Garang Mayom Malek

Articles

What clearance costs when the paperwork is on paper

The fee is the part everyone quotes. The waiting, the rekeying and the second trip are the part that actually decides whether a small trader can make a living.

Ask what it costs to clear a consignment and you will be told a fee. The fee is published, it is the same for everybody, and it is almost never the expensive part.

The expensive part is the day. It is the trip to the office to hand in a form, the discovery that a supporting document is in the wrong name, the second trip, the afternoon spent waiting for a signature from somebody who is at lunch, and the transport standing idle while all of that happens. For a large importer this is an overhead absorbed by scale. For a trader moving one truck, it is the difference between a margin and no margin.

Two things make the day expensive, and both of them are paperwork problems.

The first is that the same information is written down more than once. A trader gives a name, a number and a description at one counter, and gives the same name, number and description at another counter, on a different form, in a different order. Every rewriting is a chance to introduce a difference, and every difference is a reason to be sent away. Nobody involved is careless. The system is simply asking the same question several times and treating the answers as unrelated.

The second is that the agencies cannot read each other's documents. A certificate issued by one office is evidence to that office and paper to everyone else. So the trader becomes the courier, carrying proof from one desk to another, and the timetable is set by the slowest queue rather than by the slowest check.

This is why a digital step is worth having only when it removes one of those two costs. Putting a form on a screen, and then still requiring the trader to print it and carry it, has added a screen and removed nothing. The change that is worth the effort is narrower and less impressive to demonstrate: ask for the information once, keep it in one place, and let every office that needs it read the same record.

The World Bank's assessment of South Sudan's digital economy sets out how thin the underlying digital foundations are across the region's trade systems, and it is worth reading before anybody promises that a portal will fix a border. Foundations first, portals later.

There is a temptation, when building for this, to design for the large importer because that is who attends the meetings. It is the wrong reference customer. The large importer has a clearing agent, a relationship and the patience to absorb a delay. The small trader has none of those, is the majority of movements in most corridors, and is the one who stops trading when the paperwork gets heavier. A system that works for the trader with one truck will also work for the importer with forty. The reverse is not true.

Three tests are worth applying to any clearance system before it is called an improvement. Does a trader enter the same fact twice. Does a trader carry a document between two offices that could have read it themselves. Can a trader find out where a consignment is without telephoning somebody. If the answers are yes, yes and no, the fee is not the problem.

The final point is about trust, and it is the one most often skipped. Traders do not resist digital systems because they dislike technology. They resist them because a system that is down at the wrong hour costs them a day they cannot recover, and because a system they cannot see into feels like one more place a decision can be made about them without explanation. An interface that shows the state of a consignment, plainly and without a login ritual, buys more goodwill than any amount of messaging about modernisation.

Take the day back and the fee looks after itself.

Filed under Payments infrastructure, Trade and customs.

Sources

More writing