EAC single customs territory comes into force this month

The regional single customs territory will be ready by end of this month, the Rwanda Revenue Authority (RRA) and Private Sector Federation (PSF) have confirmed. Once implemented, it is expected to eradicate barriers to trade by adopting a central model of clearance of goods, whereby taxes and assessments will be done only at the first point of entry and, thus, ensure faster clearing of goods as well as reduction in the cost of doing business.The deadline for the implementation of the single customs territory had been set for 2010, as an important ingredient to regional integration. However, due to lack of strong institutional and mutual commitment from all the five East African Community (EAC) member states, the deadline was not met.A new deadline was not set, but Rwanda, Uganda and Kenya continued to hold discussions on how to agree on its implementation.In June, Heads of State of the three countries decided to establish the territory, whereby Rwanda would spearhead its implementation, as well as the single tourist visa and use of identity cards as travel documents.“The single customs territory is a good initiative. Now that it is finally coming into force, I am looking forward to trying it out because at the end of the day, when choosing a corridor to pass through I look at the cost and bottlenecks involved,” Abdul Ndaru, the proprietor of TransAfrica Limited, a transport and logistics company, told a meeting organised by RRA and PSF in Kigali last week.Like several other transporters who attended the meeting, Ndaru urged the EAC governments to work more aggressively with cross-border traders while implementing the single customs territory.Importers and exporters to Burundi and Tanzania are likely not to benefit from the initiative, as indicated by the new clearance and information system that will only be implemented in Rwanda, Uganda and Kenya.“The territory will lead to the reduction of non-tariff barriers. Cargo destined to countries along the northern corridor will be weighed once since the weighbridge certificate will be recognised along the corridor,” Richard Tusabe, the RRA deputy director general, said. “Roadblocks will be eliminated by the adoption of electronic cargo tracking systems and human intervention will be limited through automation of procedures to reduce corruption.”RRA calculated that the single customs territory would reduce cargo trucks travel time on the corridor, Mombasa to Kampala, from 18 to five days. It will take only eight days instead of 21 to move from Mombasa to Kigali.“All importations to Rwanda and Uganda shall be declared using pre-arrival and self-assessment declarations, while duties and taxes shall be paid and collected in destination country. This will reduce the number of declarations made from three to one,” Tusabe explained. “Verification of high risk imports to Rwanda and Uganda shall be done at Mombasa, while low risk consignments shall be finalised at the port and be delivered directly to importers.”The Private Sector Federation CEO, Hannington Namara, said the initiative would turn around the fate of many cross-border businesses by making them more efficient and profitable.“Traders have complained about the congestion and lack of space at the port, which bring about unnecessary increases in tariffs. The single customs territory is definitely going to solve many of these barriers suffered by the business community,” Namara said.According to RRA, the cost of clearance, excluding transport, of 20-feet containers will reduce by 50 per cent from $383 to $193.Traders will, therefore, save about $45m annually from reduced clearance costs, basing on 2012 statistics which show that over 237,000, 20-feet containers destined to Rwanda and Uganda, were cleared through Kenya.Traders, however, still decry high road-user charges and urged EAC partner states to revise the rates.Rwanda charges $152, the least road toll on cargo trucks in the region, while Tanzania charges the highest at $500 for a single trip to Dar es Salaam.“EAC should adopt best practices from the Southern Africa Development Community (SADC) and charge a harmonised road toll of $8 per 100km for a trailer,” Vincent Safari, the co-ordinator of the national monitoring committee on non-tariff barriers at the Ministry of Trade and Industry, said.“In general, EAC borders are still inefficient and 41 per cent of delays are caused by border posts, especially customs. It is important that all EAC states adopt the one-stop border post and electronic single window system to decongest and speed up clearance of goods,” Safari saidRRA statistics indicate that the central corridor, through Rusumo border, conducts Rwanda’s heaviest cross-border trade traffic. The corridor recorded a value of $1b in 2011, representing 45 per cent of the total border crossings.Importers and exporters to Burundi and Tanzania are likely not to benefit from the initiative, as indicated by the new clearance and information system that will only be implemented in Rwanda, Uganda and Kenya.“The territory will lead to the reduction of non-tariff barriers. Cargo destined to countries along the northern corridor will be weighed once since the weighbridge certificate will be recognised along the corridor,” Richard Tusabe, the RRA deputy director general, said. “Roadblocks will be eliminated by the adoption of electronic cargo tracking systems and human intervention will be limited through automation of procedures to reduce corruption.”RRA calculated that the single customs territory would reduce cargo trucks travel time on the corridor, Mombasa to Kampala, from 18 to five days. It will take only eight days instead of 21 to move from Mombasa to Kigali.“All importations to Rwanda and Uganda shall be declared using pre-arrival and self-assessment declarations, while duties and taxes shall be paid and collected in destination country. This will reduce the number of declarations made from three to one,” Tusabe explained. “Verification of high risk imports to Rwanda and Uganda shall be done at Mombasa, while low risk consignments shall be finalised at the port and be delivered directly to importers.”The Private Sector Federation CEO, Hannington Namara, said the initiative would turn around the fate of many cross-border businesses by making them more efficient and profitable.“Traders have complained about the congestion and lack of space at the port, which bring about unnecessary increases in tariffs. The single customs territory is definitely going to solve many of these barriers suffered by the business community,” Namara said.According to RRA, the cost of clearance, excluding transport, of 20-feet containers will reduce by 50 per cent from $383 to $193.Traders will, therefore, save about $45m annually from reduced clearance costs, basing on 2012 statistics which show that over 237,000, 20-feet containers destined to Rwanda and Uganda, were cleared through Kenya.Traders, however, still decry high road-user charges and urged EAC partner states to revise the rates.Rwanda charges $152, the least road toll on cargo trucks in the region, while Tanzania charges the highest at $500 for a single trip to Dar es Salaam.“EAC should adopt best practices from the Southern Africa Development Community (SADC) and charge a harmonised road toll of $8 per 100km for a trailer,” Vincent Safari, the co-ordinator of the national monitoring committee on non-tariff barriers at the Ministry of Trade and Industry, said.“In general, EAC borders are still inefficient and 41 per cent of delays are caused by border posts, especially customs. It is important that all EAC states adopt the one-stop border post and electronic single window system to decongest and speed up clearance of goods,” Safari saidSamuel Toyota, a senior ICT advisor at the Rwanda Revenue Authority, said the tax body’s officers and Rwandan clearing agents had already identified and paid for space to start operations in Mombasa.He also mentioned that the Kenya Ports Authority office that was recently opened in Kigali would be of much help as the traders now had people to call in case they met difficulties along the way.“What is new, and people should be glad about, is that they have reachable staff at the port and here for any problem they incur,” he said.Toyota said with the single customs territory, traders will be able to make more turnarounds among other savings.“During the course of the month, we shall be handling a few traders to test the system’s efficiency. Hopefully, most traders will have used it by the time it is launched,” he said. RRA statistics indicate that the central corridor, through Rusumo border, conducts Rwanda’s heaviest cross-border trade traffic. The corridor recorded a value of $1b in 2011, representing 45 per cent of the total border crossings.

Insight

EAC single customs territory comes into force this month