Archives For cross border trade

EAC-logoSince July 2014, EAC revenue officers work together to facilitate trade within the community. Some improvements remain made; the Single Customs Territory (SCT) does present some advantages. Since the single customs territory is operational, clearing processes are established in the country of destination while the goods are still at the port of Dar es Salaam”, explains Leah Skauki, a SCT liaison officer at the Tanzania Revenue Authority (TRA).

Once the declaration is over, when custom duties and taxes are paid, TRA verifies the physical goods. “The office grants a notification testifying that the goods fulfil all requirements in order to get the exit note.” Within the new system, the number of weighbridges and non-tariff barriers are reduced because “truck drivers only have to show the documents which certify that the goods have undergone verification.”

Massoundi Mohamed Ben Ali, Administrative Director in Charge of Human Resources and Import – Export at the Bakhresa Grain Milling Burundi, is pleased with the new development. “Before the system was implemented, Bakhresa used to import 3800 Tonnes of wheat (40 trucks) and we were obliged to declare each truck with a different clearing agent. We now fill in one statement with one clearing agent. The procedures are done quickly with a small of amount of money”, he points out.

Clearing agents testify that the number of statement on the borders is reduced. “Before, transporters had to fill in a transit declaration (T1) on each border”, one of the clearing agents in the Dares Salaam port relates.

Aimable Nsabimana, a focal point of SCT in Dar es Salaam for the Burundi Revenue Authority, indicates that the computerised system they use is different in each country.”It is not easy to exchange data. We are forced to print documents for verification. And when the goods arrive in Tanzania, they are in the hands of the TRA which has its own software”, he notes.

Inter-connectivity of software would facilitate verification and avoid fraud. This opinion is shared by many clearing agents: “If we were interconnected, the Tanzanians would be able to easily access Burundian data and vice versa”, one of them says.

Léonce Niyonzima, programme and monitoring officer at OBR and the national coordinator of SCT, agrees that the lack of interconnectivity causes delays in the transmission of documents.

He says that all EAC countries should have been interconnected by June 2014, but due to technical problems Tanzania and Burundi still lag behind. “There is a technical committee responsible for monitoring and evaluation which will draw up the balance sheet of the challenges before ending the pilot stage at the end of this year.”

The Single Customs Territory is funded by Trademark East Africa with an amount of USD 450 thousand for the redeployment of staff, travel expenses, inspection and supervision, information technology, office equipment and assistance. Source: http://www.iwacu-burundi.org

East%20Africa%20mapIn the spirit of stronger East African integration, the revenue authorities of Kenya, Uganda and Rwanda have started preparations for the implementation of a Single Customs Territory. The Commissioners’ General of the three East African countries deliberated on the mechanisms to operationalize the decisions of the heads of state who have continuously called for its fast tracking.

On June 25, 2013 at the Entebbe State House in Uganda, a Tripartite Summit involving the three heads of state issued a joint communiqué directing among other things the collection of customs duties by Uganda and Rwanda before goods are released from Mombasa. The leaders also agreed that traders with goods destined for warehousing should continue executing the general bond security.

During the meeting, the Commissioners’ General of the three countries put in place joint technical committees on ICT, Business Process, enforcement, change management, legal and human resource to discuss the implementation road map.

In a statement signed by the three Commissioners’ General, they said that the development of a Single Customs Territory will positively impact on the trading activities of the three countries as it will ensure that assessment and collection of taxes is done at the country of destination before cargo moves out of the port.

“As a result, the East African Community Customs Union will join the ranks of other Customs Union such as South African Customs Union and the European Union among others. Under this arrangement, restrictive regulations are eliminated as the corridor is now considered for customs purposes. For clarity, circulation of goods will happen with no or minimal border controls,” reads the statement in part.

Kenya said it would cut red tape holding up millions of dollars of imports into its landlocked neighbours Rwanda and Uganda, by letting the countries collect customs on goods as they arrive in its port at Mombasa. Goods can currently face long delays as agents process the paperwork to release cargoes from warehouses at east Africa’s biggest port, and later make separate arrangements to pay import duties at Kenya’s borders with Uganda and Rwanda.

