IMF East AFRITAC Workshop Report

Information Technology - Challenges and Opportunities for Customs Management

Background

At the request of the East AFRITAC (AFE) client countries, a workshop on Information
Technology (IT) Challenges and Opportunities for Customs Management was held at the
Kenya School of Monetary Studies (KSMS) in Nairobi, Kenya from August 3-7, 2009. The
workshop was attended by 28 senior management level customs administration and IT officials
from Ethiopia (4), Kenya (5), Malawi (4), Rwanda (4), Tanzania (5), and Uganda (6). The
workshop resource persons were Messrs Andrew Okello and Brian Fulton. Representatives from
two vendors-- Crown Agents and Webb Fontaine-- also made useful presentations on recent IT
developments.

Introduction

In line with international best practice, efforts have been made in the region to implement
customs administration systems that are aligned to the principles of voluntary compliance and
self-assessment. Under this system, importers are expected to determine their own liability for
customs duties, while customs administrations are expected to enforce compliance using risk-
based inspections and audits that are in turn supported by effective IT systems. Reform progress
is being made albeit at a slow pace, with poor implementation in some cases. In addition,
implementation and utilization of available IT resources is suboptimal. Specific areas of concern
include: automation of outdated procedures; high prevalence of manual interventions;
uncoordinated use of workarounds and add-ons; lack of integration internally and with key
stakeholders; underutilization of available data; and lack of regional standards, even on issues of
common interest. As a result, regional countries continue to be rated poorly with respect to
trading across borders (World Bank, Doing Business, 2009), corruption, and other operational
indicators. It is evident that there is a lot of room for improvement.

Main Findings and Recommendations

The key workshop recommendations were that customs administrations should implement
procedures and processes that are fully compliant with international standards and conventions.
In this regard, there is need for customs administrations to: (1) commit fully and support risk
management initiatives, including development of regional approaches; (2) develop effective
linkages between the customs intelligence and risk management functions; (3) incorporate risk
management techniques in post-clearance audit and verification activities; (4) introduce or
expand taxpayer segmentation strategies such as the authorized economic operator (AEO)
scheme; (5) develop business analysis skills in customs and modernization departments; (6) carry
out regular release time reviews and use a wider range of performance indicators; (7)
review/update customs laws to facilitate modern practices and update procedures manuals; (8)
utilize the full range of enforcement tools available to increase compliance; (9) improve the
quality and range of data extracted from the IT systems for management reporting; (10) develop
effective information exchange arrangements across revenue authorities, government
departments and regional partners; and (11) develop and document manual fallback procedures
with appropriate controls (useful for remote stations that are susceptible to power outages).

Specific recommendations with respect to IT implementation include: (1) maximize use of

current systems by enhancing staff knowledge of system features and possibilities; (2) use of
workarounds only when absolutely necessary; (3) constructively engage systems providers
regarding critical system issues; (4) develop closer liaison between IT and business; (5) develop
a way forward on IT, including a common regional option; (6) enhance IT staff knowledge in
customs work; and (7) develop/expand regional interconnectivity and manage it at regional level.

The workshops resolutions were developed by a small group of participants with the guidance
of the facilitators and were discussed and endorsed by all participants (see detailed action plan in
annex 1). Implementation of the recommendations will require further AFE assistance with a
specific focus on regional approaches and standardization.

Workshop evaluation

The overall workshop rating was 3.9 out of a maximum of 5 points (or 78 percent). Participants
also stated that the workshop provided invaluable lessons and insights in the area of customs
management and the use of IT, and that this knowledge would contribute significantly to
improving practices in the region.
 Annex 1: Action Plan / Recommendations for the Region

Time Scale:
Short Term = 1- 6 months
Medium Term = 6 12 Months
Long Term = 12 24 months

Area Action Point Responsible Unit Time Scale

****MODERN CUSTOMS METHODS COMPLIES FULLY WITH INTERNATIONAL
STANDARDS***

RISK Management to develop Heads of Customs Short Term

MANAGEMENT policy and guidelines on Administrations
active use of risk
management in customs
administrations.

