Rwanda, Burundi, South Sudan join unified East Africa payments system
Cargo trucks line up at the port of Mombasa on March 7, 2014 awaiting
clearance. Photo/Kevin Odit
By JOINT REPORT The EastAfrican
Posted Saturday, May 24 2014 at 18:12
IN SUMMARY
Currently, the East African Payments System (EAPS) is operational in
Kenya, Uganda and Tanzania.
Trade within East Africa is expected to receive a boost as new plans
are underway to bring in Rwanda, Burundi and South Sudan into a
regional payments structure, as Tanzania pushes for a cargo clearing
system for the Central Corridor.
Currently, the East African Payments System (EAPS) is operational in
Kenya, Uganda and Tanzania.
The expansion of the payments system is one of three initiatives
announced this week that will open up regional economies for trade
between each other, and ease the cost of doing business in the region.
READ: East Africa rolls out cross-border payment plan
The payments system, aimed at accelerating funds transfer and
transactions across the region, was officially unveiled on May 16 in
Nairobi by central bank governors and officials of the regional
trading bloc, but it went live on November 25, 2013 for testing.
Also, Tanzania and Burundi are following in the footsteps of Kenya,
Uganda and Rwanda in launching the Single Customs Territory (SCT) from
July 1, which is expected to open up trade through the Central
Corridor.
READ: EAC members to start joint customs tax collection in July
Meanwhile, Kenya, Uganda and Rwanda have announced that steel, edible
oils, confectioneries and milk would be added to the list of goods
cleared under the new arrangement, allowing for joint collection of
Customs dues in the region. Cement, cigarettes and neutral spirits
were the first products to be handled under the SCT, which took effect
on April 1.
The additional range of products covered under the SCT scheme will
benefit big Kenyan firms such as Bidco Oil, Brookside Dairies and
Devki Steel Mills, which have a presence in the regional market.
Steel, cement and edible oil are among the most heavily traded
products in the bloc.
"This is a positive step because it will help improve competitiveness
in terms of more efficient trade logistics," said Narendra Raval,
managing director of Devki Steel Mills.
Additional goods
The Kenya Revenue Authority Commissioner of Customs Services, Beatrice
Memo, said exports of the additional four products were being
processed under the SCT system since May 19, raising hopes of improved
flow of goods and curbing of dumping. Ms Memo, however, warned that
shipment of all products covered under the SCT scheme would only be
done using specialised trucks.
"Only trucks fitted with ECTs (electronic cargo tracking systems)
shall be allowed to transport exports cleared under the SCT
procedure," she said.
The ECT system enables the owners of transit goods as well as the KRA
to track the movement of goods in real time via a computer, once they
have been collected from the port of Mombasa or from the point at
which they were loaded for export.
The system is also expected to curb losses. Governments have been
losing money as transit goods on which duty had not been charged were
being diverted into the country. Some cargo owners have also lost
goods or received their cargo with broken seals.
The EAPS, according to the central bank governors of Kenya, Uganda and
Tanzania, has facilitated transactions worth $37.6 million in the past
six months.
READ: New clearing system saves Uganda and Rwanda $469m
"Commercial banks in Rwanda and Burundi are expected to join later in
the year," said Central Bank of Kenya Governor Njuguna Ndung'u, who is
also the chair of the EAC Monetary Affairs Committee.
The EAC Deputy Secretary General for Planning and Infrastructure, Enos
Bukuku, noted that the EAPS will transform how business in the EAC is
done by fast-tracking transactions.
Under the SCT deal, clearing agents have been granted access rights to
relocate and carry out their duties in any of the partner states.
Importers covered under the SCT scheme will lodge import declaration
forms in their home country and pay relevant taxes first to facilitate
the process.
KRA will then issue a road manifest against the import documents
submitted electronically by the revenue authority of the importing
country.
Similarly, exporters of commodities in Uganda and Rwanda to Kenya will
require the importers to pay taxes to KRA before goods are released by
the revenue authority of the exporting country.
The rollout of other products and incorporation of Tanzania and
Burundi to the SCT will continue until June 30.
Last week, the Tanzania Revenue Authority and the EAC assured
stakeholders at a workshop in Dar es Salaam that they were prepared
for increased trade.
Tanzania wants to use the Central Corridor to connect with Burundi,
Rwanda and Uganda under an arrangement in which goods transported
within the region will not be treated as transit cargo from July 1.
"But this reduction in barriers can only be achieved if we manage to
harmonise our Customs laws," said TRA Commissioner for Customs Tiagi
Masamaki. "In most cases, our clearance procedures are complex. But,
we can optimise the use of technology to overcome unnecessary
hurdles."
Kenneth Bagamuhunda from the EAC Secretariat said the Central Corridor
should adopt the Kenya-Uganda-Rwanda system, which has seen a
reduction in the time it takes to transport goods.
Data shows that the number of days taken to move a container from the
Mombasa port to Kampala has reduced to four from 18 under the SCT,
while that to Kigali is now six days, down from 21.
The Protocol on the establishment of the EAC Common Market entered
into force on July 1, 2010, but trade in the region has been hindered
by logistical challenges such as bureaucratic Customs procedures.
By Allan Odhiambo, Joshua Masinde and Peter Nyanje
http://www.google.ca/gwt/x?gl=CA&source=s&u=http://www.theeastafrican.co.ke/business/Rwanda-Burundi-South-Sudan-join-East-Africa-payments-system/-/2560/2325408/-/nfn3syz/-/index.html&hl=en-CA&ei=teaAU6XkG4eFsQfawIHoBQ&wsc=yh
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SIBOMANA Jean Bosco
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