FEBRUARY 2017 ABOUT THE AUTHORS CHRISTINA CHATIMA is Director for Trade, Ministry of Opening Doors to Transparency Industry, Trade and Tourism. in Cross-Border Trade: CHARITY MUSONZO is Deputy Director for Trade, Ministry of Industry, Trade and Lessons from the Malawi Trade Portal Tourism. TAWONGA MUNTHALI Most business leaders in Malawi see the Malawi Trade Portal (MTP) as a is Content Coordinator, Ministry of Industry, Trade and Tourism. step forward in the provision of public information via online platforms and the promotion of transparency in the delivery of public services. Its TEMWA GONDWE Gondwe is Country Manager, purpose is to facilitate trade by promoting easier access to information on Malawi Trade Portal, Project Management Group (PMG)/Imani. laws, regulations, measures, standards, procedures, and forms related to JOHN MATEKENYA the governance of exports, imports, and transit of goods. This SmartLesson is a Data Expert, Malawi Trade Portal, PMG/Imani. describes how the MTP is helping authorities facilitate trade by increasing transparency and accountability and by reducing the time it takes to access CHRISPINE NDALAMA is a Legal Expert, Malawi Trade regulatory information on trade across borders. And it shares the lessons Portal, PMG/Imani. the authors believe are the most replicable. APPROVING MANAGER BACKGROUND iffs to publish all trade-related infor- mation promptly and transparently. In an environment where trade infor- The TFSP provided funding for the mation can be difficult to access and establishment of the platform and businesses spend a lot of time and re- contracted the Project Management sources just to acquire even basic in- Group and Imani Development Con- formation on how to conform to trad- sultants to provide technical assistance ing procedures, the very idea that all to the MTP Secretariat, which is based this information can be packaged in in the Ministry of Industry, Trade and one place and be made available on- Tourism. line has been described as nothing less than amazing! At a click of a button, Because Malawi is landlocked, trade traders can access information that facilitation can play a pivotal role in previously took weeks or months to its quest to become a net exporting acquire. country, as articulated in its national Implementation of the Malawi Trade medium-term development agenda. Portal project began in June 2015 with Trade costs related to non-tariff bar- support from the World Bank Group’s riers remain high. And lack of access Trade Facilitation Support Program to basic trade information on how to (TFSP). Costs for its first 12 months comply with trading procedures is a came to about $650,000. Malawi has key impediment to trade, and it fu- an obligation under Article X of the els the lack of transparency and ac- General Agreement on Trade and Tar- countability. As one oil seed trader SMARTLESSONS — FEBRUARY 2017 1 attested during a user-validation event, the Ma- jective is for traders to see all the obligations they lawi Trade Portal has significantly eased the bur- need to comply with to import or export specific den on traders. goods—in response to a single query. “Traders like me face a number of com- plications—including onsite visits as well LESSONS LEARNED as having to deal with multiple govern- ment agencies at various locations—just Lesson 1: During data collection, we to obtain the necessary papers, forms, observed that discrepancies exist between permits, and clearances needed to facili- de facto regulations and de jure practices. tate my import or export business. Although it is reasonable to expect that offi- I also experience long delays, congestion, cials would implement regulations as prescribed increased costs, and loss of competitive- in the law, there were cases where the practice ness, usually because I often arrive at was misaligned, thereby adding a layer of further the border without all necessary docu- requirements that have no legal backing. For ex- mentations. It’s good to have this portal, because we won’t have to go around ample, the tobacco regulations1 prescribe the law anymore asking for information and on “Restriction on Export of Tobacco,” which says documents. We can just log on to this there is need for an export permit (used inter- website and find all the information we changeably with “license” in the Act), issued un- need.” der the Control of Goods Act, to export any type —An oil seed trader of tobacco. The Control of Goods Act is the core of the Ministry of Industry, Trade and Tourism, so The MTP is expected to help traders reduce trans- it would make sense for the ministry to issue such action costs and consequently improve the coun- a permit. However, in practice, the Tobacco Con- try’s competitiveness. The MTP website contains trol Commission has taken over the regulation of almost all regulatory trade-related information exporting tobacco, in total exclusion of the Minis- for import, export, and transit. The information try of Industry, Trade and Tourism. comprises all laws, regulations and other legal instruments, all license and permit requirements, To address these discrepancies in application, the prohibitions, restrictions, technical standards, san- authorities found it helpful to develop flowcharts itary and phytosanitary measures, the entire com- of procedures. (See Flowcharts 1 and 2.) These modity classification and tariffs, all procedures for flowcharts also helped raise awareness among the license or permit application and clearance, and private sector as to which procedure is actually copies of all forms as well as instructions. The in- permissible under the law. This process addresses formation collected is aggregated and integrated 1 The Tobacco (Export) (Amendment) Regulations (2010), Regulation into the Trade Portal so it can be presented dy- 2 (1) [Regulation made under the Tobacco Act CAP 65:02 of Laws of namically in response to traders’ queries. The ob- Malawi]. 