if these details do not correspond.”

Commodities are coded by means of a tariff number and as a result, a harmonised tariff code will be assigned to the product. It is the code assigned to the product that determines the rate of duty payable. “Another aspect to consider is whether there are any special requirements for the specific country the product is being shipped to, such as temporary imports or exports and restrictions. There are prohibited and restricted goods that can only be shipped in and out of the country under a permit or license, such as plant products which require a phytosanitary certificate or medicine and scheduled substances which usually need a medical control council certificate.”

Facey added that to guarantee a smooth shipment process for both the business and the customer, it is vital for companies to ensure traceability and transparency in the transportation process.

“Not only will this help keep the customer informed, but it will also assist the company prevent delays should there be a stoppage in the process. With the knowledge of a particular stoppage, a business can then help resolve the issue quickly and efficiently, as in some instances; the delay is likely solved by supplying extra data or forms.”

Due to the complexities of the procedures and processes, Facey advised business owners to seek assistance from appropriate service providers that can support and advise them on their business needs. “This enables good local knowledge and the assistance with the clearance process and procedures. They will also ensure that all requirements are met and understood before shipping, as well as manage expectations and navigate customers through, sometimes very difficult procedures. By fully understanding the processes and terminology involved with entering the different markets, African businesses can build a long-term foundation for even more successful international trade.”

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