Cross Border Trade for Micro Institutions in Zimbabwe

In this article, we need to share the information which assists the informal cross border trade operations with the aim of achieving the following objectives;-

• making cross border trade easier;
• generate more informed cross border traders; and
• increase the chances of sustainability and growth into formal trade

Cross border trade (import and export) by individuals is often called informal business by the institutions which seek to record and tax the transactions of those individual traders. To the trader's own perspective, there is nothing informal about earning a living for one's own family. If anything, the cross border trading business sustain a very significant number of families and livelihoods. To this end, the scale of business needs to be supported by institutions and Government, including any individual, who feels compelled to contribute towards poverty alleviation and sustainable development of micro-institutions.
 
By the very nature of the financial limitations of the traders, the transaction by cross border traders tend to happen with markets which are close to Zimbabwe's borders. More and more cross border trade of Zimbabwe has been taking  even inter-continental dimensions as goods are being sourced as far as China or United Arab Emirates (UAE), Turkey etc. 

 

The cross border trade has a trade bias towards import trade and dominated by small female businesses. The fact that the trade is dominated by the small female-run businesses means there are quite a lot of downstream implications in the areas of economic development, fighting poverty, empowerment and amelioration of effects of unemployment. More importantly, the micro- informal business units have a great potential of growth into formal business. 

The potential impact and the growth possibilities explain the motivation behind the crafting of this article.

Documentation

Passports

The main document for cross border trader is the passport. Passports have not been easy to access in Zimbabwe in light of the backlog which the Office of the Registrar General. Passport and VISA are very important documents for cross border traders since the traders accompany their goods.

The cost of passports are as follows:-

    - Ordinary Passport -  US$35
    - Urgent passport (3 working days) - $253
    - Express urgent passport (24 hrs) - $318
    - Temporary Travel Document - $38

Import and Export Permits

Unlike most of manufactured goods (with the exception of some goods such security, medical goods etc), many products from extractive industries (agriculture,  wildlife and mining) need import or export permits. A trader needs to check with a clearing agent to see if the goods she or he intends to carry are not part of the controlled goods. In addition, small quantities can be allowed without permits as they are deemed to be for private consumption.

Phytosanitary Certificates 

Plants or direct products from plants have a tendency of carrying pests and diseases. Garden flowers, grass (even dried), fruits, vegetables, etc have plant health related issues which trading countries address through issuance of phytosanitary certificates as a way of assuring the receiving country that the exported product comes from pest- and disease-free source or process. It is the tendency of cross border traders to avoid carrying the hussle-ridden commodities or smuggle them across the border altogether. 

Certificates of Origin

The certificates of origin are very essential the receiving customer who may claim lesser import duty for certain goods originating from a recognised trading country. Getting preferential entry into the destination country makes business easier or cheaper for destination customers. However, cross border traders, who produce the goods they export themselves such as arts and crafts, do not register under the Rules of Origin for the countries they send their goods to. This limits their scope for growing their market shares and ability supply big orders at competitive prices. 

Between Zambia and Zimbabwe, as well as Malawi and Zimbabwe there is a Simplified Tariff Regime (STR) which reduces that documentatary burden from cross border traders by way of completing a single simplified document with the assistance of the STR officer situated at the border. Such document acts as a certificate of origin and Bill of Entry for selected goods only. The cross border must get more information on the goods which qualify for STR so that they can take advantage of the established customs arrangement, as long as the goods qualify and value of those goods do not exceed USD2,000.

Foreign Exchange Certificates

Certain certificates obtainable through are required for carrying goods above Exchange Control thresholds. For instance, when goods being carried exceed USD2,000,a currency declaration form (Form CD1) is required. This is an Exchange Control declaration form for the true valie of the goods and that the value should be repatriated into Zimbabwe within 90 days or any other approved extended period.

Carrying huge sums of cash (foreign or local) also require Exchange Control approval certificate. On this aspect, issues of financing of terrorism and money laundering are being addressed.

Foreign Currency Accounts

The handling, safekeeping and accepting of foreign currency is one of the key aspect of cross border trading. In Zimbabwe, cross border traders are legible for opening of foreign currency accounts (FCAs) with many banks of their choice in designated currencies. Designated currencies include only hard currencies but not limited to USD, ZAR, BWP, EUR, GBP, etc. Against such FCAs, the trader can get a Mastercard or VISA card for transacting online or for Point of Sale transactions in a foreign country, thereby reducing the risk of carrying physical cash to or from a foreign country.