BUSINESS PROCESS ANALYSIS EXPORT OF COFFEE, AFRICAN BIRD S EYE CHILLI AND PYRETHRUM IN RWANDA

Transcription

1 BUSINESS PROCESS ANALYSIS EXPORT OF COFFEE, AFRICAN BIRD S EYE CHILLI AND PYRETHRUM IN

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3 Acknowledgements Md. Tariqur Rahman, international consultant, is the author of this report. He was assisted by Serge Rwamasirabo, national consultant based in Rwanda. They are wholly responsible for the information and views stated in the report. The consultants team acknowledges with gratitude the contributions of a number of people towards the process of this business process analysis (BPA), without whose participation the project would not have succeeded. We would like to express our gratitude and appreciation to Andrew Huelin, Associate Programme Adviser, Trade Facilitation and Policy for Business (TFPB), International Trade Centre (ITC), for his overall oversight, feedback and in-depth comments and guidance from the inception to the finishing of the report. We express our gratitude and thanks to the people whom we interviewed in the process of collecting information for the report. We also express our gratitude and thanks to the persons we have interviewed for the study, along with the participants in the workshop organized by the International Trade Centre (ITC) on 30 October 2015 in Kigali, Rwanda. Vanessa Finaughty edited the report and Isabelle Jouve, Associate Programme Adviser, TFPB, ITC, prepared the copy for printing. iii

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5 Contents Acknowledgements Acronyms and Abbreviations iii vii Introduction 1 Chapter 1 Trade context for BPA in Rwanda 3 1. Economic situation and trade facilitation 3 2. Overview of Rwanda s export performance 5 3. Methodology of the study 6 4. Review of literature 6 Chapter 2 Analysis of export process and procedures of selected items from Rwanda 8 1. Export process: Coffee exports from Rwanda 8 2. Export process: Pili pili chilli (African bird s eye chilli) Export process: Pyrethrum 15 Chapter 3 Concluding observations and policy options 19 Annex 1 BPA for coffee exports 21 Annex 2 BPA for pili pili chilli exports 34 Annex 3 BPA for pyrethrum exports 49 References 65 Table 1. Major economic indicators of SITA countries in Table 2. Over time change of export process in Rwanda: World Economic Forum ( ) 4 Table 3. SITA countries: Logistics Performance Index (LPI) Table 4. Comparative statistics of trading across borders indicators for SITA countries 5 Table 5. Trend of Rwandan major exports (Value in 000 US$) ( ) 5 Table 6. Time procedure of coffee exports from Rwanda 10 Table 7. Time procedure of African bird s eye chilli exports from Rwanda 14 Table 8. Time procedure of pyrethrum exports from Rwanda 18 v

6 Figure 1. Use case diagram of core business processes in coffee export 10 Figure 2. Time procedure of coffee exports from Rwanda 11 Figure 3. Use case diagram of core business processes in African bird s eye chilli exports 14 Figure 4. Time procedure of African bird s eye chilli exports from Rwanda 15 Figure 5. Use case diagram of core business processes of pyrethrum exports 17 Figure 6. Time procedure of pyrethrum exports from Rwanda 18 vi

7 Acronyms and Abbreviations Unless otherwise specified, all references to dollars ($) are to United States dollars, and all references to tons are to metric tons. The following abbreviations are used: RRA TTM UNECE NAEB MINAGRI CFA MAGERWA RDB UNCTAD ESCWA PO B/L COQ COO SITA Rwanda Revenue Authority Trade transaction modelling United Nations Economic Commission for Europe National Agricultural Export Development Board Ministry of Agriculture and Animal Resources Clearing and forwarding agent Magasins Généraux du Rwanda s.a. Rwanda Development Board United Nations Conference on Trade and Development Economic and Social Commission for Western Asia Purchase order Bill of lading Certificate of quality Certificate of origin Supporting Indian Trade and Investment for Africa vii

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9 Introduction With the gradual reduction of tariff in international trade over the last two decades, in order to remain competitive in global trade, countries focus has shifted towards improving the status of trade facilitation indicators both within the border and behind the border. For countries that are seeking economic growth and development through increased participation in cross-border trade, this improvement is a must. Other than shipping charges, costs associated with completing documentary and related regulatory procedures such as certification for import and export of any item can account for a significant portion of the value of traded goods. Removal of the non-tariff measures such as cumbersome regulatory procedures and documentation, inefficient transport and logistics infrastructure and services, which will cut the time and costs required to complete a business process and increase predictability, have gained much attention from all segments of the stakeholders. In recent times, the importance of trade facilitation (i.e. the simplification and harmonization of import, export and transit procedures, including paperless trade through wide and efficient use of information and communication technologies) has gained due recognition from international communities such as the World Trade Organization (WTO) (Trade Facilitation Agreement in December 2013). Trading goods across borders involves meeting a vast number of commercial, transport and regulatory requirements, which typically entail complex procedures that require cooperation between many actors, including traders, government agencies and service providers from different countries. Inability or inefficiency to comply with any or some of these requirements or submission of wrong or incomplete documents often creates unnecessary delays and entails additional costs for importers and exporters. High trade facilitation and internal transportation costs are acting like headwind and have significant impact on traders ability to earn profits on a thin margin. The benefits resulting from various reforms of trade facilitation-related measures such as streamlining or consolidating the number of ministries and agencies documents requirement per transaction, reducing time required to complete the process, making available the formal fess, and reducing informal payments, is very significant. Although most actors and regulators involved in the international supply chain are aware of the need to streamline import and export procedures, few (if any) have a complete understanding of the entire trade transaction process, making it difficult to identify the bottlenecks and prioritize reforms. Again, the procedures to perform trade across borders and their relative efficiency vary across products traded, as well as trade routes, mode of transport, and origin and destination of the products. From this perspective, a product-specific business processes analysis (BPA), examining all commercial, transport, regulatory and financial procedures, is likely to be useful in identifying key areas to improve, through identifying and eliminating administrative and procedural constraints. Rwanda often faces high trade costs due to its lack of direct access to the sea and remoteness and isolation from world markets. Recently, the country is doing quite impressively in terms of reforming its administrative and procedural requirement in service delivery systems, but there is still scope to scrutinize its performance in specific areas, which can guide policymakers to improve. It is hoped that the information in this report on trade processes and procedures of the major export items from Rwanda will assist evidence-based policymaking and reforms to further simplify and streamline export procedures in Rwanda. 1

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11 Chapter 1 Trade context for BPA in Rwanda 1. Economic situation and trade facilitation The Republic of Rwanda is one of Africa s smallest and most densely populated countries, with a poor rural economy. The country is trying to overcome the limitations of its small, predominantly agricultural and landlocked economy by leveraging international trade both at global and regional level. Recently, Rwanda is maintaining a high economic growth. Although Rwanda resembles its neighbouring countries in terms of major economic characteristics, the country is still falling behind the Sub-Saharan standards on many frontiers, such as per capita gross domestic products (GDP) and trade to GDP ratio (table 1). Table 1. Major economic indicators of SITA countries in 2014 Indicator name Rwanda Ethiopia Kenya Tanzania Low income Sub- Saharan Africa 1 GDP per capita (constant US$) GDP growth (annual %) Agriculture, value added (% of GDP) Industry, value added (% of GDP) Manufacturing, value added (% of GDP) Services, etc., value added (% of GDP) (2013) Trade (% of GDP) Merchandise trade (% of GDP) Source: World Development Indicators (WDI), The World Bank (accessed on 25 November 2015) Trading goods across borders requires a vast number of transactions to meet the rules and regulations of exporting and importing countries. Failure to comply with any of these requirements and/or submitting a wrong or incomplete set of documents often results in unnecessary delays in time, which can be viewed as an additional tax on goods. High trade facilitation and internal transportation costs are acting like a headwind, having significant impact on traders ability to earn profits on a thin margin. Not all costs, however, are attributable to the public sector purview, e.g. certification and licensing, customs clearance and cargo inspections, etc. Business-to-business transactions can also be the domains of enormous nonvalue-added costs, e.g. inefficient use of transportation mode, truck fuel inefficiency and lack of commodity warehouse at strategic export hub, etc. As a commitment to improve the status of trade facilitation (TF), Rwanda signed the World Trade Organization Free Trade Agreement (WTO TFA) at Bali in December Rwanda has shown its commitment under the agreement and significantly improved the rules and procedures related to export and import. With regard to trade facilitation indicators, Rwanda performs significantly better than the average of Sub-Saharan Africa and low-income countries in the areas, such as streamlining procedures, harmonization and simplification of documents and automation. Rwanda has already started using ASYCUDA++ 2 at multiple border crossings. Also, the Rwanda Revenue Authority (RRA) has a call centre to provide adequate and timely responses to traders. The Rwanda Bureau of Standards (RBS), as a national enquiry point and notification authority, ensures importers and exporters get the latest information 1 All income levels. 2 The Automated System for Customs Data (ASYCUDA) is an online platform designed and developed by the United Nations Conference on Trade and Development (UNCTAD) to administer customs data for a country. 3

