Single Window for Zimbabwe Exports and Imports

Zimbabwe economic operators who are involved in international trade (imports and exports) should expect an improvement in the way they submit their international trade documents to Government agencies. The Government is working with United Nations Conference on Trade and Development (UNCTAD) to implement a single window system for the economic operators.

The single-window system is a trade facilitation idea which enables international traders to submit regulatory trade documents at a single portal or location and/or single entity. Such documents include ZIMRA Bill of Entry, applications for import/export permits, export/import licences and other supporting documents such as certificates of origin, health certificates, phytosanitary certificates and trading invoices.

The initiative will therefore include Government departments which issue documents required for shipping of goods across the Zimbabwe borders such as ZIMRA, Ministry of Agriculture, Ministry of Industry, Minerals Marketing Corporation of Zimbabwe (MMCZ), Ministry of Mines, Zimbabwe Parks and Wildlife Management Authority (ZPWMA), Reserve Bank of Zimbabwe (RBZ), Medicines Control Authority of Zimbabwe and Zimbabwe Republic Police (ZRP)

The rate at which the single window concept will be implemented in Zimbabwe shall largely depend on the management commitment of the respective institutions involved. Generally speaking, there are about twenty two institutions involved in importation and exportation of various products. By default, it is expected that among these institutions there are duplicated processes, manual operations and different efficiency levels.

The single window concept will then have to start with re-engineering of the processes leading import or export of goods. Afterwards, a portal will be designed and implemented. Economic traders will then begin to apply for or submit their documents through the established portal. The regulatory institutions will then have to fetch data which is aligned to their legal mandates from the established central portal.

There is no doubt there is a lot of work which needs to be carried out by the regulatory institutions including resources and computerisation of their operations to enable them to be able to fetch, store and use the data from the central system. Zimbabwe is already behind most of the African countries which have similar industrial structure. In addition, this tool will greatly improve on ease of doing business in international trade, though it may not imprive the World Bank Ease of Doing Business Index, unless if the re-engineering process takes away some of the required documents and processes.

It is therefore important for the economic operators to understand how the development is unfolding so that their associations may take the opportunity to lobby for and participate in the re-engineering of processes. It is equally important for the economic operators and Government agencies to ensure that they acquire stable internet for this noble initiative of Single Window concept for Zimbabwe.

Export of Scrap Metal & Removal of Import Duty on Solar Energy Products

The most recently announced Mid-Term Budget Statement announced by Minister of Finance on 14 July 2010 opened some opportunities for Zimbabwean SMEs in the field of international trade.

Export of Scrap Metal

As you may remember from my previous article ‘Passports for Export’, all scrap metal exports from Zimbabwe were banned starting 1 August 2004 in order to promote their use in the local production.

On 14 July 2010, in the Mid-Term Budget Statement, the Minister of Finance announced that, with effect from 1 August 2010, scrap metal generated as a by-product of the production process shall be exempted from the aforementioned export ban. However, export licences of such scrap metal shall still be required and these are issued by the relevant Ministry on a case by case basis.

SMEs who have access to such scrap metal can now have a better business opportunity to export the by-product scrap metal to their clients. The SMEs should approach Ministry of Mines for the export licence of such scrap metal.

Removal of Import Duty on Solar Energy Products

In support of investment in solar energy, on 14 July 2010, in the Mid-Term Budget Statement, the Minister of Finance announced the removal of import duty customs duty on solar panels, inverters, batteries, regulators, geysers, lanterns, water pumps & heaters and energy saving bulbs with effect from 1 August 2010.

‘Landmines’ in Exporting - The Don'ts of Exporting in Zimbabwe

International trade business has extra dimensions of legislations and controls over domestic trade business. Because of those extra dimensions, any new or existing exporter should tailor-make own operations to avoid committing the "don'ts" of exporting, as the effects of ‘stepping’ on those ‘landmines’ might be fatal. Therefore the purpose of this post is to advise on how to quality control own export operations by reviewing some of the "don'ts" which Zimbabwean exporters commit.

Don’t #One:

Exporters should not forget that they are responsible for maintaining full compliance with all Zimbabwean Exchange Control laws and Customs and Excise Laws (hereinafter collectively termed export laws) that are relevant to their products at the time of export. Such responsibility makes the exporter liable for the export control violations that one might knowingly or unknowingly commit while engaging in an export transaction and for the export control violations that one’s agents (such as freight forwarders) commit while carrying out export operations on the exporter’s behalf. These include carrying out illegal transshipment or illegal export of own products without permits etc.

Don't #Two:

Exporters should not neglect to investigate whether the foreign markets into which they are exporting their products have any Import Controls related to the sale of such product. Such foreign destination’s import controls may be in the form of import prohibitions, import restrictions (quotas) and import licensing requirements. Such controls may be based on country of origin, product type, or product characteristics, such as products produced by convicts and counterfeit products. Imported products, which contravene an importing country's import controls, are generally refused entry at the importing country's border, thereby resulting in unnecessary loses or costs.

