Risk management as an effective measure in enhancing border control in Namibia Revenue Agency: challenges and opportunities

Oct 12 / Author name

INTRODUCTION

In fulfilling the WTO - Trade Facilitation Agreement obligations, member states are required to notify the Secretariat on various measures and their respective categories. The Republic of Namibia notified the Secretariat and classified Risk Management as a category C measure. With the assistance of UNCTAD, Namibia has finalised the project proposal for risk management that aimed at enhancing the Risk management function in order to facilitate legitimate trade and ensure effective control.

Risk management mandate:
• Encourage voluntary and informed compliance with Customs and related laws;
• Facilitate the movement of legitimate cargo with minimal Customs intervention; and
• Simultaneously, strengthen our abilities to detect and respond to attempts to circumvent Customs laws and requirements.

In support of this mandate, Namibia Customs & Excise (NCE) has adopted risk management a key operational philosophy. Risk management allows Customs to undertake targeted selections rather than routine examinations of all cargo. This will result in fewer delays in the clearance of goods, thus strengthening the national economy and improving the economic condition of our citizens. Although risk management has been part of the organisation strategy since 2014, there has been a slow progress in the implementation of the risk management strategy.

Namibia Customs mitigates high risks related to clients/importers and commodities in terms undervaluation, under- declaration, misclassification and smuggling, Compliance with other legislation and trade agreements, CITES, Money laundering, IPR, Non-declaration, hazardous goods.

RISK MANAGEMENT CHALLENGES

Legislation
Although the Customs and Excise Act 20 of 1998 was reviewed in 2016 and the Risk Management policy was recently finalized, there is still no SOPs to the implementation of the new amendments to the Act and the policy. This means that risk management process is not yet embedded in the organizational process. Lack of the SOP made the implementation of the risk management more difficult.

Capacity building
Capacity building is very critical to risk management effectiveness. It is aimed at enhancing the competences of officers in risk management functionalities. There has been a slow progress on training customs officers in core customs functions such as Classification, Valuation and origin as related to risk management. Customs officers are also not acquainted with big data analytics skills.

Risk Automation
The use of technology to enhance risk management practices contribute enormously to the facilitation of legitimate trade for low risk traders, and controls - by targeting the high risk traders through selectivity module. However, risk engine is not well develop to efficiently achieve these primary objectives. There are also limited risk rules in the ASYCUDA system, and as it stands currently, the risk engine cannot generate the performance of the risk rules due to the underdeveloped risk engine. With regards to risk profiles on companies, the system cannot select based on other elements e.g. company name, other than the company code.it means that for unregistered traders, the system can not select them in the system because they have no Tax Identification Numbers or Codes.

Communication
Communication is critical to risk management because risk management depends on exchange of information between customs offices, stakeholders and other customs administrations. Namibia customs experience a huge gap in exchange of information between various customs offices and other stakeholders. This information is related to detentions, seizure notices, inspection reports, penalties, investigation reports and court rulings. Without this information risk management can determine efficiently the compliance level of traders.

Risk management committee
The Committee on risk management was established in line with the risk management policy. Its mandate is to mitigate major risks that have serious impacts on the organizational objectives. Although the Committee was established in 2018, it had only met once. This is not in line with the terms of reference for risk management committee.

Evaluation of outcome and feedback
The last stage in the RM cycle is an evaluation of outcomes/feedback from the conducted control. After the finalization of the customs control. Currently, the Selectivity module of AW cannot link the noncompliance/irregularities on the level of risk indicators or risk profiles, this make it difficult to monitor the performance of selectivity rule in the AW selectivity module. Since there is not feedback mechanism between the RM Central Unit and regional offices, the information on inspection findings are share up on request. The RM Central Unit manually analyzes the paper-based outcomes/feedback from the customs control.  