12 on standards, technical regulations and conformity assessment procedures available in the Rwandan market and other external markets targeted by Rwandan exporters. Different ministries and agencies have made relevant documents available online. Despite being a landlocked country, Rwanda is trying to boost its regional and international economic integration through a private sector-led economy. 3 Being landlocked is a major disadvantage for Rwanda to be competitive in international trade, as the exporters have to go to either the ocean port in the United Republic of Tanzania (Dar es Salaam) or the Republic of Kenya (Mombasa) to ship their goods, which adds high transport costs. In this endeavour, the government has taken a number of initiatives to simplify the international trade process and procedures, such as establishing a single window system for customs clearance, which has already generated noticeable benefits for traders. From table 2, we can see that, just within 10 years, the country has improved the export process significantly. It has reduced the number of documents required and time to export to a great extent. Table 2. Over time change of export process in Rwanda: World Economic Forum ( ) Indicator name Documents to export (number) Time to export (days) Cost to export (US$ per container) Burden of customs procedure 4 N/A Burden of customs procedure 5 N/A Source: WDI (World Development Indicators), The World Bank (accessed on 25 November 2015) To promote Rwandan exports, laws and regulations have been frozen and reduced to a single document, which is the license delivered by the Rwanda Development Board. Rwanda is a high performer of reforms in rules and regulations to facilitate economic activities in the region (table 3 and table 4). The country has been identified as the champion of improvement of business process in the Africa. In many indicators of trade facilitations, the country is about to reach the standard of high-income countries. ITC (2014) mentioned that Rwanda s focus is on improving trade facilitation and promotion to enable private sector-led business development and export promotion. Table 3. SITA countries: Logistics Performance Index (LPI) 2014 Economy name Overall LPI rank Customs Infrastructure International shipments Logistics competence Tracking and tracing Rwanda Kenya Ethiopia Tanzania Uganda Source: World Bank, Logistics Performance Index (accessed on 21 September 2015) Timelines s 3 Rwanda Vision 2020 (2000). Ministry of finance and economic planning. Republic of Rwanda. 4 1 = extremely inefficient to 7 = extremely efficient. 5 1 = extremely inefficient to 7 = extremely efficient. 6 For Uganda, the statistics are for year

13 Table 4. Comparative statistics of trading across borders indicators for SITA countries Economy name Rank DTF Time to export: Border compliance (hours) Time to export: Documentary compliance (hours) Cost to export: Border compliance (US$) Ethiopia Kenya Rwanda Tanzania Uganda Singapore OECD high income Source: Doing Business, The World Bank (accessed on 8 October 2015) Cost to export: Documentary compliance (US$) With the significant reduction in tariff and quotas for most of the items being traded across the border, the issue of delivering goods and services in time and at low costs is a key factor to determine the competiveness of a country in global trade. In this regard, improved trade facilitation is likely to result in better competitiveness for domestic industries by reducing unnecessary bureaucratic requirements and harmonizing relevant processes. From this perspective, a thorough analysis and understanding of the product-specific business process involving all commercial, transport, regulatory and financial procedures is believed to have profound impact on overall international trade procedures through elimination of administrative and procedural constraints (Hossain & Rahman, 2011). As the process and procedures of cross-border trade vary greatly depending on the nature of the specific product in question, for a better understanding and identifying key areas for change to improve these steps, an analysis of product-specific business processes is very much needed. 2. Overview of Rwanda s export performance The amount of merchandise exports from Rwanda is very small only US$ 197 million in From 2009 to 2014, even with the slowdown of global economic growth, Rwanda has achieved a very high growth (table 5). Within a short period, the country has registered an export growth of more than 200%, where mining, hides and skins, and re-exports played the major role. In terms of share of major items in total export, mining constitutes the major portion. Among the other export items, agricultural products dominate the list, especially tea and coffee. Table 5. Trend of Rwandan major exports (Value in 000 US$) ( ) Products Mining Coffee Tea Hides and skins Pyrethrum Other products Re-exports Total export Growth rate (%) Source: National Bank of Rwanda, External Sector Statistics 5

14 Major export items in Rwanda are coffee and tea, and the main export destinations are the European Union (EU), Kenya, the Republic of South Africa, the Swiss Confederation, the Republic of Uganda, the United Arab Emirates, Tanzania and the United States of America (ITC, 2014). 3. Methodology of the study This study has investigated the trade process and procedures for three major and potential export items in Rwanda, namely coffee, pili pili chilli and pyrethrum. Under this project, we have studied the steps, actors, documents, time and cost involved in the overall transaction procedure and identified areas of improvement to facilitate border trade of these items. The Business Process Analysis Guide to Simplify Trade Procedures 7 has been used as a guide for this study. This guide is based on trade transaction modelling (TTM), a flowchart that identifies the people or organizations involved in each step of the export or import process, using Unified Modeling Language (UML) activity diagrams to represent the steps in a trade transaction, over time, related to the agent or organization responsible for the action (UNCTAD, 2007). Using activity diagrams, TTM provides a better way of communicating the logical paths of a trade transaction to all concerned parties. Most of the studies on the trade transaction processes are industry specific supply chain based. They map the supply process primarily in the internal market and those that are focussed on international trade have identified the process under a border heading of the activities involved or at disaggregated level of a single broad step of the overall trade process. The standard procedure of process analysis is associated with identifying the steps involved in completing the cycle, starting from getting an order for export or placing an order for import and the time required to complete each stage, with associated costs both in accounting and economic terms. Necessary information for the analyses was collected through face-to-face interviews and telephonic communication with the relevant stakeholders, including persons from government agencies, entrepreneurs or exporters, clearing and forwarding (C&F) agents, airline agents and association members. We also compared the collected information to relevant secondary sources, literature and reports. 8 Once we had a draft ready for the study, we visited selected exporters to get their feedback. We presented our findings in a workshop organized by the International Trade Centre (ITC) in Kigali at the end of October Finally, we selected items from both traditional and emerging export items for Rwanda so that we can have a comparative picture of the trade process and procedures. Also, we the chose items and sectors in the priority list for the Supporting Indian Trade and Investment for Africa (SITA) project. 4. Review of literature A typical export process involves 27 parties, more than 40 documents and more than 300 copies of documents, and the average customs transaction involves 20 to 30 parties, 40 documents, 200 data elements (30 of which are repeated at least 30 times), and the rekeying of 60% 70% of all data at least once (UNECE, 2007). The long and cumbersome documentation not only slows the overall business process, but also adds a significant amount of costs, which makes the business less competitive. Although the exact amount of benefit out of improved and efficient trade process and procedures as a result of better trade facilitation measures (e.g. reduction of amount of documentation) varies from country to country and product to product, the direction of change is always positive (Nathan, 2009). With the help of a fragmented international trade transaction process, Alavi (2005) estimated the positive benefits of shifting paper-based trade documentation to paperless trade. Using a gravity model simulation exercise for 75 countries on their manufacturing trade, Wilson et al (2005) found substantive amount benefits as well as 7 United Nations Network of Experts for Paperless Trade and Transport in Asia and the Pacific (UNNExT), United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and the United Nations Economic Commission for Europe (UNECE). (2009). 8 We found the Export Handbook very useful in this regard. 6

15 scope of improvement for trade facilitation, where trade facilitation measures might include both border and inside the border elements. 9 In their study on the apparel industry, Bangladesh, Gereffic and Memedovic (2003) pointed out the importance of improved trade facilitation measures, which requires simplification of the trade process and procedures, to reduce the lead time to remain competitive in this buyer-driven market, along with cheap labour cost. From the brief survey of relevant literature in the field, we can easily see the importance of improving the status of trade process, especially for a country like Rwanda, which is trying its best to improve its economic conditions. One major step in this regard can be improving its competitiveness in the global market. As part of this aspiration, streamlining the process and procedures of international trade will have a significant benefit. 9 Border elements include port efficiency and customs administration, and inside the border elements, such as domestic regulatory environment and the infrastructure to enable e-business usage. 7