Don't #Three:

Exporters should not neglect to evaluate country risk in addition to buyer risk in selecting the proper payment method for their export transactions. Countries frequently experience political and economic problems so severe that buyers in such countries are precluded from obtaining the necessary foreign currency to pay for their imports. Exporters that ship to such countries without having investigated the country's political and economic situation and without having selected a payment method appropriate in light of such political and economic situation run the risk of not receiving payment for their export sale, regardless of the good intentions evidenced and financial responsibility exercised by their foreign buyers. Such non payments by foreign buyers may end up degenerating into violations of repatriation laws of Zimbabwe.Exporters should not neglect to evaluate country risk in addition to buyer risk in selecting the proper payment method for their export transactions. Countries frequently experience political and economic problems so severe that buyers in such countries are precluded from obtaining the necessary foreign currency to pay for their imports. Exporters that ship to such countries without having investigated the country's political and economic situation and without having selected a payment method appropriate in light of such political and economic situation run the risk of not receiving payment for their export sale, regardless of the good intentions evidenced and financial responsibility exercised by their foreign buyers. Such non payments by foreign buyers may end up degenerating into violations of repatriation laws of Zimbabwe.

Don't #Four:

Exporter should not confuse INCOTERMS when submitting the customs documentation. It is important to ensure that the exporter does not misuse any INCOTERM for any purpose and that the exporter fully understands the costs, responsibilities, rights and obligations that accompany the use of a specific INCOTERM. The misuse of a selected INCOTERM can lead to over or underpayment of costs and to over or under assumption of responsibilities, rights and obligations. Zimbabwean transporter of exported goods under which INCOTERM has been misuses might end up being forced by Customs authorities to complete Forms CD3 at the Border Posts in foreign currency simply because the exporter quoted incorrect INCOTERM on the respective Form CD1.

Don't #Five:

Exporters should not ignore their responsibility to comply with the Zimbabwe Exchange Control Laws as they relate to required export documents. Exporters are required to prepare and submit a Form CD1 for each export, unless where an exemption applies. The Form CD1 must list the contents of each shipment, values of shipment, cite the appropriate export license, and identify the final destination, end recipient. Failure to provide a Form CD1 exposes an exporter to criminal penalties under the Zimbabwean laws.

Don't #Six:

Exporters should not make any misrepresentations on their Forms CD1. Exporters are responsible for accurate Forms CD1. The following specific areas require attention: Don't under-invoice or over-invoice your products on your Form to help an importing customer avoid tariffs or taxes.Don't misrepresent the place of origin on your Form CD1 in order to assist your foreign buyer to gain access to a preferential duty program to which your foreign buyer is not legitimately entitled.Don't incorrectly identify the contents of your shipment in an effort to evade the Zimbabwe export controls that apply to your product. These activities violate Zimbabwe export laws and expose a Zimbabwe exporter to civil and/or criminal penalties. In addition, they expose the Zimbabwe exporter to a potential violation of the importing country's tax law under the theory that the exporter aided and abetted the importer in committing tax fraud.

Don't #Seven:

Zimbabwean exporters should not be greedy - if an export opportunity looks too good to be true, it often isn't true! Just think of all the Zimbabwean exporters who have so far been trapped in export scams and don't get lured into participation by thoughts of the scarce foreign currency in Zimbabwe which may become available to you for little or nothing in return. Some have been duped after being convinced by foreign conmen that their product will fetch unbelievably high price, only to lose track of the ‘too-good-to-be-true’ foreign customer soon after shipment and before getting payment. Don't lose your good business sense in the face of an export opportunity and give export sales opportunities the same level of scrutiny that you would give any business deal.

Exporting from Zimbabwe - The Passports to Export

Any person ordinarily resident in Zimbabwe, whether individual or corporate, can export any of the uncontrolled goods from Zimbabwe without any need of a special authority. The potential exporter does not necessarily need to be a manufacturer of the product – all the entities throughout the chain of distribution can move the identified goods to international markets, provided the person has all the ‘passports to export’ from Zimbabwe. The following are the passports for exporting goods from Zimbabwe.

Registration of an Exporter
One has to register his/her name with one of the Zimbabwean registered Commercial Bank or Merchant Bank. The registration is a once off exercise which does not take hours to complete. It is a simple procedure which calls for submission of documents

• Copies of National Identification Card of an Individual Exporter
• Proof of Residence for Individual Exporter
• Copy of CR14 for corporate exporters
• Copy of Certification of Incorporation in Zimbabwe for corporates
• Duly completed Registration Form for both individual and corporate exporters

Relevant Export Licenses and Certificates of Origin
Export licences are only applicable to goods which are not of Zimbabwe origin but being exported form the country. The licences are obtainable from Ministry of Industry and International Trade. If goods are of Zimbabwean origin as defined by Rules of Origin under specific Bilateral agreements with target export market, it is wise for an exporter to complete a certificate of origin, to qualify for preferential treatment when goods enter the destination country.

Getting a Form CD1 for Specific Shipment
Once registered, the exporter can submit the Commercial Invoice to any registered Commercial Bank or Merchant Bank for creation of a Form CD1. This process should ideally not take an hour to complete per each Form CD1. 

