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The AEO heightens trade importance on Lesotho’s economy

By: Thandiwe Kubere


The authorised economic operator (AEO), in collaboration with the revenue services Lesotho held a session to raise awareness on the importance of trade, high production and the benefits that come with being part of the programme as well as its ability to improve the country’s economy. This was under the theme: experience hassle-free trade as and authorized economic operator.

The AEO is a company involved in the international movement of goods and approved by the revenue services Lesotho (RSL) complying with the world customs organization (WCO) or equivalent compliance and supply chains security standards. The AEO programme is therefore built to secure and facilitate global trade. It enhances the effectiveness of the international trade to quicken and enhance trade competitiveness.

It is for this reason that voluntary compliance is encouraged for economic operators to willingly offer to partner with customs and other regulatory agencies to manage risks associated with trade. This therefore affords regulators an opportunity to do away with most of the strict regulatory controls for meaningful participation in global trade.

All over the world, trade is the lifeblood of economies and economic growth, and without it, economic stagnation takes over. According to the RSL Commissioner General Norman Mapetla, agencies within countries are obliged to ensure that there is facilitation of trade into and out of countries. The kingdom of Lesotho is therefore, part of the world customs organization.

The awareness session for the AEO programme is a product of a landmark initiative of the WCO intended to advance the noble aims of ensuring that trade across borders for clients who are exemplary in compliance, competent in custom procedures as well as ensuring safety and security in their import/export activities enjoying unique benefits upon registering for the programme. The benefits include expedited clearance of goods, seamless supply chains, and reduced cost of doing business as well as predictability in trading across borders, amongst others.

The programme is also a natural result of the modernization efforts of customs organizations across SACU, the SADC Region, the African continent and the world at large in order to simplify and harmonize border procedures for customers digitally through the use of technology.

Mapetla emphasized the pivotal factor of the successful implementation of the AEO programme in any country is collaboration and engagement of border agencies. This is through coordinated border management to reduce delays at borders as well as disorganized operations, without compromising on compliance, public safety and security. “It is our hope that this, in the context of the Kingdom of Lesotho, will be a noble ambition pursued with zeal and vigour”, he said.

Acquiring the AEO status is Lesotho has the benefits of opening doors for seamless trade in neighbouring countries and other regions of the world through the mutual recognition agreements.

The programme further seeks to achieve five goals. According to the executive secretary of Southern African customs union Thabo Khasipe, the top goal is industrialization achieved through export promotion for the entire region. Related to that, is ensuring the facilitation and logistics because through them the intended speed, reduced costs and predictability for trading across borders can be achieved. This is also to make sure that the country’s businesses within SACU have improved production and are competitive.  

The third one involves taking advantage of the African continental free trade area opportunity agreement which seeks to make sure that Africa improves the level of intra-Africa trade as it is currently low because Africa seemingly trades more with other continents than within. “The pandemic and the war between Ukraine and Russia has actually highlighted our exposure as Africa towards the dependence on other parts of the world on essentials such as food.  It is only when we can produce with high levels of  productivity that we can say we have achieved independence, and it is only then if we trade amongst ourselves  that we can say we are independent as Africa”, he said.

He further stressed that one of the challenges that hinder Lesotho from trading internationally is the poor infrastructure that needs to be improved, especially for sensitive products that need to be handled with care. Here he used an example horticulture products and how they would reduce quality or get spoiled due to transportation before getting to desired destinations. “If you look at the pattern of our trade, it is always from pit to pot. We extract the mineral from the mine in its raw form and we put it in the pot, out of Africa it goes. We manufacture products which are then shipped back to us as final consumers.” He said the idea is to change the countries logistics, and create network to ensure regional value chains advantages where there can be an industry spreading over SACU. “This is so that the regional vehicle manufacturers take advantage of Lesotho’s textiles manufacturing so that the seats of the vehicles will be manufactured in Lesotho”.

He further mentioned that the fourth pillar is to unify engagements with other regions and make trade agreements as one entity of SACU, meaning that all businesses accredited with SACU have an advantage of using opportunities which are available regionally. Lesotho has ten accredited businesses. “We should realize the importance of connectivity and take advantage and start exploring what it is we can trade. We have a trade agreement with South Africa, which presents an opportunity for exploiting some of the things that are available,” he said. The AEO program is also aimed at ensuring predictability across borders to know what to expect when handling products.

The AEO programme Manager Mamakoala Pitso said the programme entrenches a culture of partnership between traders and regulators because it ensures greater accountability consistent with compliance procedures. She said it improves efficiency, transparency and expedited shipment of cargo. The programme ensures security in all parts of chain supply and a better understanding of own supply.

The minister of trade and industry, business development and tourism Mokhethi Shelile said the government of Lesotho strives to improve the business environment for the private sector to grow and improve prospects for economic growth as well as to create employment.  He said the national trade policy framework and strategy have been developed focusing on increasing domestic production; diversifying regional and internal markets; and increasing the competitiveness of businesses in Lesotho.

Trade facilitation is central in achieving these ambitions. To that effect, the national trade facilitation committee (NTFC) was established to steer the national trade facilitation agenda. Consequently, the implementation of the national trade facilitation roadmap is in progress and has recorded successes including the operation of the national single window, phase I and phase II which is underway; as well as piloting of the coordinated border Management. “The AEO is an excellent initiative. It is one of the flagship programmes in the region to drive the trade facilitation agenda. Its benefits are enormous and studies have shown that this type of arrangement can improve customs clearance efficiency by 30% or more”, he said.

This therefore translates into substantial cost savings for the private sector and efficient trade within SACU so that the competitive edge can be increased. “This programme therefore provides dynamism and improves competitiveness while trading across borders, especially for a landlocked country as ours to claim our share in the rapidly evolving global trading arena.”

The AEO programme is implemented under the NTFC which provides a platform for both government agencies and the private sector to engage on a regular basis. “Trade is at the core of development for any country, and it remains the lifeline for Basotho to-date”, Shelile said. The country has therefore over the years added its footprint in the flow of ideas, goods & services by innovating our trade facilitation processes.

“As we focus on the importance of the AEO Programme we must not lose sight of the bigger picture of the international trade facilitation programmes.” Trade facilitation has emerged as an effective tool to lessen the devastating effects of any disruptions on trade. The key to eliminating costly border procedures which are prominent in developing countries is to simplify and digitalise formalities in international trade.

He said regional trade facilitation mechanisms should be used strategically to; boost existing and emerging trade arrangements, reduce costs to trade, and fuel inclusive growth. He said they can further facilitate market access, strengthen regional value chains, and boost regional economy as a whole.

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