Changes to Angola customs regulations

By Willemien Viljoen, tralac Researcher, who discusses concerns surrounding a new legal ruling affecting Angolan exporters

IN June 2015 the Angolan General Tax Administration (AGT), which includes customs, adopted a new ruling that is causing concern for many exporters. According to the new ruling (number 003258/DNPA/DSA/AGT/2015) the consignee (buyer or importer) no longer needs to present the original Bill of Lading (B/L) to ensure the release of cargo from the port of arrival. This has raised concerns regarding the risk of non-payment and the potential for fraudulent claims.

Generally the B/L has three important functions. It is proof of receipt, proof of a transport agreement between the supplier and consignee and it is the title of ownership. Standard practice dictates that the consignee needs to present the original B/L as proof of ownership to take possession of the goods at the port of arrival. The original B/L is normally only surrendered by the supplier once payment for goods has been received. However, the new ruling allows for a consignee to claim ownership of the goods prior to payment taking place and the original B/L surrendered to the buyer or importer. This can pose a serious risk to the suppliers that payment for goods will not take place or that goods can be claimed by means of fraudulent copies of a B/L. This has resulted in many freight companies advising their clients to halt all cargo destined for Angola until advanced payment has been received.

According to AGT this new ruling has been adopted in order to ease congestion at Angolan ports that have been caused by balance of payment difficulties and the lack of hard currency. However, this ruling is likely to adversely affect lag times in goods being imported into Angola and possibly product shortages. This is due to the nature of the Angolan economy. Angola’s economic performance is almost completely determined by the demand for oil. In 2014, 98.35 percent of Angola’s total exports were attributed to the exportation of oil. Other export products included pearls, precious stones and metals (1.26%); iron and steel (0.09%) and machinery (0.05%). Due to Angola’s oil dependency the recent decrease in the oil price led to the current balance of payment difficulties (the balance of payment is negative 19% of Gross Domestic Product) accompanied with raising government debt (approaching 40% of Gross Domestic Product). This has led to a decrease in the availability of hard currency and thus the inability of importers to pay for goods received, causing congestion at Angolan ports. According to AGT allowing for goods to be claimed by importers without payment being made will ease the congestion. Which is likely true, but at what cost for the Angolan importers and consumers?

Due to the lack of diversification in the economy Angola is a net importer of all goods, excluding oil. Angola’s main import products in 2014 were machinery (23.6%), transport equipment (14.5%), base metals (6.6%) and miscellaneous manufactured articles (4.5%). All foodstuffs (live animals and animal products, vegetable products, food and beverages) account for 18 percent of all products imported by Angola. The majority of imports come from Portugal, United States, China and South Africa. Trade between Angola and its neighbouring countries is quite limited, thus the majority of import products are shipped to Angola and flow through the Angolan ports.

The ruling is likely to resolve the current congestion at the Angolan ports. Importers no longer have to make payment to receive the original B/L to have goods released. However, if the new ruling results in suppliers requiring advance payment on goods prior to shipping it will not ease balance of payment difficulties, but might actually increase the immediate demand for currency to pay for goods in advance to ensure shipping will take place. Furthermore the lack of currency accompanied with the requirement of advance payment can actually result in a logistical nightmare and product shortages in the Angolan market. This is due to an increase in lag times between consignments being shipped due to suppliers awaiting payment prior to loading goods for exportation.