Officials said the new system, due to be introduced in August, would clear inefficiencies and blockages seen as a major barrier to trade in the region. But clearing agents in Kenya said it could also cost thousands of jobs in warehouses, freight firms and almost 700 clearing and forwarding companies operating in the country.

Kenya, Uganda and Rwanda, together with Burundi and Tanzania, are members of the regional East African Community trade bloc, with a joint gross domestic product of $85 billion.

Kenyan tax officials said the new system would allow a “seamless flow of goods” and make it easier to stop goods getting through the system without customs payments. “Once cleared at the port, there will be no stoppages at borders and checkpoints along the corridor,” the Kenya Revenue Authority’s commissioner of customs, Beatrice Memo, told a news conference.

Under the system, Rwandan and Ugandan clearing agents and customs officials would be able to set up their own offices to clear cargo and collect taxes directly at the port. The Kenya International Freight and Warehousing Association said that meant up to half a million jobs could be lost to Uganda and Rwanda. “The Government has not consulted us … and we totally reject it,” said  Association chairman Boaz Makomere. Sources: East African Business Week (Kenya) & The New Vision (Uganda).

zim-rsaZimbabwe needs to further develop transport and trade infrastructure links with South Africa to maintain Africa’s biggest economy as its single most important trading partner, recent research findings have shown.

This came from preliminary findings of a research study carried out by Dr Medicine Masiiwa who was commissioned by the Ministry of Regional Integration and International Co-operation to undertake the study on trade and transport. The World Bank funded the study to assess the need to facilitate transport and trade in Zimbabwe. The findings form part of preliminary desk research ahead of a more detailed second phase.

Dr Masiiwa presented the initial findings from the desk research to stakeholders at a workshop in Harare. Preliminary findings of the study show that since economic and political stability, key for trade competitiveness of Zimbabwe is now in place, the country’s trade was bound for significant growth, making a trade and transport facilitation measure critical to support this growth.

“A major implication of having South Africa as Zimbabwe’s single most significant trading partner is that the transport and trade infrastructure between the two countries should be further developed,” he said.

Development options include expanding the current border post to accommodate more traffic or to construct a new border post altogether. Sound transport and trade infrastructure between Zimbabwe and South Africa is critical as more than 34 percent of local imports go to South Africa while Zimbabwe imports more than 60 percent of basic commodities from that country.

But the state of the main trunk road, on the Zimbabwe side, has remained in poor state despite also being the main link between the north and south. Increased trade with China implies that Zimbabwe, in collaboration with its regional partners, needs to further develop the Beira and Limpopo transport corridors, which link Zimbabwe with the ports on the east coast.

“It is also interesting to note that trade with the EU and other Western countries is on the rebound; meaning transport corridors linking western gateways also need to be further developed,” said Dr Masiiwa.

The major problem facing Zimbabwe is that the quality of infrastructure is deteriorating and therefore acting as an impediment to trade. A study by the World Bank showed that in the 1990s, the proportion of primary roads in “good” condition was about 90 percent, but this dropped to 85 percent in 2009. Roads with the worst conditions are secondary roads, where about 45 per cent of paved and 50 percent of the unpaved secondary roads are in poor condition. Source: Zimbabwe Herald

Uganda, Malaba border crossing

Uganda, Malaba border crossing

The New Vision (Uganda) reports on a draft law which will punish countries that fail to implement agreed upon mechanisms to eliminate trade barriers has been submitted at the regional Parliament.

Jose Maciel, the TradeMark East Africa director of trade facilitation, noted that while most of the non-tariff barriers (NTBs), including road blocks and corruption have slightly declined, the proposed law in the East African Legislative Assembly, if enacted, would create the possibility of sanctions against stubborn states that do not enforce the check points. “It is important to give teeth to the system. We need to make it possible to impose sanctions for countries that do not eliminate NTBs,” said Maciel.

