In a significant move to enhance national revenue and ease trade costs, the Government of Liberia has successfully renegotiated the Cargo Tracking Note (CTN) agreement, securing a 40 percent share of the revenue generated from the system.
The CTN system is a globally recognized mechanism used to monitor and verify cargo shipments. It provides detailed information on the contents, origin, and destination of goods entering and leaving the country's ports.
The system plays a crucial role in curbing underreporting, smuggling, and other forms of customs fraud, thereby facilitating accurate tax collection and improving overall port security.
The revised deal, spearheaded by the National Port Authority (NPA) under the leadership of Managing Director Sekou Hussein Dukuly, was negotiated with strong technical backing from key government officials, including Liberia Revenue Authority (LRA) Commissioner General James Dorbor Jallah, Minister of Finance and Development Planning Augustine Kpehe Ngafuan III, Minister of Justice Cllr. Oswald Tweh and madam Aminata Bangura, Managing Director of GTMS.
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GTMS is the Exclusive General Managing Agent selected by the government in 2018 with the license to implement the Cargo Tracking Note (CTN) System in the country's Maritime/Ports system and ensure full compliance.
This renegotiation, which comes after extensive consultations and technical reviews, is expected to increase government revenue while addressing long-standing concerns from importers and exporters about high shipping costs.
One of the most critical changes in the new agreement is the substantial increase in the government's revenue share. Under the previous terms, Liberia only received 2% of the total revenue generated through the CTN system.
The renegotiated deal raises the government's share to 40% for the first five years, with a potential increase to 45% for the following five years. This increase is expected to generate millions of dollars in additional revenue, bolstering Liberia's economic growth and supporting public services.
"This agreement marks a significant milestone in our efforts to ensure that Liberia benefits more equitably from its port activities," said NPA Managing Director Sekou Hussein Dukuly. "By increasing the government's revenue share and reducing costs for businesses, we are fostering a more competitive and transparent trade environment."
This increase, according to the agreement, is expected to bolster the country's economic standing, ensuring that a larger portion of the revenue generated from port activities remains in Liberia.
In addition to improved revenue share, the renegotiated agreement includes significant reductions in shipping fees for both imports and exports. Previously, shipping fees ranged from US$150 to US$300, depending on container size.
Under the new terms, the fee for a 20-foot import container has dropped to US$95 (down from over US$150), while export fees for 20-foot containers are set at just US$15. Similarly, the cost for a 40-foot import container is now $190, down from over US$300, with exports priced at US$30. Bulk import/export fees have also been adjusted, with imports now priced at US$0.85 per metric ton and exports at US$0.36 per metric ton.
The involvement of the Liberia Revenue Authority (LRA) in the CTN agreement ensures greater oversight and accountability in the country's revenue collection and trade facilitation processes. The LRA's role will strengthen the government's ability to monitor and ensure compliance, further improving the country's economic growth prospects.
LRA Commissioner General James Dorbor Jallah emphasized the importance of this collaboration, stating, "By involving the LRA in the CTN process, we are ensuring that every dollar generated through port activities is properly accounted for. This is a crucial step toward enhancing revenue collection and improving public trust in the system."
The revised agreement is set to last for ten years, with periodic reviews scheduled every five years to ensure that the terms remain in line with Liberia's evolving needs and international standards.
The new CTN agreement represents a long-term commitment to improving Liberia's shipping sector, with the flexibility to adjust to changing circumstances through the scheduled reviews. The agreement highlights the government's dedication to creating a fairer, more transparent pricing structure and securing a larger share of the revenue generated from Liberia's ports.
For years, importers and exporters criticized the previous agreement, arguing that its function was redundant to what BIVAC was already performing at the time. Adding to the complaints CTN's high costs imposed under the previous agreement drew complaints that it increased the price of goods and placed an undue burden on businesses and consumers. The renegotiated terms introduce a more affordable fee structure, aimed at reducing the cost of doing business at Liberian ports and encouraging greater trade activity.
According to Liberia's Minister of Finance and Development Planning, Augustine K. Ngafuan, the renegotiated CTN agreement will have far-reaching economic implications for Liberia's future. In a statement made following the announcement of the new agreement, Minister Ngafuan emphasized that the additional revenue generated from the CTN service would be instrumental in funding the government's national development agenda.
"This agreement is a major victory for Liberia's economy and will be pivotal in enhancing our ability to deliver on critical infrastructure and social services," Minister Ngafuan said. "We are committed to utilizing these new resources to benefit the Liberian people, ensuring that the revenue is reinvested in projects that will improve the standard of living for all Liberians."
Business leaders and port users have welcomed the changes, expressing optimism that the revised agreement will foster a more competitive and transparent trade environment. Many believe that lower shipping costs will lead to reduced prices for consumers while making Liberian ports more attractive to international trade partners.
Despite the positive changes, some challenges persist in Liberia's port operations. Observations from the industry reveal issues such as delays in the issuance of Clean Reports of Findings (CRF) by MEDTECH Scientific, which can lead to additional storage costs for importers.
Additionally, the valuation method used by MEDTECH Scientific has been called into question, as it uses the BVD Brussels definition of value, which is more likely to result in higher costs for commodities than the preferred transitionary value method under the General Agreement on Tariffs and Trade (GATT).
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Furthermore, some shipping lines continue to impose high charges, including demurrage fees, storage costs, and handling fees. The lack of a regulatory body to oversee shipping line operations has led to inconsistencies in procedures and additional fees being imposed on port users.
The Liberia Revenue Authority (LRA) has also been faced with challenges in timely processing assessments for customs duties. Importers and brokers often experience delays in receiving assessments, leading to additional costs in the form of storage and demurrage charges.
Several key stakeholders, including MEDTECH Scientific, APM Terminals, and the shipping lines, have an essential role to play in ensuring the success of the new CTN agreement. While APM Terminals is responsible for handling and storing cargo at the Freeport of Monrovia, there are concerns about the refusal to accept Liberian dollars for payments and the double collection of handling charges.
The shipping lines, such as Mediterranean Shipping Company (MSC), CMA-CGM Liberia, and Maersk Line, also impose various charges that have raised concerns among port users.
Despite these challenges, the government's renegotiation of the CTN agreement demonstrates a commitment to improving Liberia's trade environment, ensuring greater revenue for the country, and reducing costs for businesses involved in importing and exporting goods.
In conclusion, the renegotiation of the Cargo Tracking Note agreement is a significant step forward for Liberia's shipping sector. With reduced shipping fees, increased government revenue share, and a more transparent and accountable system, the new deal promises to boost Liberia's economic growth and improve the efficiency of its port operations.