16 Chapter 2 Analysis of export process and procedures of selected items from Rwanda 1. Export process: Coffee exports from Rwanda Step 1: Buy finalize purchase order Normally, depending on a buyer s interest to buy any item, the exporter prepares a price quote and terms of trade, which includes the delivery date, quality of item, packaging instructions and payment options. The quotation is then sent to the importer for approval. If the buyer is satisfied with terms and conditions on the quotation, the importer confirms intent to purchase and the parties sign a commercial invoice; otherwise, the buyer gets back to the exporter to negotiate the terms of trade. After necessary modifications, the document is returned to the exporter and, once both parties agree on the terms, they finalize the contract. The process of communication between the importer and the exporter is mainly through exchange of e- mails. If required, however, supporting documents are sent through courier services and voice calls or even Skype chatting. Step 2.1: Arrange local transport After finalizing the export contract, the exporter brings the goods to the National Agricultural Export Development Board (NAEB) 10 of Rwanda for necessary inspections. NAEB has an onsite facility to store the coffee, inspect it physically and issue the few documents required for export. Normally, the exporters use their own company vehicles or any local truck for this purpose. Once the exporter finalizes the contract, he or she has to bring the coffee to NAEB to perform the necessary analysis. Step 2.2: Book cargo space This step is generally completed at the same time as the exporter brings the coffee to NAEB for the necessary inspections. At first, the exporter requests space with a shipping line by specifying the quantity of the product and preferred date of shipment. Normally, the exporter contacts its own clearing and forwarding agent (CFA) 11 to perform this task on behalf of the exporter. In most cases, this communication is done by . The shipping line then issues a draft bill of lading for consideration for the client. Based on the document and confirmation by the shipping line, the exporter schedules pick-up and delivery of the container with the inland transport company. Normally, the time in between a request made by an exporter and the finalization of the booking request is two to four days. Most of the time, the long time required at this stage is due to finding and matching the exporter s preferred date and mode of shipment and it does not necessarily halt the other steps needed for the export process. The cost at this stage depends on the size, urgency and availability of cargo space at that time. Step 2.3: Obtain cargo insurance On the commercial invoice, if the exporter is required to arrange cargo insurance, 12 he or she contracts the insurance company. 13 To collect the insurance policy, the exporter submits the filled-in application form along with supporting documents, e.g. commercial invoice, packing list and draft bill of lading. Upon receipt 10 The National Agricultural Export Development Board (NAEB) is a government body led by MINAGRI. NAEB s role is to facilitate exports of agricultural products, including traditional export products, [such as] coffee and tea, and to promote and support the development of new export market[s]. (Export Handbook) 11 The international freight forwarder acts as an agent for the exporter in moving cargo to the foreign destination. These agents are familiar with foreign countries import rules and regulations, methods of shipping, government export regulations, and the documents connected with foreign trade (SME Toolkit, Rwanda). 12 There are several types of insurance, such as goods in transit, maritime or air and carrier liability insurance, which an exporter can take to minimize risks associated with trade and transport of export. Goods in transit insurance (GIT) covers loss, theft or damage to your goods when they are transported via road. Marine and air insurance cover the same, but for transport via ship or by air. While marine insurance is always recommended, some cargo airlines provide some form of insurance for certain products. This will vary according to the airline company the exporters are using, and the nature and value of the goods being exported (ref: Export Handbook). 13 Normally, each exporter has one or more preferred insurance agent or company from which they collect the insurance policy. 8

17 of these documents, the insurance company decides whether or not to provide the insurance coverage for the consignment. If the insurance company decides to provide the insurance coverage, it issues a cover note to the exporter to confirm the insurance coverage. However, to collect the insurance policy from the insurance company, the exporter needs to submit a copy of the bill of lading. By paying the insurance premium, the exporter collects the insurance policy from the insurance company. 14 Step 2.4: Analyse sample Depending on the buyer s requirements, the exporter requests the authorized inspection agency to inspect the product. An exporter can request a certificate of quality (COQ) via letter or , and copies of the commercial invoice, packing list and any other required information, along with the proof of payment charges for NAEB. The inspector(s) from NAEB collect samples and perform the inspection. If any problem or mismatch is found with the product, the exporter is asked to rectify it. Once the inspector is satisfied with the product quality, an inspection certificate (certificate of origins and certificate of quality) is issued. Testing and issuing will usually take about half a business day. The COQ can be collected from NAEB s certification unit after this period. A COQ is valid for six months. NAEB charges 3% of the coffee export s contract value to cover all the costs and issues the certificates within half of a working day. Once NAEB issues the certificate of quality, the exporter can collect the phytosanitary certificate from the Ministry of Agriculture and Animal Resources (MINAGRI). Also, while in NAEB, an exporter can request a certificate of origin (COO) 15 by writing a letter or an and providing the written description of type of product (e.g. arabica or robusta bean), number of batches and weight. The COO is cost-free and NAEB usually issues the certificate within one working day. Step 2.5: Provide a customs declaration online This step is completed by the exporter s CFA. The CFA submits the required documents e.g. the commercial invoice, packing list, certificate of origin, certificate of quality and insurance certificate (insurance policy) on the Rwanda Revenue Authority s (RRA s) website. Step 2.6: Obtain customs clearance Upon finding the documentation provided by the CFA satisfactory, customs authorities issue a customs clearance; i.e. exit note. The exporter s agent then acknowledges receipt of the customs clearance. Step 2.7: Transport to port of departure As per the transport contract, the inland transport company collects the goods from NAEB and transports them to the port. On arrival, the CFA requests entry of the vehicle into the port area. The port authority or private depot then records details of the truck and container and issues an entry pass allowing the truck and container to enter the controlled area. The date and time of entry of the truck and container is officially recorded. The goods are then taken to the designated area where cargo inspection is to take place. Step 2.8: Handle container at terminal and stow on vessel This step involves a number of parallel activities by the shipping line and the port authority. The shipping agent coordinates handling of the container at the terminal and moves it to the berth area with permission from the port authority. It is the shipping agent s responsibility to prepare a container loading list and a container list message to be used for berthing the container and stowing it on the designated vessel in a coordinated manner. While the container is in the process of being stowed onto the vessel, the shipping agent prepares the final bill of lading, which is supplied to the CFA. Parallel to this process, the port authority prepares a list of outward-going containers to be stowed on the vessel and ensures that the shipping line verifies the list. Once all these activities are completed and the cargo release order is received from customs, the ship sets sail as per schedule. 14 In general, the transporter collects all the required documents on behalf of the exporter, submits those to the insurance company and gets the insurance policy. 15 Although the COO is usually issued by the RRA, in the case of tea or coffee, the exporter can collect COO from NAEB. 9

18 BUSINESS PROCESS ANALYSIS: EXPORT OF COFFEE, AFRICAN BIRD S EYE CHILLI AND PYRETHRUM IN Step 2.9: Prepare the documents required by the importer The exporter collates all the documents that will be needed by the importer to receive the consignment in the importing country. The exporter sends an notifying the importer of the shipment, along with soft copies of the documents. Shortly thereafter, the exporter sends original copies of those documents by courier. To complete this step i.e. to arrange the required documents on average, it takes 10 minutes. Step 3: Pay The exporter s payment depends on the terms and conditions set in the commercial invoice. Generally, coffee exporters receive a part of their export value upon the first presentation of the supporting documents. Once the exporter notifies the importer about the shipment and sends the copies of the required documents, the importer usually transfers the agreed percentage of money to the bank account of the exporter. However, for the full payment, exporters might have to wait for some time (until the coffee is released by the importer). Figure 1. Use case diagram of core business processes in coffee export Table 6. Step Time procedure of coffee exports from Rwanda Core business process Private/public Time required (days) Min. Max. Avg. 1 Finalize purchase order Private Arrange local transportation Private Book cargo space Private Obtain cargo insurance Private Analyse sample Private/public Provide online customs declaration Private/public

19 2.6 Obtain customs clearance Private/public Transfer goods to the port of departure Private/public Handle container at terminal and stow on Private vessel Prepare documents required by the importer Private/public Pay Private Source: Authors calculation based on interviews with stakeholders Figure 2. Time procedure of coffee exports from Rwanda Finalize purchase order Arrange local transportation Book cargo space Obtain cargo insurance Analyse sample Time (in days) Provide online customs declaration Obtain customs clearance Transfer goods to the port of departure Handle container at terminal and stow on vessel Prepare documents required by the importer Pay Core business process steps 2. Export process: Pili pili chilli (African bird s eye chilli) Step 1: Buy finalize purchase order At the beginning of the negotiation with prospective buyers, the exporter sends some samples. Exporters use a courier to send the samples to the buyer. Normally, the time difference between the exporter sending the samples and the importer receiving those samples is three working days, and it costs around US$ 100 for one sample. However, the time required to get back to the exporter regarding the buyer s decision to purchase the order varies. Once the buyer intends to buy the item, the exporter prepares a price quote and terms of trade, which includes the unit price of the item, the delivery date, quality and quantity of the item, packaging and labelling instructions, and payment options. The quotation is then sent to the importer for approval. If the buyer is satisfied with terms and conditions on the quotation, the importer confirms intent to purchase and the parties sign a contract, which becomes a commercial invoice. The process of communication between the importer and the exporter is mainly through exchange of s. If required, however, voice calls or even Skype calling can also take place. On average, it takes one business week to finalize the whole process and two working days from the beginning of the negotiation. Step 2.1: Analyse sample Depending on the buyer s requirements, the exporter requests the authorized inspection agency to inspect the product. An exporter can request a certificate of quality (COQ) via letter or , and copies of the commercial invoice, packing list and any other required information, along with the proof of payment 11