For the exporters who wish to raise their Forms CD1 from own premises can register their staff members for access to the system called CEPECS. Raising Forms CD1 from own premises has many conveniences including ability to create a Form CD1 outside business hours, reports which track maturities of Forms CD1 and use of own corporate stamps on Form CD1 instead of visiting Bank branch for stamping.

A Form CD1 is a declaration form on which an exporter attests to the Exchange Control authority, Reserve Bank of Zimbabwe, the value and quantity of goods to be exported. This form should be completed with acquittal in mind. A standard acquittal period (the period within which the payment for the exported has to be received in Zimbabwe is 90 days).

Completion of Customs Procedure
Once the exporter has obtained the Form CD1 from the aforementioned sources, s/he should proceed to any Inland ZIMRA export processing office for a Bill of Entry, as pre-clearance exercise. The exporter simply gives his Form CD1 to a registered Customs Clearing agent for this formality, who completes the Bill of Entry in the ASYCUDA World system. Bearing in mind that the Bill of Entry needs assessment (which normally takes at most 6 hours, registering a Bill of Entry while at the ZIMRA Port of Exit is not ideal. 

Consignment Notes
For every export, there is a consignment note submitted to Customs office, which is filled in a standard format. These notes act a proof of export to Customs; they are very important for making claims under drawback of duty and cancellation of exports. The type of consignments notes are as follows:

• Rail Advice Notes – issued by National Railways of Zimbabwe after being handed over the goods export. It should be accompanied by a notify party of instruction
• Airway Bills – issued by the airline after being handed over the goods export. They should be accompanied by shippers instructions
• Road Consignment Notes – issued by the road carrier after being handed over the goods export.

Documentation for Controlled Exports
In Zimbabwe, the exporter should look for speciliased permits/ authority for the controlled exports. The controlled exports are:

1. Wildlife and Wildlife Products
2. Agricultural Products
   - Grain
   - Dairy products
   - Seed
   - Fresh farm products
3. Livestock (pedigree, for shows or competition etc)
4. Live Horses
5. Used agricultural equipment
6. Second hand industrial equipment including scrap metal.

How To Start Exporting from Zimbabwe

If any Zimbabwean company or individual is looking to turn a quick profit, then exporting is probably not a good idea. It takes time to build up a successful exporting business, so potential or new exporter should make sure they are prepared for a long-term commitment exporting. There are some important stepping stones which need to be carefully laid.

Choose Target Countries for Export

One has to evaluate which country to export from Zimbabwe and whether there is adequate demand for intended goods. This evaluation has to take into consideration the distances involved for movement of goods, cultures involved and the language differences. It is relatively easy to export to those countries where there is a direct connection in terms of road, rail or air transport, such as South Africa, Zambia, Botswana or generally SADC region.

Make Contacts and Set up Sales and Distribution Networks
The best choice for a company intending to export is to partner with parties who are already active in the country in which one hopes to sell own products. This can also be accomplished through appointing selling agents or distributors in the target country. In order to establish such a selling network, one should use avenues like trade fairs or shows or foreign missions to meet such potential partners. Dealing directly with a final customer in a foreign country is often risky, when it comes to payment and collections for the delivered goods.

Understand the Fundamentals of Zimbabwean Export Laws
To be successful in exporting from Zimbabwe, one has to be avoid making unnecessary rough patches by avoiding breaking the laws of Zimbabwe especially:

• Declarations forms and accompanying documentation
• Repatriation and use of the foreign currency earned from exporting
• Rules of Origin and the related Regional Bilateral Trade Agreements

Whilst these first posts are somewhat theoretical, subsequent posts will provide more details on the raised points, like the export laws, participation of trade fairs, export marketing, existing trading agreements between Zimbabwe and its trading partners, special arrangements for export of specific controlled products etc.

Look for Export Orders
The best choice for a new company to exporting is to partner with someone who is already active in the country in which you hope to sell your products. This can be accomplished through appointing selling agents or distributors. In order to establish such partners, one should go to trade fairs or shows to meet such potential partners, who are aggressive enough and offer reasonable selling commissions. Dealing directly with a final customer in a foreign country is often risky, that’s why it is recommended to find a locally based of foreign partner to break into the market. Finding orders needs a lot of effort, as the exporter can be ignored several times and in some cases, the potential foreign buyers demanding unreasonable trade or cash discounts. More than often samples are needed for testing before orders can be placed. Such samples can be distributed through the agents, during trade fairs or partners.

Fulfil the Export Orders
Once such hard-won orders have been secured, elements of quality management become important. The exporter should consistently and persistently produce goods which meet the specifications of the selected samples. This is where most exporters lose it; they compromise on known quality levels to cut on costs. Such moves cannot go unpunished by competition. Later posts will highlight more of the element of QUALITY. Besides the production of a product in accordance with specifications, there are other factors which are of paramount importance and these are:

• Time taken to deliver the product – it should be within the agreed time
• Packaging – should protect and enable safe handling throughout the trip to the destination country
• Complete the customs or clearance procedures