OPPORTUNITIES IN RISK MANAGEMENT AS A POWERFUL TOOL FOR BALANCING TRADE FACILITATION AND CONTROL

Maintain and strengthen Risk Management Committee

Risk Management Committee is collectively responsible for the preparation of the Risk Management Strategy, implementation of the risk management concepts and the strategic review of the overall risks. The Risk Management Committee oversees the risk management process and ensures its full integration in all areas of customs work. It should hold regular monthly meetings at which the effectiveness of each risk management element is assessed to identify problems and recommend appropriate improvements. By suggesting adequate corrections, it will ensure the correct balance between resources allocated and achieved results. The Risk Management Committee should develop clear criteria to define acceptable and unacceptable risk levels. It prepares annual progress reports as to the achievement of the Strategy’s objectives.  

Integration of Intelligence into the RM system Establish an effective organizational intelligence structure with headquarters, regional units, and liaison officers at border crossing points. The following minimum requirements should be considered: • Undertake awareness training to emphasize the importance of feedback in the information/intelligence cycle; • Develop guidelines for the use of informants; • Ensure hotlines are established and operational; • Improve information gathering, processing, and dissemination procedures to ensure availability of relevant information for Customs staff and other agencies and administrations as appropriate; • Develop an intelligence and information system which supports Investigation, Post Clearance Audit, and RM; • Use registers/tasks for everyday intelligence work, both Customs & other law enforcement registers.  

RM support to Post Clearance Audit

RM should provide support to PCA in creation of risk profiles and indicators, continually validate, monitor and review the control processes. PCA and RM are playing a crucial role in controlling the AEO and trusted trader programs information regarding the performance and effectiveness of the concepts. The RM should provide indicators to PCA for planning and conduct of controls on the traders as well the feedback from PCA to RM. RM should create synergy between RM unit and other departments such as investigations, origin, valuation, through various techniques such as centralised database for sharing enforcement information e.g nCEN.  

Development and implementation of training programme for customs staff focusing on (e.g., risk management, Trade facilitation, Valuation, Origin & Classification).
In planning for implementation of RM and facilitation initiatives, the NCE needs to conduct a core competency analysis of current staff to ensure staff’s capacity to implement risk management strategy. The NCE need to establish the necessary skills, competencies, and qualifications for staff dedicated to RM and control. NCE needs to identify the core competencies of its staff and measure against identified needs in respect of risk management. A training strategy that encompasses core elements of Customs and risk management techniques should be devised. Awareness raising training in risk management should be provided to key staff, and in due course cascaded down to the rest of the customs officers. The RM Departments should develop their in-house training manuals for risk management and trade facilitation initiatives.  

Develop and review RM SOPs and integrate them into organisational processes.
An efficient RM requires a clear definition of all necessary SOPs to cover all stages of the RM cycle. Development of RM SOPs should start at the top-level, focusing on the legal environment, policy, and strategy.  

Use of advanced techniques and tools for risk assessment (identification, analysis and evaluation and prioritization)
The ISO Standard 31010:2009 recommends techniques that can be used at the risk identification, Risk analysis and risk evaluation stages.   Development and Regular or ad-hoc review, updating of the risk profiles/indicators RM must review the risk profiles at regular intervals to ensure that it is always up to date and that it reflects the latest relevant risk indicators. Continuous developing and updating of risk profiles and risk profiling methods is also vital for the correct functioning of the system in this context, especially when new national legislation is developed, or new trade activities or trade policies are introduced.   Enhanced Use of Technology and automation of risk selectivity model Enhance the risk engine selectivity module in the AW system. AW selectivity module should be able to generate management reports on risk profiles and indicators. This will facilitate and influence decision making process on resources and customs reforms. The feedback from control is entered in the AW that consist of the dropdown list from where the customs officer can select one irregularity and the text field. Emphasis the use nCEN and encourage enforcement to register cases on the platform.

REFERENCE Customs & Excise Act 20 of 1998 as amended Trade Facilitation Agreement Legal Text