20 charges for NAEB. The inspector(s) from NAEB and MINAGRI then collect samples and perform the inspection. 16 If any problem or mismatch is found with the product, the exporter is asked to rectify it. Once the inspector is satisfied with the product quality, an inspection certificate (certificate of origins and certificate of quality) is issued. Testing and issuing will usually take about half a business day. The COQ can be collected from NAEB s certification unit after this period. Normally, it takes half of a working day to issue these certificates. Also, while in NAEB, an exporter can request a certificate of origin (COO) by writing a letter or an and providing a written description of the type of product. The COO is cost-free and NAEB usually issues the certificate within one working day. For the phytosanitary certificate, the exporter first needs to collect the application form from MINAGRI, which can also be downloaded from their website. After that, the applicant needs to fill out the form and submit it, either in person or via . After submitting the documents, the exporter needs to arrange a visit date directly with MINAGRI s inspection unit. The exporter needs to pay for the inspector s transportation. There is also a fee of RWF 2,000 involved in collecting the certificate, which can be paid before or after the inspector s visit. However, the original payment receipt needs to be submitted in person to MINAGRI s inspection unit. During the visit, the inspector checks whether the product complies with Rwandan and foreign standards and, if he or she is satisfied, the exporter can collect the certificate within one working day from MINAGRI s inspection unit. Also, for some chemical tests (e.g. aflatoxin free), the exporter needs to send some samples outside Rwanda, as there is no accredited testing facility for these. This process involves sending samples by courier and getting the results back via , and it takes around 10 to 14 working days to complete the whole process. Step 2.2: Book cargo space This step is generally completed at the same time the exporter starts analysing the item. The exporter requests space with an airline by specifying the quantity of the product and preferred date of shipment. 17 Normally, the exporter contacts its own clearing and forwarding agent (CFA) to perform this task on behalf of the exporter. In most cases, this communication is done by or calling the CFA. The shipping line then issues a draft air waybill for consideration for the client. Normally, the time between a request made by an exporter and the finalization of the booking request is two to four days. Most of the time, the long time required at this stage is due to finding and matching the exporter s preferred date and mode of shipment and it does not necessarily stop the other steps needed for the export process. The cost at this stage depends on the size, urgency and availability of cargo space at that time. Step 2.3: Obtain cargo insurance In the commercial invoice, if the exporter is required to arrange cargo insurance, he or she contracts the insurance company. To apply for the insurance policy, the exporter submits the filled-in application form, along with supporting documents, e.g. commercial invoice, packing list and draft air waybill. Upon receipt of these documents, the insurance company decides whether or not to provide insurance coverage for the consignment. If the insurance company decides to provide the insurance coverage, it issues a cover note to the exporter to confirm the insurance coverage. However, to collect the insurance policy from the insurance company, the exporter needs to submit a copy of the air waybill. By paying the insurance premium, the exporter collects the insurance policy. Normally, the exporter pays for the local insurance and payment for the international insurance is negotiated between the exporter and importer. Step 2.4: Move goods to MAGERWA After finalizing the export contract, the transporter brings the goods to MAGERWA 18 on behalf of the exporter. Normally, exporters use their own company vehicles or any local truck for this purpose. On arrival, the CFA presents the supporting documents and requests entry of the vehicle into MAGERWA. The 16 This is a two-step procedure. There is an inspection on the farm and NAEB issues a pre-inspection report before the harvest. There is another inspection by NAEB once the product is in the exporter s warehouse. 17 The export of pyrethrum is usually done by regular airlines or cargo planes. 18 Magasins Généraux du Rwanda s.a. (MAGERWA) owns warehouses approved and under the control of the Customs and Excise Department, in which all the industrial, tradesmen, farmers or craftsmen deposit raw materials of finished goods. 12

21 MAGERWA authority then records the physical details of the items (e.g. size and quantity) and issues an entry pass allowing the truck and container to enter the controlled area. The date and time of entry of the truck and container is officially recorded. The goods are then taken to the designated area where cargo inspection is to take place. Normally, it takes three hours to six hours to reach MAGERWA from the company premises. Step 2.5: Provide a customs declaration online This step is completed by the exporter s CFA. The CFA submits the required documents e.g. the commercial invoice, certificate of analysis, delivery note, packing list and material data sheet (MDS) (insurance policy) on the Rwanda Revenue Authority s website. Step 2.6: Clear goods through customs The CFA submits a copy of the customs clearance acknowledgement receipt to customs, along with hardcopies of all the supporting documents. Customs then retrieves information from the previously lodged online declaration and cross-checks with the documents received from the CFA. An inspector is then authorized to inspect the cargo and certify compliance with the declaration. If any misconduct is found, export of the shipment is stopped and a case is filed against the exporter. If no discrepancy is found, customs issues a shipping bill and seals the container. The CFA then receives the shipping bill on behalf of the exporter. Step 2.7: Transport to port of departure As per the transport contract, the inland transport company collects the goods from NAEB and transports them to the port. On arrival, the CFA requests entry of the vehicle into the port area. The port authority or private depot then records details of the truck and container and issues an entry pass allowing the truck and container to enter the controlled area. The date and time of entry of the truck and container is officially recorded. The goods are then taken to the designated area where cargo inspection is to take place. Step 2.8: Handle container at terminal and stow on vessel This step involves a number of parallel activities by the shipping line and the port authority. The shipping agent coordinates handling of the container at the terminal and moves it to the berth area with permission from the port authority. It is the shipping agent s responsibility to prepare a container loading list and a container list message to be used for berthing the container and stowing it on the designated vessel in a coordinated manner. While the container is in the process of being stowed onto the vessel, the shipping agent prepares the final bill of lading, which is supplied to the CFA. Parallel to this process, the port authority prepares a list of outward-going containers to be stowed on the vessel and ensures that the shipping line verifies the list. Once all these activities are completed and the cargo release order is received from customs, the ship sets sail as per schedule. Step 2.9: Organize documents The exporter collates all the documents that will be needed by the importer to receive the consignment in the importing country. The exporter sends an notifying the importer of the shipment, along with soft copies of the documents. Within two to four days, the exporter sends original copies of those documents by courier. In some cases, all the necessary documents are attached to the consignment. The time requirement to complete this procedure is minimal on average, only 10 minutes. Step 3: Collect payment The exporter s payment depends on the terms and conditions set in the commercial invoice. Generally, they receive a part of their export value upon first presentation of the supporting documents. Once the exporter notifies the importer about the shipment and sends the copies of the required documents, the importer usually transfers the agreed percentage of money to the exporter s bank account. However, for the full payment, exporters might have to wait for some time (until the item is released by the importer). 13

22 BUSINESS PROCESS ANALYSIS: EXPORT OF COFFEE, AFRICAN BIRD S EYE CHILLI AND PYRETHRUM IN Figure 3. Use case diagram of core business processes in African bird s eye chilli exports Table 7. Step Time procedure of African bird s eye chilli exports from Rwanda Core business process Private/public Time required (days) Min. Max. Avg. 1 Finalize the purchase order Private Analyse sample 19 Private Book cargo space Private Obtain cargo insurance Private Move goods to MAGERWA Private Provide customs declaration online Private/public Clear goods through customs Private/public Transfer goods to the airlifting area Private/public Handle at the airport Private/public Organize documents Private Collect payment Private Total time required Source: Authors calculation based on interviews with stakeholders 19 The analyse sample step involves sending samples outside the country and obtaining the report. 14

23 Figure 4. Time procedure of African bird s eye chilli exports from Rwanda Finalize the purchase order Analyze sample Book Cargo space Obtain cargo insurance Obtain local transport insurance Move goods to MAGERWA Time(in Days) Declare customs online Clear goods through customs Move goods to the Airlifting area Handle at the airport Organize documents Pay Core business process step 3. Export process: Pyrethrum Pyrethrum is produced only in three countries in the world, namely Kenya, Australia and Rwanda. Most of the time, it s a seller-driven market, where the two parties are in a long-term agreement. This long-term agreement or relationship defines the trade between exporters and importers. Step 1: Buy finalize purchase order At the beginning of the negotiation with the prospective buyers, the exporter needs to send some samples. Exporters use a courier to send the samples to the buyer. Normally, the time between the exporter sending the samples and an importer receiving those samples is three working days, and it costs around US$ 100 per sample. However, the time required to get back to the exporter regarding the buyer s decision to purchase the order varies. Sometimes buyers might take from one month to three months to get back to the exporter. After that, depending on a buyer s interest to buy the item, the exporter prepares a price quote and terms of trade, which includes unit price of the item, the delivery date, quality and quantity of the item, packaging and labelling instructions, and payment options. The quotation is then sent to the importer for approval. If the buyer is satisfied with terms and conditions on the quotation, the importer confirms intent to purchase and the parties sign a commercial invoice. The process of communication between the importer and the exporter is mainly through exchange of s. If required, however, supporting documents are sent through courier services and voice calls or even Skype chatting. On average, it takes one business week to finalize the purchase order. Step 2.1: Analyse sample 20 Once the two parties reach an agreement to sign a contract, the exporter goes to his storeroom to check if the item is readily available. If the same item (quality and quantity) is available, the exporter can start the process of shipping the item immediately; otherwise, he has to collect and analyse the item, and it might take about a week to ship the item. 20 There are two samples; one is sent to the importer, who does his or her analysis, and another test is done by Horizon Sopyrwa, the company that processes and exports pyrethrum form Rwanda. The two test results have to give the same quality. 15

