Posted by: Martin | November 5, 2011

Customs

Omnipresent and omnipotent

The blog drogbascountry recently mentioned a world bank publication that described difficulties getting things through the port of Abidjan:

“The other major area with lots at stake, is the port of Abidjan. A real hub for many countries in West Africa, the port was the object of a first reform, which among other things led to the concession of the container terminal at the end of 2003. Despite the controversy of this move, the container port has become the highest-performing along all the African Atlantic coast, up to Durban, with a working speed of 23-30 containers an hour. But paradoxically, as a recent World Bank study showed on the sources of Ivorian growth, the port is one of the least competitive in West Africa because of harassments of all kinds, the costs of moving goods, and the obstacles to foreign trade. So, the container transit times are around 9-12 days, as opposed to 2 days at the port of Dakar. The overall costs of sending goods through Abidjan to Burkina Faso is 16% more expensive than from Lome [Togo] and 40% more expensive than Tema in Ghana. Overall, the port of Abidjan is estimated to be 35% more expensive than Lome. This situation is due to, among other things, the number of different hoops to jump through at the port and above all the omnipresence and omnipotence of the customs service.”

This is even worse than I thought and seems to be an area where the Ouattara administration is disappointing.

However, it’s not surprising that customs services are powerful in developing countries. When illiteracy is high, the informal sector large, and state institutions not capable of enforcing a complex all covering tax system, custom duties become a very important and easily collectable revenue for the state.   In fact, for most – if not all – countries in the western world custom duties were the largest source of income for the state up until the beginning of the 20th century.

Here are two graphs for the US:

Source: P. Krugman "The Political Economy of Trade Policy" Princeton

From the US Census of 1870. (Click to enlarge) Source: http://www.radicalcartography.net/index.html?9thcensus

Or to take an example closer to home, we have the toll paid by ships passing the Öresund straight between present day Sweden and Denmark:

King Eric of Pomerania introduced the Oresund Toll in 1429. All ships passing Helsingör had to pay duty to the Danish Crown (whether the cargo was going to or from a Danish port, or not). For centuries, the Oresund Toll was the most important source of revenue for the Danish Crown, furnishing the kings with relative independence of Denmark’s Privy Council and landholding aristocracy.   Source: oresundfilm.com

Kronborg Castle in Helsingör - built to collect the customs duty

I bet the Customs Service in Helsingör back in the day was just as omnipotent and omnipresent as the one at Abidjan port. Having big guns aimed at passing ships helped I guess.

19th century mixing with the 21st

So, how important are custom duties for the Ivory Coast today?  Looking at the Ivorian state budget for 2011, the total size is 3.05 trillion CFA francs (4.65 billion euro).  Of that the fiscal receipts are projected at only 1.216 trillion CFA francs (1.85 billion euro), the rest is rollover of debt, aid and various loans.

Projected income for 2011 from import duties is 343 billion CFA Francs (522 million euro) and from exports duties 210 billion CFA francs (320 million euro). So in total custom duties are 45.5% of total ivorian fiscal receipts for 2011.  Not quite like Denmark in the 15th century, but in line with the US in the second half of the 19th century.

When travelling in West Africa today, I find that you have this quite interesting mix of things that fit in the 19th century (e.g. manual craftmanship, horses and donkeys used for transport of goods) and others that are squarely 21st century like cellphones, skype and Canal+.  Guess customs can be put in the former category.

UPDATE: I have to add that while the 19th century elements can be fascinating for a visitor, west africans would be a lot better off if things were more 21st century and less 19th century. Which ever way one measures it, life on average in Europe’s 19th century pretty much sucked compared to  the 21st century.

This story from 19th century Sweden from the Brain Gain and a Historical Lookback post gives an example:

“I have worked in my profession”, says a poor shoemaker, “for 30 years and I can say that I have not yet managed to earn more than 1 krona [the Swedish currency unit] on average per day during the year.  I have usually worked 17-18 hours per day, but never managed to save enough to buy my own home. I am growing potatoes on a small plot of land on a slope close to where I live. I have still managed to raise seven children and now it’s looking bright even for me, because I’ve started to build my own home, not by my own earned money, but by money my oldest daughter, she is now 18, has sent home from America. She left when she was 14, and started sending us money already the first year. Since she turned 17 she has regularly sent us 10 dollar per month, and sometimes more, so that we in four years have received 1,500 kr from her. It’s with this money we now build our home.  But isn’t it curious that one can work hard a whole life here in Sweden and not manage to achieve as much as a young girl can save in a couple of years in America. I could never speak badly of America or the emigration, because I don’t know what would have happened to us if we hadn’t managed to bring the girl over there.”

Which I commented:

“This story has present day Africa written all over it:  Long working hours as self employed, subsistence farming, many children, strong family ties, reliance on remittances from abroad, children supporting parents, parents helping children moving abroad knowing they will not see them for years.”


Responses

  1. […] I’ve not encountered any show-stopping catch.  The only major surprise to the downside was custom costs at Abidjan port to bring in the car turning out to be more than twice the budgeted figure. Even with that, the […]

  2. […] In the post about Customs I found a graph of US government spending from 1870. One of the expenditure categories was […]

  3. […] through import duties will go down  as fewer cars will be imported – and as mentioned in the Customs post import duties is a very important part of government revenue.  Admittedly though,  the […]


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