He was speaking at a Kenya Ports Authority (KPA) organised meeting with EAC media in Mombasa. TradeMark is a trade facilitating agency operating in the five states of East Africa. Maciel said non-tariff barriers like road blocks, which are easy to eradicate, are some of the biggest impediments to East Africa’s competitiveness.

States are not the only defaulting party to agreed upon positions on eliminating NTBs. P.J. Shah, a Mombasa entrepreneur, for instance notes that while Mombasa began 24-hour operations about three years ago, other agencies like banks and shipping lines are not operating 24 hours. The poor infrastructure such as rail and water systems, whose potential is yet to be optimised, also increase trade costs. Other NTBs include weighbridges and corrupt state enforcement agencies.

Regional trade experts and facilitation agencies such as Trade Mark East Africa agree that NTBs are known, and numerous researches have been done about them and their impact on trade. Although some efforts have been made to eradicate or reduce the salient ones such as road blocks, overall NTBs remain a major trade impediment.

Two thirds of goods are shipped in containers. TradeMark estimates that 20% of annual shipments face NTBs. TradeMark is also targeting to work with regional governments to harmonise 20 standards in a year, amongst the other efforts at making EAC more competitive.

During the Mombasa meeting, it was agreed that because sometimes there seems to be no communication between the different government agencies such as the Kenya Revenue Authority (KRA) and KPA, hinterland states suffer.

There should be a single authority that oversees them all and ensures enforcement. There are about 24 road blocks between Mombasa and Uganda’s border and another 21 in Uganda, four in Burundi and two in Rwanda. There are also 12 weighbridges in Kenya, five in Uganda and two in Rwanda.

“A well run efficient port can help shape economic growth and performance of the economy,” said Antony Hughes, a TradeMark official.

Mombasa handles about 20 million tonnes of cargo, 85% destined for Uganda and other hinterland states. Transit states always suffer the biggest brunt of NTBs and poor flow of information regarding imminent disruptions at the border. This was witnessed during the recent cash bond imposed by KRA that caught Uganda traders unaware, leading to massive clog ups of cargo and huge loss of value.

Comment: It appears that regional bodies such as the EAC are to get extraordinary powers to enforce rules over sovereign states. Would be interesting to learn whether these member states voted for such action, or if it is rather the ideal and persuasion of ‘foreign’ interests.

The Freight-Intra Africa Trade Conference in Pretoria, this week, has featured several news articles in the local media, and no doubt some foreign tabloids as well. The Minister of Transport has cleared up the cause of the ills plaguing cross border and regional transport. At least we are now fully informed that [historical] design issues and operational inefficiencies at South Africa’s landborders, and Beit Bridge in particular, are the fundamental causes of under-performance in intra-Africa trade.

“In most cases, the delays at the borders are caused by operational inefficiencies, which result in the duplication of processes. This is a serious cost to the economies of the countries that conduct their trade through such border posts,” the Minister said.

One has to seriously question who advises the minister which leads to such statements, and whether or not these advisers have visited any land borders in recent months.

Now the remedy – Government has budgeted and approved R845-billion for infrastructure development over the medium-term, with a significant proportion, about R262-billion of this investment being earmarked for transport infrastructure and logistics projects. Can anyone question government’s commitment in this respect? Not really. However, the Minister was quick to point out government would resolve inefficiencies at the borders by establishing a mechanism that will bring all border entities under a single command and control structure to address the fragmentation in border operations. “The ultimate vision is to create one-stop border operations to facilitate legitimate trade and travel across the borders”.

The proliferation of border management agencies (integration of enforcement and regulatory authorities under one umbrella) – which has seen the demise of many customs administrations over the last decade – has not proven an effective vehicle to manage cross border travel and trade. It is difficult to see how facilitation procedures can co-exist under a command and control environment. What the situation does create is the opportunity to consolidate a budget for security expenditure. Various Sources: Engineering News, Business Live, Fin24.com and personal opinion.