24 For the purpose of analysis, the exporter brings a sample to his lab and performs a number of tests, such as percentage concentration, clarity of the product, free from waxes, BST content test and flash point. After performing all these tests, if the item passes the buyer s requirements, the exporter prepares a certificate of analysis. At the same time, the workers start packing the items. Pyrethrum is shipped in drums. Normally, there are two sizes: 25 kg drum or 200 kg drum. Along with the packed item, the exporter also prepares the documents required for export, which include the commercial invoice, certificate of analysis, delivery note, packing list and material data sheet. This documentation and packaging can run simultaneously and takes three to six hours to complete. Step 2.2: Book cargo space This step is generally completed at the same time the exporter starts analysing the item. First, the exporter requests a space with an airline by specifying the quantity of the product and preferred date of shipment. 21 The exporter usually contacts its own clearing and forwarding agent (CFA) to perform this task on behalf of the exporter. In most cases, this communication is done by or calling the CFA. The shipping line then issues a draft air waybill for consideration for the client. Normally, the time between a request made by an exporter and the finalization of the booking request is two to four days. Most of the time, the long time required at this stage is due to finding and matching the exporter s preferred date and mode of shipment and it does not necessarily stop the other steps needed for the export process. The cost at this stage depends on the size, urgency and availability of cargo space at that time. Step 2.3: Obtain cargo insurance In the commercial invoice, if the exporter is required to arrange cargo insurance, he or she contracts the insurance company. To apply for the insurance policy, the transport company, on behalf of the exporter, submits the filled-in application form along with supporting documents, e.g. commercial invoice, packing list, draft air waybill. Upon receipt of these documents, the insurance company decides whether or not to provide the insurance coverage for the consignment. If the insurance company decides to provide the insurance coverage, it issues a cover note to the exporter to confirm the insurance coverage. However, to apply for the insurance policy from the insurance company, the exporter needs to submit a copy of the air waybill. By paying the insurance premium, the exporter can collect the insurance policy. Normally, the exporter pays for the local insurance and payment for the international insurance is negotiated between the exporter and importer. Step 2.4: Move goods to MAGERWA After finalizing the export contract, the exporter brings the goods to MAGERWA. Exporters usually use their own company vehicles or any local truck for this purpose. On arrival, the CFA presents the supporting documents and requests entry of the vehicle into MAGERWA. The MAGERWA authority then records the physical details of the items (e.g. size and quantity) and issues an entry pass allowing the truck and container to enter the controlled area. The date and time of entry of the truck and container is officially recorded. The goods are then taken to the designated area where cargo inspection is to take place. Normally, it takes three hours to six hours to reach MAGERWA from the company premises. Step 2.5: Provide a customs declaration online This step is completed by the exporter s CFA. The CFA submits the required documents e.g. the commercial invoice, certificate of analysis, delivery note, packing list and material data sheet (insurance policy) on the Rwanda Revenue Authority s website. Step 2.6: Obtain customs clearance After submitting all the necessary documents, the CFA notifies the customs authority and arranges inspection by RRA. Upon finding the documentation provided by the CFA satisfactory, customs authorities issue customs clearance; i.e. exit note. The exporter s agent then acknowledges receipt of the customs clearance. 21 The export of pyrethrum is usually done by regular airlines or cargo planes. 16

25 Step 2.7: Move goods to the airlifting area After getting customs clearance, the CFA hands over the consignment, along with the supporting documents, to one of the airline agents. The airlines agent then transfers the goods to the airlifting area. For this, the agent has to produce the documents to the airport security, who then issues a security check mark upon finding the documents satisfactory. After getting the security clearance, the agent places the consignment in the designated airlifting area based on the type, quantity and destination of the export item. This process takes only couple of minute to complete. Step 2.8: Handle goods at the airport This step involves a number of parallel activities by the airline company and the airport authority. The airline agent coordinates handling of the items at the terminal and moves it to the cargo loading area with permission from the port authority. Sometimes, it requires repackaging of the items, in which case it takes longer and costs extra to finish this step. While the item is being lifted onto the cargo carrier, the airline agent prepares the final air waybill, which is supplied to the CFA. Step 2.9: Organize documents The exporter collates all the documents that will be needed by the importer to receive the consignment in the importing country. Then the exporter sends an notifying the importer of the shipment, along with soft copies of the documents. Shortly thereafter, the exporter sends original copies of those documents by courier. In some cases, all the necessary documents are attached to the consignment. Step 3: Collect payment The exporter s payment depends on the terms and conditions set in the commercial invoice. Generally, they receive a part of their export value upon first presentation of the supporting documents. Once the exporter notifies the importer about the shipment and sends the copies of the required documents, the importer usually transfers the agreed percentage of money to the exporter s bank account. However, for the full payment, exporters might have to wait for some time (until the item is released by the importer). Figure 5. Use case diagram of core business processes of pyrethrum exports 17

26 Table 8. Time procedure of pyrethrum exports from Rwanda Step Core business process Private/public Time required (days) Min. Max. Avg. 1 Finalize the purchase order Private Analyse sample Private Book cargo space Private Obtain cargo insurance Private Move goods to MAGERWA 22 Private Provide online customs declaration Private/public Clear goods through customs Private/public Move goods to the airlifting area Private/public Handle goods at the airport 23 Private/public Organize documents Private Pay Private Source: Authors calculation based on interviews with stakeholders Figure 6. Time procedure of pyrethrum exports from Rwanda 25 Time (in days) Finalize the purchase order Analyse sample Book cargo space Obtain cargo insurance Obtain local transport insurance Move goods to MAGERWA Provide online customs declaration Clear goods through customs Move goods to the airlifting area Handle at the airport Organize documents Pay 1 2,1 2,2 2,3 2,4 2,5 2,6 2,7 2,8 2,9 2,1 3 Core business process steps 22 MAGERWA owns warehouses approved and under the control of the Customs and Excise Department, in which all the industrial, tradesmen, farmers or craftsmen deposit raw materials or finished goods. 23 This step is operational for 24 hours. Hence, the actual time required to complete this step is lower. 18

27 Chapter 3 Concluding observations and policy options In comparison to other high-performing countries, not much difference was found in Rwanda s business process. From the field interviews, most of the actors involved in the process, starting from exporters, logistics agents and people handling the shipment at the airport, were found to be quite satisfied with the business as is process. Based on our interviews with the stakeholders and secondary information, the following are the recommendations that the policymakers can consider implementing to make Rwanda s export sector more competitive. Development of lower-cost transport to the sea is a call of urgency in order for Rwanda to be competitive in the international market. In this regard, the construction of the Dar es Salaam-Isaka- Kigali/Keza-Musongati Railway will cut both the cost and time for transportation. In the meantime, Kigali can improve the quality of roads, which will help to move the full-size containers from the exporters premises to the loading stations (possibly to the railway depot). Normally, the export contract for coffee is done free on truck (FOT) instead of free on board (FOB). Due to this, many potential new buyers are reluctant to purchase coffee from Rwanda and many existing buyers pay a lower price for the items. In this regard, to ensure a higher export price for coffee exported from Rwanda, the responsible export authority e.g. Rwanda Development Board (RDB) can take steps to encourage the exporter to negotiate contracts on FOB. Many small exporters prefer to sell to buyers at Kigali prices, instead of Dar es Salaam or Mombasa prices. Many new buyers who don t have enough information regarding the risk of carrying goods all the way from Kigali to the port of shipment naturally quote a low price or, in many cases, don t show interest to go for a deal. Also, small exporters need cash as soon as possible, as they have to pay for all the inputs and services they purchased during the cultivation and production phases which is mainly financed by bank loans, which makes them more risk averse than large exporters. Often, finding an empty container is a challenge. Most of the time, due to poor infrastructure, the logistics companies send coffee in a 20 container instead of a full container, which requires unloading the goods in another location and loading that in a full-size container. This delays the whole process and adds to the cost of export. In this regards, improving the trade infrastructure is crucial to be competitive in the export market. This problem is also going to improve once the new railroad is operational. Once this project is done, the challenge will remain to improve the quality from exporters sites to the closest railway dockyard. For pili pili chilli, a common testing centre can be established, which will issue all the necessary testing. This can be done by opening a facility of internationally reputed testing either in Rwanda or in some suitable place within the East African Community (EAC). This will save a lot of time and make the export process faster. This is definitely not a big challenge, as there is not much competition in the international export market for this. That being said, if the facility can be built in Rwanda, the process will be expedited by cutting lead time substantially. This might keep Rwandan exporters competitive in the face of any future competition where lower lead time might be an important determinant. Finding new markets should be emphasized to increase the amount of coffee exports and get better prices for coffee, especially considering the rise of many emerging and developing countries that might be prospective buyers for many of Rwanda s export items. A one-stop service centre or single enquiry point for export and import processes and procedures can be helpful to the newcomers in these fields. In this regard, a website can be operated for wide and easy accessibility. The product or sector-specific BPA can be used as inputs to develop the handbook and the website for this purpose. RDB can manage the project, in which development partners like ITC can support the initial phase. In collaboration with the countries through which most of its international trade is handled, Rwanda can carry an in-depth study to find out the loopholes in port operations. It was found that Rwanda is very efficient when it comes to services within the country. However, very often, the country is not 19

28 getting such efficient services outside its own territory. In this regard, further cooperation with its neighbouring countries, especially the countries with access to sea ports, can help Rwanda to be more competitive in the global market by increasing efficiency. 20