2 SMARTLESSONS — FEBRUARY 2017 Flowchart 1: Process of Obtaining an Export License through the Tobacco Control Commission Flowchart 2: Process of Obtaining an Export License through the Tobacco Control Commission directly what have been silent barriers to trade in reform. An example of the first approach is the the country. Fisheries Department, which regulates trade in fish and aquaculture products by using the Fisheries Lesson 2: Slow legal reforms can cause and Aquaculture Policy of 2001 instead of the Fish- delays in the implementation of “good” eries Conservation and Management Act of 1998, policies. which has been under review for some years now. Part of the reason for a dis- crepancy between the law and practice is that the rate of legal reforms is much slower than the rate of new policies coming into play. For instance, ministries, departments, and government agencies typically adopt one of two approaches: 1) they regulate on the basis of policy, using their policies as law, without any legal back- ing, leaving room for them to go beyond their authority, or 2) they simply do not execute Local fishermen on Lake Malawi. policies as they wait for legal SMARTLESSONS — FEBRUARY 2017 3 A question arises as to whether necessity is a justifi- will contribute to a reduction in the incidence of able cause. Trade facilitation support from devel- corruption. opment partners should take a holistic approach, addressing not only the policy environment and Lesson 4: It’s a jungle out there. formulation of policies but also the legal frame- One factor contributing to “thick” borders in Ma- works and the implementation of laws. This will lawi is the presence of overlaps in the jurisdiction help ensure that the legal framework does not of agencies regulating the flow of goods into and frustrate the implementation of good trade-facil- out of Malawi. In some instances, the lack of clar- itation policies. ity as to which agency is in charge of particular Lesson 3: Lack of transparency breeds aspects of licensing—or indeed where exactly the corruption. line is drawn—has led to unnecessary delays in compliance by traders, thereby adding to costs. For The lack of transparency in the application of example, the Iodization of Salt Regulations2 stipu- commercial laws is overwhelming. The same reg- lates that non-iodized salt for industrial use can be ulations can be applied differently by different imported provided that there is prior approval by officers in the same department and across dif- the minister. The Iodization of Salt Act is adminis- ferent borders. As some cross-border traders put tered by the Ministry of Health. It is therefore self- it, “it depends on who is the officer in charge evident that the ministry that the law recognizes at the moment.” This lack of transparency and to issue the waiver to import non-iodized salt is the consistency creates opportunities for corruption. Ministry of Health. However, the Trade Portal team Each compliance process requires the trader to found that the Ministry of Industry and Trade has complete and submit application forms (say, been issuing these waivers—without even consult- in applying for some permits). There are cases ing the Ministry of Health. At times, this has caused where permits are given orally or where they tremendous inconvenience to traders when port are available but are simply not used in favor of public health officers have refused to recognize semiformal approval processes. This lack of uni- such waivers. formity or systemization increases human con- tact, which fosters corruption. And private sector The Trade Portal is supported by a governance parties have pointed this out consistently in their structure that brings together all perspectives to interactions with the MTP Secretariat. It is not review progress on the project. This platform has uncommon to find the same measure or proce- also provided an opportunity for the ministries, de- partments, and agencies to begin to clarify jurisdic- dure applied differently across different borders tion in the application of responsibilities. This was up and down the country. not in the original project design, but it is a posi- The Trade Portal is raising awareness among trad- tive unintended outcome that, in hindsight, should ers on the correct application of the regulatory have been programmed into the initial design. measures and increasing transparency. This reduc- tion in human contact is already empowering trad- ers, who can now counter the wrong application 2 Salt Regulations (1998), Regulation 18 [Regulations made under the of the law by some officials. The hope is that this Iodization of Salt Act (1995)]. Malawi Trade Portal tool masthead/header. 4 SMARTLESSONS — FEBRUARY 2017 CONCLUSION A combination of de jure and de facto application of the law is at the heart of the many constraints that the trad- er faces in Malawi. The slow process of legal reform is also slowing up the implementation of progressive policies that have the potential of facilitating trade. The overall lack of transparency in the administration of trade regula- tions, while alarming, could be easily resolved by ensuring access to relevant information. The Malawi Trade Portal is now live, and different categories of users—including transporters, small and medium enterprises, researchers, and private firms—have hailed it as ro- bust and an enhancement to their abil- ity to trade efficiently. The inception of the Malawi Trade Portal is but one step forward in the quest to simplify trade procedures. The next step on the roadmap is to imple- ment a national single window, with the aim of further reducing costs and time required to import and export. One positive externality so far has been improved public-private dialogue in an area that has lacked transpar- ency. Overall, these trade-facilitation measures have the potential to spur growth, investment, and job creation, which is at the core of the govern- ment’s development drive. 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