Management commitment
to drive the process is
crucial

Develop regional approach East AFRITAC Medium

to risk management,
including exchange of
information.

Enhance risk management Heads of Revenue Medium Term for

capacity through Authorities and Training
Training Development
Incorporating real time Partners Long Term for
alerts in transaction system upgrade
processing. (system
upgrade)

INTELLIGENCE Revenue authorities Heads of Customs Short Term

should develop Departments
appropriate linkages
between Intelligence and
risk management units.
Define clear mandate on
the roles of the
intelligence unit.

Nominate Regional Heads of Customs Short Term

Intelligence Liaison Departments
Officers (RILO) in each
member state.
 Facilitate sharing of East Medium Term
intelligence information in AFRITAC/WCO
the region (hotline,
messaging services)

Develop business analysis East AFRITAC and Medium - Long

STREAMLINING skills in procedures Heads of Customs Term
PROCEDURES / /modernization units.
TRADE Carry out regular release Heads of Customs Short Term
FACILITATION time reviews and other
performance indicators.

Deploy dedicated IT Heads of Customs Medium Term

customs system support and Heads of IT
empowered with basic
customs skills including
regular refresher customs
courses.

Update procedure manuals Heads of Customs Medium Term

for computerized
environment.

Introduce taxpayer Heads of Customs Medium - Long

segmentation strategies Term
[Introduce / expand AEO
scheme]

Minimize manual Heads of Customs Short Term

intervention in selectivity

Develop and document Heads of Customs Short Term

manual fallback procedures
with appropriate controls

INFORMATION / Decide M.I.S. needs and Heads of Revenue Medium Term

ANALYSIS / develop appropriate report Authorities
EXCHANGE mechanisms

Train staff and simplify Heads of IT Medium Term

data extraction across the
organization with
appropriate controls

Enhance exchange of Heads of Revenue Medium - Long

information and linkages Authorities Term
across departments
 Enhance exchange of Heads of Authorities Long Term
information and linkages and Relevant
between the relevant Government
government departments Departments
(Single Window).

POST CLEARANCE Incorporate risk Heads of Post Medium Term

AUDIT management techniques in Clearance Units
post-clearance audits

Define clear mandate on the Heads of Customs Short Term

roles of the post-clearance
audit unit.

Training in computerized Heads of Customs Medium Term

environment.
Capacity building in
joint audits and case
selection

ENFORCEMENT Improve compliance by Heads of Customs Medium Term

firm penalty action, etc.
Procedures should be in
place to -
identify repeat offenders
impose penalties in an
incremental manner

Utilize full range of Heads of Customs Medium Term

enforcement tools available
in order to increase
compliance

HR Identify skills gaps and Heads of Revenue Short Term

carry out job analysis Authority

Prepare and implement Heads of HR Medium Term

strategies to fill the Departments
identified skills gaps
Consider developing Heads of HR Medium Long
incentive packages for Departments Term
specialized staff

Develop succession plans

to ensure continuity

LEGAL Review / update legislation East African Council

to cater for modern of Ministers and Medium Long
practices / IT Legal Departments Term
********I.T. CAN ASSIST WITH ALL THE ABOVE AREAS**********
INFORMATION ****Business
TECHNOLOGY reengineering must precede
automation
Maximize use of current
systems inc. staff
knowledge of system
features and possibilities
Effective use of Heads of Customs
workarounds, where and Heads of IT Continuous
absolutely necessary
Constructively engage
system provider regarding
critical system issues
Closer liaison IT and
Business
Decide way forward on IT
requirements, including a
common regional option
IT staff to receive
grounding in customs work
Customs staff to receive
grounding in basic IT
Develop/expand regional
interconnectivity
(RADDEX e.t.c) and
manage it at regional level