29 Annex 1 BPA for coffee exports of activities in the Buy: Finalize purchase order process for coffee exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved Buy N/A Exporter Importer Exporter has an export permit from relevant authority Exporter has a list of prospective buyers 1.1 Exporter prepares quotation and sales terms, and sends it to importer, usually via Importer reviews the quotation and sales terms, determines if they are acceptable. If not, importer may request a revised quoted price and sales terms. 1.3 Once both parties agree on the terms and conditions, importer confirms the purchase and issues purchase order (PO) to exporter. 1.4 Exporter issues proforma invoice after receiving the PO. Exporter and importer deal with a contract, which is known as commercial invoice 3 working days There is no fee involved in this step 21

30 of activities in the Ship: Arrange local transportation process for coffee exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 2.1 Arrange local transportation N/A Exporter Inland haulage Exporter has an export contract Exporter contacts inland haulage or, in some cases, exporter uses its own company vehicle to bring the goods to NAEB Once the two parties agree on the terms and conditions, they fix a time to pick up the goods from the exporter s premises Inland haulage collects the goods from the exporter s premises and delivers to NAEB. The coffee reaches NAEB for necessary inspections 0.75 working days Varies depending on the distance from the exporter s location 22

31 of activities in the Ship: Book cargo space process for coffee exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 2.2 Book cargo space International Maritime Organization (IMO) (various conventions) Exporter Logistics company (representative) Exporter has an export contract Exporter is responsible for delivery of the cargo to the specified port of departure Exporter contacts logistics company to reserve cargo space Logistics company confirms the booking request by sending the exporter the draft bill of lading Exporter reviews the draft B/L; if incorrect, informs the company to revise it, then applies for cargo insurance (if required) Exporter schedules the delivery of the empty containers. Transportation is arranged to move cargo to port of departure. 3 working days Depends on the destinations and time 23

32 of activities in the Ship: Obtain cargo insurance process for coffee exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 2.3 Obtain cargo insurance N/A Exporter or representative Importer Insurance company The concerned parties have agreed on the terms and conditions of insurance arrangement Exporter or representative applies for an insurance coverage to an insurance company Exporter submits the required documents, which includes commercial invoice, packing list and draft bill of lading, along with a filled-in cargo insurance application form Based on the submitted documents, an insurance company decides whether or not to provide the insurance coverage, along with the cost of the insurance Once the company is satisfied with the documentation, it issues a cover note for the to-be-insured consignment When the insurance company receives a transport contract or bill of lading from an exporter or representative, it issues an insurance policy in favour of the party. The consignment is insured according to the agreed terms and conditions on commercial invoice 0.04 working days US$ 25 plus insurance premium 24

33 of activities in the Ship: Analyse sample process for coffee exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 2.4 Analyse sample N/A Exporter NAEB MINAGRI Coffee is already at NAEB premises The exporter requests the authorized inspection agency to inspect the product The exporter requests a certificate of quality (COQ) via letter or , along with copies of the commercial invoice, packing list and any other required information, and with the proof of payment charges for NAEB The inspector(s) from NAEB and MINAGRI collect samples and perform the inspection. If any problem or mismatch between the samples and commercial invoice is found, the exporter is asked to rectify it Once the inspector is satisfied with the product quality, an inspection certificate (certificate of origins and certificate of quality) is issued. A COQ is valid for six months 1.5 working days 3% of the contract value 25

34 of activities in the Ship: Provide online customs declaration process for coffee exports from Rwanda Topic Process name Rules and regulations Stakeholders 2.5 Provide online customs declaration Law No. 21/2006 of 28 April 2006, Establishing the Customs System Exporter or representative Customs The goods in amount and conditions specified in the purchase order are ready for inspection; i.e. are already at MAGERWA in Gikondo or their airport site Precondition An exporter or representative is already a registered user of RRA s electronic singlewindow system The exporter or representative submits the required documents e.g. the commercial invoice, packing list, certificate of origin, certificate of quality and insurance certificate (insurance policy) on RRA s website Make an export declaration via the electronic single-window system by filling out the declaration form and uploading copies of all essential documents Upload a copy of the receipt of fee payment for customs clearance If the cargo matches the packing list and commercial invoice, the security personnel seal the cargo, and, if applicable, certificates of origin and other documents as specified by the contract are attached to it. Post-condition After all the above-mentioned, goods are ready to load onto the cargo carrier Average time to complete 0.04 working days Average costs involved US$

35 of activities in the Ship: Obtain customs clearance process for coffee exports from Rwanda Topic Process name Rules and regulations Stakeholders 2.6 Obtain customs clearance Law No. 21/2006 of 28 April 2006, Establishing the Customs System Exporter or representative Logistics Customs Exporter or representative has already submitted the required documents for customs Precondition clearance on RRA s website via the electronic single-window system Upon finding the documentation provided by the exporter or representative satisfactory, customs authorities issue customs clearance; i.e. exit note The exporter s agent acknowledges receipt of the customs clearance A driver of inland haulage presents an equipment interchange receipt and goods transition control list to the customs officer Customs officer verifies the information received with the actual consignment and the information recorded on the system. If customs paperless system indicates that the consignment is not subject to further inspection, the customs officer can release the consignment from the sub-gate right away If it is indicated in customs paperless system that this particular consignment is randomly selected for inspection, a driver of inland haulage has to transfer the container to the point of inspection Customs officer then inspects the cargo. If misconduct is not found, customs officer can release the consignment from the sub-gate right away The actual quantity of goods to be exported will be recorded in the system. An exporter will be notified of this amount. If misconduct is found, the customs officer records a misconduct case, which requires further investigation. Goods are ready to get out of the customs inspections area, e.g. MAGERWA in Post-condition Gikondo or their airport site Average time to complete 0.04 working days Average costs involved US$ 4 27

36 of activities in the Ship: Transfer goods to the port of departure process for coffee exports from Rwanda Topic Process name 2.7 Transfer goods to the port of departure Rules and regulations MINISTERIAL INSTRUCTIONS No. 06/MOS/TRANS/015 OF 8 April 2015 Exporter or representative Stakeholders Inland haulage Customs Precondition The goods are already at the gate of the port Driver presents the equipment interchange receipt at the gate and requests to enter port container yard Customs official verifies documents. If there are missing documents, the exporter is asked to provide the missing documents Customs deputy chief assigns an inspector to inspect the container s seal for authenticity The containers undergo scanning by the concessionaire. Port authority s officer allows truck to enter port container yard and container goes through customs clearance Driver proceeds to pay port fees for loading and unloading container and stevedoring charges to the port authority s billing department Port authority s officer enters data into single window computer system to inform the stevedoring department to proceed with loading and unloading. The data is also shared with the carrier (shipping line) to prepare a load list for the cargo Port authority s worker moves the container from container yard to the dockside to stow onto the vessel. Post-condition The consignment is ready to be shipped Average time to complete 5.5 working days (including the travel time from Kigali) Average costs involved US$ 6000 (heavy weight) 28

37 29

38 of activities in the Ship: Handle container at terminal and stow on vessel process for coffee exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 2.8 Handle container at terminal and stow on vessel Convention on the International Maritime Organization Exporter or representative Customs Carrier (shipping line) Port authority The consignment has already been released from customs area Carrier has already received permission from marine department to leave port of departure Ship agent prepares draft bill of lading for exporter and manifest for the customs department through paperless system Ship agent prepares container loading list for port authority Ship agent prepares bill of lading for to exporter The port authority prepares a list of outward-going containers to be stowed on the vessel and ensures that the shipping line verifies the list Once all these activities are completed and the cargo release order is received from customs, the ship sets sail as per schedule. The ship is on the move with the consignment 3.5 working days US$ 80 (20 cargo) 30

39 31

40 of activities in the Ship: Prepare documents required by the importer process for coffee exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 2.9 Prepare documents required by the importer Uniform Customs and Practice for Documentary Credits, UCP 600 (ICC Publication No. 600) Exporter or representative Importer Logistics Shipping lines The consignment is already on the ship and set to move The exporter or representative collates all the documents that will be needed by the importer to receive the consignment in the importing country, which includes commercial invoice, packing list, certificate of origin, certificate of quality, insurance certificate and bill of lading The exporter first sends an notifying the importer of the shipment along with soft copies of the documents. Shortly thereafter, the exporter sends original copies of those documents by courier. Importer receives and acknowledges the receipt of import documentation 0.02 working days No fee involved (except a courier fee to send the hardcopy documents) 32

41 of activities in the Pay process for coffee exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 3. Pay Uniform Customs and Practice for Documentary Credits, UCP 600 (ICC Publication No. 600) Exporter and exporter s bank Importer and importer s bank Exporter and importer concluded sales contract and trade terms 3.1 Exporter prepares and sends documents (e.g. invoice; packing list; bill of lading) to importer. 3.2 Importer receives documents. Importer goes through import declaration process. 3.3 Importer prepares cash or money in the account for transfer when the due comes. 3.4 Importer s bank receives transferred money. 3.5 Importer s bank review and payment or direct debit from importer. 3.6 Importer s bank sends money orders to exporter s bank. 3.7 Exporter s bank is debited by importer s bank. 3.8 Fee deducted before transfer to exporter s account. 3.8 Exporter checks and receives money. The contract is fulfilled and the whole process is finished 3 working days No fee 33

