New clearing system saves Uganda and Rwanda $469m


Trucks queue to enter the port of Mombasa to pick up cargo destined
for South Sudan on December 26, 2013. Photo/Laban Walloga Nation
Media Group
By CHRISTABEL LIGAMI Special Correspondent
Posted Saturday, May 10 2014 at 17:05
IN SUMMARY
Clearance time for cargo destined for Kampala at the Mombasa port has
dropped from 18 days to four, and from 21 days to six, for cargo
destined for Kigali.
Cost of clearing a container destined for Kampala was $3,375 before
the launch of the SCT, but is now down to $1,731. The cost of clearing
a container destined for Rwanda was $4,990 but has gone down to
$3,387.
Partner states will now expand the system to include edible oil, steel
products, wines and spirits, confectioneries, plastic products, milk
and milk products.
Uganda and Rwanda have saved up to $469 million in the cost of
clearing goods since the East African Single Customs Territory (SCT)
was rolled out at the port of Mombasa in January.
An EAC ministers' report from last week's 5th Northern Corridor
Integration Projects Meeting held in Nairobi shows that the clearance
time for cargo destined for Kampala at the Mombasa port has dropped
from 18 days to four, and from 21 days to six, for cargo destined for
Kigali.
This efficiency, ministers from Kenya, Uganda and Rwanda said, has cut
the cost of clearing goods at the port substantially.
READ: EAC Single Customs Territory on
The cost of clearing a container destined for Kampala was $3,375
before the launch of the SCT, but is now down to $1,731. The cost of
clearing a container destined for Rwanda was $4,990 but has gone down
to $3,387, the ministers' report seen by
The EastAfrican shows.
Now cargo is weighed once, upon entering a partner state — a departure
from the earlier arrangement where it would be subjected to multiple
checks.
Rwanda and Uganda have signed a legal instrument for the deployment of
revenue officers at the ports of entry.
According to the EAC ministers, partner states will now expand the
system to include edible oil, steel products, wines and spirits,
confectioneries, plastic products, milk and milk products.
Expanded system
Previously, only commodities like petroleum products, cement, spirits,
and cigarettes were allowed under this system.
READ: Cement to be cleared under EA single Customs system
The ministers said Uganda, has rolled out wet cargo (liquid cargo)
while Rwanda has rolled out both wet and dry cargo (cargo such as
coal, finished steel or its ingredients, grain, sand or gravel, or
similar materials) for clearance at the port of Mombasa.
The report shows goods worth $714 million destined for Uganda and $4.4
million for Rwanda have been cleared under the platform.
Other benefits of the EA-SCT, the ministers noted, include the use of
one customs agent to clear cargo across borders between Kenya, Uganda
and Rwanda; elimination of multiple security bonds to a single bond;
improved accurate trade statistics, improved management of duty draw
back and faster refund processes for exports.
The deputy commissioner of the marketing and communication department
at the Kenya Revenue Authority (KRA) Ezekiel Maru said revenue
commissioners from Kenya, Uganda, Rwanda, Tanzania and Burundi have
reached a consensus that clearing agents will be accorded mutual
recognition in all partner states as the SCT implementation is being
carried out.
"Uganda Revenue Authority (URA) has carried out training in the use of
its Customs clearance system known as Asycuda to enable clearing
agents from Kenya to be familiar with it," said Mr Maru.
"The Customs systems between the partner states have been enhanced to
enable interface between URA, KRA and Kenya Ports Authority (KPA)."
Kenya uses the Simba Customs software, while Uganda and Rwanda use the
ASYCUDA (Automated System for Customs Clearance) platform.
Although the ministers noted that non-tariff barriers have been
reduced and cargo is weighed just once upon entering the partner
state, NTBs still remain a challenge with new ones coming up.
At the summit, Uganda complained about NTBs surrounding sugar and rice
that have made the two commodities from the country uncompetitive in
the regional market.
It was noted that additional charges have also been imposed on
importers along the Northern Corridor for the cargo tracking system
The ministers thus recommended that the matter be handled in the
tripartite budget meeting to be held on May 3 in Nairobi and report to
the next summit scheduled for June in Kigali.
The ministers directed that Kenya fast track signing of the legal
agreement for staff deployment in the SCT.
"There must be continuous monitoring and reporting of any changes,"
the ministers said.
The ministers noted that there will be a focal contact person from KPA
to facilitate cargo clearance at the port of Mombasa. Kenya confirmed
that the key person has been identified and will be communicated to
officially.
"There is a need for partner states to come up with harmonised
standards of cargo tracking systems so as to facilitate seamless flow
of cargo through the Corridor and minimise unnecessary costs to the
importers," the tripartite ministers noted.
Tanzania's interest
Following these benefits, Tanzania has said it is ready to pilot
intra-regional trade with other partner states on both the Central and
Northern corridors.
During the Summit, Burundi also confirmed it will join and fully
participate in the East African SCT.
Trade experts predict the new Customs regime could expand
opportunities for big firms.
"These reforms are likely to cause narrower price ranges between big
and small companies due to increased pressure against the latter to
absorb more costs in the supply value chain which in turn will be
passed on to local consumers," said Lawrence Othieno, a trade
economist at consultancy firm Imani Development.
Additional reporting by Bernard Busulwa
http://www.google.ca/gwt/x?gl=CA&hl=en-CA&u=http://www.theeastafrican.co.ke/news/New-clearing-system-saves-Uganda-and-Rwanda--469m/-/2558/2310260/-/43lmr8z/-/index.html&source=s&q=New+clearing+system+saves+Uganda+and+Rwanda+%24469m&sa=X&ei=J3FuU9P1K4OVyASi6YDoBQ&ved=0CB0QFjAA
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