COMESA – Electronic Certificate of Origin (eCO)

Kenya is among 15 African States that have agreed to pilot a new project seeking to ease movement of goods within the region’s trading bloc.

The electronic certificate of origin (eCO) System, developed under the Common Market for Eastern and Southern Africa (Comesa) digital free trade area will fast-track movement of goods, enhancing intra-regional trade.

The new plan will do away with registration, application and submission of certificates for post-verification of goods.

Certificates of origin are issued to exporters within the Comesa Free Trade Area (FTA) to confer preferential treatment to goods originating from an FTA member State.

Truckers issued with eCO certificates will no longer stop to undergo an audit of their cargo via a manual verification process.

Comesa trade and customs director Christopher Onyango said the pilot was launched after last week’s meeting where member States agreed to develop national piloting plans to ensure that electronic certificates are implemented as soon as possible.

“The emergence of the Covid-19 pandemic calls for speedy implementation of the Comesa eCO by all member States,” said Dr Onyango, adding that eCO will spur intraregional trade and attract more investments into the region.

Other countries involved in eCO are Burundi, DR Congo, Egypt, Eswatini, Ethiopia, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Tunisia, Zambia and Zimbabwe.

Adoption of eCo that replaces manual certificates follows increased restriction on movement of cargo across borders due to the Covid-19 pandemic.

“It is rather disheartening that despite the preferences offered under the FTA, intraComesa is at eight percent of total trade, compared to Africa’s 15 percent, America’s 47 percent, Asia’s 61 percent and Europe’s 67percent,” Dr Onyango noted.

A technical working group (TWG) on rules of origin (RoO) is engaged on easing rules to facilitate implementation of the Comesa eCO and other trade facilitation instruments.

The director urged the team to consider making the rules simple, transparent and predictable to enable businesses to thrive.

“RoO … are not just the passport for circulating goods under preferential tariffs but are as well the cornerstone behind effective application of preferences towards member States,” said Dr Onyango.

He observed that when the RoO are too costly to be implemented by firms relative to the expected benefits, exporters would rather pay tariffs than comply with strict rules of origin, leading to low utilisation.

According to the Kenya Economic Survey 2020, Kenya’s high appetite for imported goods saw it sink into a trade deficit with Africa for the first time in more than two decades.

Kenya’s import bill from other African countries rose to Sh234 billion last year, an 11 percent increase from the Sh210 billion spent in 2018 while export receipts rose by a paltry three percent to Sh224 billion in the year.

The increased consumption of foreign goods pushed the balance of trade to a deficit position of Sh9 billion.

“Imports from Africa rose by 11.4 percent to account for 13 percent of the total import bill, attributed to increased imports from South Africa,” the survey states.

Source: Business Daily Africa, 24 June 2020

Heartless!

Fellow blogger ZIMDEV paints a bleak picture for casual cross border traders – Cross border trade has been the lifeline for many unemployed Zimbabweans who make a living buying and selling goods from various neighbouring countries. Late last year, the Zimbabwean government together with the Zimbabwe Revenue authority have introduces a ban on the use of the $300 rebate on most goods. The new tariffs are quite steep and leave no room for profit for the traders. Cross border traders, fed the nation when Zimbabwean shops were empty. They travel across borders, bringing in goods that are not available in Zimbabwe and play a vital role in the economy. One visit to Beitbridge will prove just how vital the cross border trade is to Zimbabwe. It is disheartening to see the government’s reaction to cross border trade.

Instead of enabling and facilitating trade, the government is stifling and discouraging trade and enterprise. Importers of blankets, footwear, refrigerators, stoves and other electrical gadgets now pay 40% of the purchasing price plus a flat rate of US$5 per unit as duty. Government is also now charging between 10% and 25% duty on basic commodities such as maize meal, cooking oil, potato chips, baked beans and mixed fruit jam. The consignment of goods is also charged according to the weight of the goods, each kilo being charged at $3. Cross border trade has been dealt a heavy blow.

While continental and regional efforts wax lyrical about future ‘free trade’ in the Africa, domestic efforts and policy appear to be in contradiction, or perhaps the political utterances at regional trade and AU conferences are mere hot air!  Read the full article here! Surely this should be a case for closer diplomatic collaboration between Zimbabwe and its neighbours, or are the ‘cross border traders’ the enemy?