42 Annex 2 BPA for pili pili chilli exports of activities in the Buy: Finalize purchase order process for pili pili chilli exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 1. Buy N/A Exporter Importer Exporter has an export permit from relevant authority Exporter has a list of prospective buyers 1.1 Exporter sends sample to the potential buyers via courier in order to check the quality. 1.2 Exporter prepares quotation and sales terms, and sends it to prospective buyer, usually via Importer reviews the quotation in relation to the sample and sales terms, and determines if they are acceptable. If not, importer may request a revised quoted price and sales terms. 1.4 Once both parties agree on the terms and conditions, importer confirms the purchase and issues purchase order to exporter. 1.5 Exporter issues Proforma Invoice after receiving the PO. Exporter and importer deal with a contract, which is known as a commercial invoice 2 working days (excluding the time to send the sample) US$ 100 (which includes the cost of sending the sample) 34

43 of activities in the Ship: Analyse sample process for pili pili chilli exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 2.1 Analyse sample N/A Exporter NAEB MINAGRI Pili pili chilli is already at NAEB premises The exporter requests the authorized inspection agency to inspect the product. The exporter or representative requests a certificate of quality (COQ) via letter or e- mail, along with copies of the commercial invoice, packing list and any other required information, plus the proof of payment charges for NAEB. The inspector(s) from NAEB and MINAGRI collect samples and perform the inspection. If any problem or mismatch is found with the product, the exporter is asked to rectify it. Once the inspector is satisfied with the product quality, an inspection certificate (certificate of origins and certificate of quality) is issued. An exporter can request a certificate of origin (COO) by writing a letter or an and providing a written description of the product. For the phytosanitary certificate, the exporter first collects the application form from MINAGRI, which can be downloaded from their website as well. After that, the applicant needs to fill out the form and submit. The applicant can submit the form either in person or via . After submitting the documents, the exporter arranges a visit date directly with MINAGRI s inspection unit. The inspector checks whether the product complies with Rwandan and foreign standards and, if he or she is satisfied, the exporter can collect the certificate from MINAGRI s inspection unit. For some chemical tests, the exporter needs to send some samples outside Rwanda, as there is no accredited testing facility for these. This process involves sending samples to AGROTECH by courier and getting the results back via . A COQ is valid for six months 12 working days (including the time to send sample outside the country and get back the results) US$ 6.7 and US$ 200 for testing at AGROTECH 35

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45 of activities in the Ship: Book cargo space process for pili pili chilli exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 2.2 Book cargo space Convention on the International Maritime Organization Exporter Logistics company (representative) Exporter has an export contract Exporter is responsible for the delivery of the cargo to the specified port of departure Exporter contacts logistics company to reserve cargo space Logistics company confirms the booking request by sending the exporter the draft bill of lading Exporter reviews the draft B/L; if incorrect, exporter informs the company to revise it, then applies for cargo insurance (if required) Exporter schedules the delivery of the empty containers. Transportation is arranged for moving cargo to port of departure 2 working days N/A 37

46 of activities in the Ship: Obtain cargo insurance process for pili pili chilli exports from Rwanda Topic Process name Rules and regulations Stakeholders 2.3 Obtain cargo insurance N/A Exporter or representative Importer Insurance company The concerned parties have agreed on the terms and conditions of insurance Precondition arrangement Exporter or representative applies for an insurance coverage to an insurance company Exporter submits the required documents, which includes commercial invoice, packing list and draft bill of lading, along with a filled-in cargo insurance application form Based on the submitted documents, an insurance company decides whether or not to provide the insurance coverage, along with the cost of the insurance Once the company is satisfied with the documentation, it issues a cover note for the to-be-insured consignment When the insurance company receives a transport contract or bill of lading from an exporter or representative, it issues an insurance policy in favour of the party. The consignment is insured according to the agreed terms and conditions on the Post-condition commercial invoice Average time to complete 0.04 working days Average costs involved US$ 25 38

47 of activities in the Ship: Move goods to MAGERWA process for pili pili chilli exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 2.4 Move goods to MAGERWA N/A Exporter Inland haulage Exporter has an export contract Exporter contacts inland haulage or uses own company vehicle to bring the goods to MAGERWA. On arrival, the CFA presents the supporting documents and requests entry of the vehicle into MAGERWA. The port authority records the physical details of the items (e.g. size and quantity) and issues an entry pass allowing the truck and container to enter the controlled area. The date and time of entry of the truck and container is officially recorded. The goods are taken to the designated area where cargo inspection is to take place. The chilli is in ready for customs inspection 0.35 working days Cost varies depending on the distance transported 39

48 of activities in the Ship: Provide online customs declaration process for pili pili chilli exports from Rwanda Topic Process name Rules and regulations Stakeholders 2.5 Provide online customs declaration Law No. 21/2006 of 28 April 2006, Establishing the Customs System Exporter or representative Customs The goods in amount and conditions specified in the purchase order are ready for inspection; i.e. are already at MAGERWA in Gikondo or their airport site Precondition An exporter or representative is already a registered user of RRA s electronic singlewindow system The exporter or representative submits the required documents e.g. the commercial invoice, packing list, certificate of origin, certificate of quality and insurance certificate (insurance policy) on RRA s website Make an export declaration via the electronic single-window system by filling out the declaration form and uploading copies of all essential documents Upload a copy of the receipt of fee payment for the customs clearance If the cargo matches the packing list and commercial invoice, the security personnel seal the cargo, and, if applicable, certificates of origin and other documents as specified by the contract are attached to it. Post-condition After all the above steps, goods are ready to load onto the cargo carrier Average time to complete 0.04 working days Average costs involved US$

49 of activities in the Ship: Clear goods through customs process for pili pili chilli exports from Rwanda Topic Process name Rules and regulations Stakeholders 2.6 Clear goods through customs Law No. 21/2006 of 28 April 2006, Establishing the Customs System Exporter or representative Logistics Customs Exporter or representative has already submitted the required documents for customs Precondition clearance on RRA s website via the electronic single-window system After submitting all the necessary documents, the CFA notifies the customs authority and arranges inspection by RRA. Upon finding the documentation provided by the CFA satisfactory, customs authorities issue customs clearance; i.e. exit note. The exporter s agent acknowledges receipt of the customs clearance. Post-condition Goods are ready to get out of MAGERWA to the port of shipment Average time to complete 0.04 working days Average costs involved US$ 4 41

50 of activities in the Ship: Moving goods to the airlifting area process for pili pili chilli exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition 2.7 Moving goods to the airlifting area N/A Exporter or representative MAGERWA Airport authority The exporter has already received the customs clearance from RRA The CFA hands over the consignment, along with the supporting documents, to one of the airline agents. The airline agent transfers the goods to the airlifting area. The airline agent produces the documents to the airport to obtain security clearance. Once the security clearance is done, the airline agent places the consignment in the designated airlifting area based on the type, quantity and destination of the export item. This process takes only a few minutes to complete. Post-condition The consignment is ready to be airlifted Average time to complete 0.04 working days Average costs involved US$ 50 US$

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52 of activities in the Ship: Handle goods at the airport process for pili pili chilli exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 2.8 Handle goods at the airport N/A Exporter or representative Cargo plane (airlines) Port authority The consignment is already at the designated airlifting area and the cargo plane is at the airport The airline s agent coordinates handling of the items at the terminal and moves it to the cargo loading area with permission from the airport authority. Sometimes, repackaging of the items is required, in which case it takes longer and costs extra to finish this step. While the item is being lifted onto the cargo carrier, the airline agent prepares the final air waybill, which is supplied to the CFA. The consignment is on board 2.5 working days (however, as the operations are active for 24 hours, the actual calendar day is lower) Included in the cost of cargo booking 44

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54 of activities in the Ship: Prepare documents required by the importer process for pili pili chilli exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 2.9 Prepare documents required by the importer Uniform Customs and Practice for Documentary Credits, UCP 600 (ICC Publication No. 600) Exporter or representative Importer Logistics Airlines The consignment is already on the cargo carrier and set for move The exporter or representative collates all the documents that will be needed by the importer to receive the consignment in the importing country, which includes commercial invoice, packing list, certificate of origin, certificate of quality, phytosanitary certificate, insurance certificate and bill of lading The exporter sends an notifying the importer of the shipment, along with soft copies of the documents. Shortly thereafter, the exporter sends original copies of those documents by courier. Importer receives and acknowledges the receipt of import documentation 0.02 working days N/A 46

55 of activities in the Pay process for pili pili chilli exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 3. Pay Uniform Customs and Practice for Documentary Credits, UCP 600 (ICC Publication No. 600) Exporter and exporter s bank Importer and importer s bank Exporter and importer concluded sales contract and trade terms 3.1 Exporter prepares and sends documents (e.g. invoice, packing list and air waybill) to importer. 3.2 Importer receives documents. Importer goes through import declaration process. 3.3 Importer prepares cash or money in the account for transfer when the due comes. 3.4 Importer s bank receives transferred money. 3.5 Importer s bank review and payment or direct debit from importer. 3.6 Importer s bank sends money orders to exporter s bank. 3.7 Exporter s bank is debited by importer s bank. 3.8 Fee deducted before transfer to exporter s account. 3.8 Exporter checks and receives money. The contract is fulfilled and finishes the whole process 3 working days N/A 47

