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The African Continental Free Trade Area (AfCFTA) will increase intra-African trade by removing or reducing tariff and non-tariff barriers. This will facilitate the export and import of goods. However, the complexity often associated with export procedures can be a major obstacle to the growth of trade. Hence the need to simplify and popularize export procedures which are an effective way to accelerate the export of goods.
The fluidity of commercial transactions is essential to promote the competitiveness of companies. Thus, simplification and effective popularization of export procedures are essential to encourage trade and strengthen the performance of companies. This policy brief highlights the importance of simplifying export procedures for companies.
- Why Simplify Business Procedures
Simplifying trade procedures makes it easier for businesses to access production inputs and encourages greater participation in global value chains, including for small and medium-sized enterprises (SMEs). It also helps reduce overall trade costs and increase economic welfare, particularly for developing and emerging economies. It is important to note that an additional day of delay reduces trade by 1% and other studies show that one day of delay is equivalent to a 0.5% tariff.
The OECD shows that the number of signatures and documents required for a trade transaction is correlated with the number of days spent at the border and if sub-Saharan Africa reduces the number of signatures to reach the world average, trade flows could increase by about 81.5% (Wilson, 2005; Korinek & Sourdin, 2011). Cameroonian companies will save time and trade flows will certainly increase following the simplification and popularization of trade procedures.
- Simplified procedures can contribute to a more efficient supply chain
Cameroon is lagging behind in terms of logistics performance. To export a product, for example, 11 documents must be completed, while on average, this number varies between 6 and 8 in a sample of emerging economies (Cahier économique du Cameroun, 2012). The quality of infrastructure, the ability to track shipments, and the time to destination constitute a huge challenge. Simplifying export procedures should therefore reduce delays by speeding up customs clearance processes and minimizing administrative delays. This would allow goods to arrive at their destination more quickly. Companies could also improve inventory management and better respond to market demand. Next, note that the introduction of export facilitation measures for goods can help minimize costs by reducing customs processing fees and avoiding costs related to documentary non-conformities. That said, companies can reduce costs related to delays and penalties. Additionally, by simplifying export procedures, companies can improve visibility and traceability of shipments. By having a better understanding of the location and condition of goods at any time, companies can make more informed decisions and anticipate potential issues, contributing to a more robust and responsive supply chain.
- Businesses can increase their business opportunities and expand their customer base
Slowness and red tape hinder the movement of goods across borders for traders. Indeed, when transit times are increasingly long, exports decline (WTO, 2022). Similarly, when the legal framework deteriorates, exports also decline (WTO, 2022). With the simplification of customs formalities and the reduction of trade barriers, companies will therefore be able to export more easily to new markets. This allows them to access a wider customer base and take advantage of the opportunities offered by free trade agreements. Simplified export procedures generally lead to a reduction in the costs associated with international trade, such as customs duties, transport costs and administrative costs (Martial Bindoumou, Djamangai Ludé and Elomo Zogo T. 2014). This makes products more competitive in foreign markets and allows companies to explore new market opportunities. Simplifying procedures improves responsiveness and flexibility. Companies can be more responsive to fluctuations in demand in international markets. They can more easily adapt their offerings to meet the needs of foreign customers, which can lead to sales growth and increased customer loyalty. In addition, by expanding their customer base through simplified export procedures, companies can strengthen their competitive position in the market. They can conquer new markets, diversify their revenue streams and differentiate themselves from their competitors by offering quality products and services at competitive prices. This will especially benefit Cameroonian SMEs.
Simplifying procedures improves responsiveness and flexibility. Companies can be more responsive to fluctuations in demand in international markets. They can more easily adapt their offerings to meet the needs of foreign customers, which can lead to sales growth and increased customer loyalty. In addition, by expanding their customer base through simplified export procedures, companies can strengthen their competitive position in the market. They can conquer new markets, diversify their revenue streams, and differentiate themselves from competitors by offering quality products and services at competitive prices. This will especially benefit Cameroonian SMEs.
Conclusion
Simplifying trade procedures is essential for businesses. It helps speed up exports of goods. It also promotes greater participation in global value chains, including for small and medium-sized enterprises (SMEs). In a free trade context, exports will increase and the business climate would be improved. Cameroon should improve its logistics performance, reduce and/or consolidate administrative formalities and improve the quality of its infrastructure. It is therefore important to strengthen cross-border administrations to reduce export delays, computerize the administrative system to reduce transaction costs, reduce the digital divide and create an institutional framework where respect for the law and freedom of trade prevail, a vector for facilitating trade. This would promote transparency in exports.
AUTHORS
Mr. Henri Kouam Haiwang Djamo
Founder, Cameroon Economic Policy Institute Research Analyst