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57 Annex 3 BPA for pyrethrum exports of activities in the Buy: Finalize purchase order process for pyrethrum exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 1. Buy N/A Exporter Importer Exporter has an export permit from relevant authority Exporter has a list of prospective buyers 1.1 Exporter sends samples by courier to the potential buyers to check the quality. 1.2 Exporter prepares quotation and sales terms, then sends it to prospective buyer, usually via Importer reviews the quotation in relation to the sample and sales terms, and determines if they are acceptable. If not, importer may request a revised quoted price and sales terms. 1.4 Once both parties agree on the terms and conditions, importer confirms the purchase and issues purchase order to exporter. 1.5 Exporter issues proforma invoice after receiving the PO. Exporter and importer deal with a contract, which is known as a commercial invoice 7 working days (including the time to send the sample) US$ 100 (which includes the cost of sending the sample) 49

58 of activities in the Ship: Analyse sample process for pyrethrum exports from Rwanda Topic Process name 2.1 Analyse sample 24 Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved N/A Exporter MINAGRI Pyrethrum is already in stock The exporter checks if the item is readily available or not. If the same item (quality and quantity) is available, the exporter can start the process of shipping the item immediately; otherwise, he has to collect and analyse the item, in which case it might take about a week to ship the item For the purpose of analysis, the exporter brings the sample to his lab and performs a number of tests, such as % concentration, clarity of the product, free from waxes, BST content test and flash point After performing all these tests, if the item passes the buyer s requirements, the exporter prepares a certificate of analysis At the same time, the workers start packing the items. Pyrethrum is shipped in drums. Normally, there are two sizes: 25 kg drum or 200 kg drum Along with the packed items, the exporter also prepares the documents required for export, which includes commercial invoice, certificate of analysis, delivery note, packing list and material data sheet (MDS). Pyrethrum is ready to export 1 working day (if the item is already in stock) N/A 24 If the exporter has to arrange or collect the pyrethrum, the cost and time to complete this step will differ. 50

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60 of activities in the Ship: Book cargo space process for pyrethrum exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 2.2 Book cargo space International Air Transport Association (IATA) (various conventions) Exporter Logistics company (representative) Exporter has an export contract Exporter is responsible for the delivery of the cargo to the specified port of departure Exporter contacts logistics company to reserve cargo space Logistics company confirms the booking request by sending the exporter the draft air waybill Exporter reviews the draft B/L; if incorrect, he informs the company to revise it, then applies for cargo insurance (if required) Exporter schedules the delivery of the empty containers. Transportation is arranged for moving cargo to port of departure. 3 working days Varies depending on the urgency and destination 52

61 of activities in the Ship: Obtain cargo insurance process for pyrethrum exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 2.3 Obtain cargo insurance N/A Exporter or representative Importer Insurance company The concerned parties have agreed on the terms and conditions of insurance arrangement Exporter or representative applies for insurance coverage to an insurance company Exporter submits the required documents, which includes commercial invoice, packing list and draft air waybill, along with a filled-in cargo insurance application form Based on the submitted documents, the insurance company decides whether or not to provide the insurance coverage, along with the cost of the insurance Once the insurance company is satisfied with the documentation, it issues a cover note for the to-be-insured consignment When the insurance company receives a transport contract or bill of lading from an exporter or representative, it issues an insurance policy in favour of the party. The consignment is insured according to the agreed terms and conditions on commercial invoice 0.04 working days US$ 25 for processing fee and insurance premium for the export value 53

62 of activities in the Ship: Move goods to MAGERWA process for pyrethrum exports from Rwanda Topic Process name 2.4 Move goods to MAGERWA Rules and regulations N/A Exporter Stakeholders Inland haulage Precondition Exporter has an export contract Exporter contacts inland haulage or uses own company vehicle to bring the goods to MAGERWA. On arrival, the CFA presents the supporting documents and requests entry of the vehicle into MAGERWA. The port authority records the physical details of the items (e.g. size and quantity) and issues an entry pass allowing the truck and container to enter the controlled area. The date and time of entry of the truck and container is officially recorded. The goods are taken to the designated area where cargo inspection is to take place. Post-condition The pyrethrum is ready for customs inspections Average time to complete 0.35 working days Average costs involved US$ 75 54

63 of activities in the Ship: Provide online customs declaration process for pyrethrum exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition 2.5 Provide online customs declaration Law No. 21/2006 of 28 April 2006, Establishing the Customs System Exporter or representative Customs The goods in amount and conditions specified in the purchase order are ready for inspection; i.e. are already at MAGERWA s airport site An exporter or representative is already a registered user of RRA s electronic singlewindow system The exporter or representative submits the required documents (e.g. the commercial invoice, packing list, certificate of origin, certificate of quality and insurance certificate (insurance policy) on RRA s website The exporter or representative makes an export declaration via the electronic single-window system filling out the declaration form and uploading copies of all essential documents Upload a copy of the receipt of fee payment for the customs clearance If the cargo matches the packing list and commercial invoice, the security personnel seal the cargo, and, if applicable, certificates of origin and other documents as specified by the contract are attached to it. After all the above steps, goods are ready to load onto the cargo carrier. Average time to complete 0.04 working days Average costs involved US$

64 of activities in the Ship: Clear goods through customs process for pyrethrum exports from Rwanda 56

65 Topic Process name Rules and regulations Stakeholders 2.6 Clear goods through customs Law No. 21/2006 of 28 April 2006, Establishing the Customs System Exporter or representative Logistics Customs Exporter or representative has already submitted the required documents for customs Precondition clearance on RRA s website via the electronic single-window system After submitting all the necessary documents, the CFA notifies the customs authority and arranges inspection by RRA. Upon finding the documentation provided by the CFA satisfactory, customs authorities issue customs clearance; i.e. exit note. The exporter s agent acknowledges receipt of the customs clearance. Post-condition Goods are ready to get out of MAGERWA to the airlifting area Average time to complete 0.01 working days Average costs involved US$ 4 57

66 of activities in the Ship: Moving goods to the airlifting area process for pyrethrum exports from Rwanda Topic Process name 2.7 Moving goods to the airlifting area Rules and regulations N/A Exporter or representative Stakeholders MAGERWA Airport authority Precondition The exporter has already received the customs clearance from RRA The CFA hands over the consignment, along with the supporting documents, to one of the airline agents. The airline agent transfers the goods to the airlifting area. The airline agent produces the documents to the airport to obtain security clearance. Once the security clearance is done, the airline agent places the consignment in the designated airlifting area based on the type, quantity and destination of the export item. This process takes only a few minutes to complete. Post-condition The consignment is ready to be airlifted Average time to complete 0.04 working days Average costs involved US$ 50 US$

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68 of activities in the Ship: Handle goods at the airport process for pyrethrum exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 2.8 Handle goods at the airport N/A Exporter or representative Cargo plane (airlines) Port authority The consignment is already at the designated airlifting area and the cargo plane is at the airport The airline agent coordinates handling of the items at the terminal and moves it to the cargo loading area with permission from the port authority. Sometimes, repackaging of the items is required, in which case it takes longer and costs extra to finish this step. While the item is being lifted onto the cargo carrier, the airline agent prepares the final air waybill, which is supplied to the CFA. The consignment is on board 2.5 working days (however, as the operations are active for 24 hours, the actual calendar day is lower) Included in the cost of cargo booking 60

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70 of activities in the Ship: Handle goods at the airport process for pyrethrum exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 2.8 Handle goods at the airport N/A Exporter or representative Cargo plane (airlines) Port authority The consignment is already at the designated airlifting area and the cargo plane is at the airport The airline agent coordinates handling of the items at the terminal and moves it to the cargo loading area with permission from the port authority. Sometimes, repackaging of the items is required, in which case it takes longer and costs extra to finish this step. While the item is being lifted onto the cargo carrier, the airline agent prepares the final air waybill, which is supplied to the CFA. The consignment is on board 2.5 working days (however, as the operations are active for 24 hours, the actual calendar day is lower) Included in the cost of cargo booking 62

71 of activities in the Pay process for pyrethrum exports from Rwanda Topic Process name Rules and regulations Stakeholders Precondition Post-condition Average time to complete Average costs involved 3. Pay Uniform Custom and Practice for Documentary Credit, International Chamber of Commerce Publication No. 500 Exporter and exporter s bank Importer and importer s bank Exporter and importer concluded sales contract and trade terms 3.1 Exporter prepares and sends documents (e.g. invoice, packing list and air waybill) to importer. 3.2 Importer receives documents. Importer goes through import declaration process. 3.3 Importer prepares cash or money in the account for transfer when the due comes. 3.4 Importer s bank receives transferred money. 3.5 Importer s bank review and payment or direct debit from importer. 3.6 Importer s bank sends money orders to exporter s bank. 3.7 Exporter s bank is debited by importer s bank. 3.8 Fee deducted before transfer to exporter s account. 3.9 Exporter checks and receives money. The contract is fulfilled and the whole process is complete 6 working days N/A 63

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