New Customs regime could make warehouses irrelevant

Friday April 24 2015

Coffee bags ready for export at the RwaCof

Coffee bags ready for export at the RwaCof company warehouse in Nyabugogo, Kigali. Goods are now being delivered directly to business premises from Mombasa port. PHOTO | FILE 


Rwanda’s main inland cargo handling facility — Magerwa — is struggling to keep the warehouse business afloat as implementation of Single Customs Territory continues.

One of the East African Community protocols, the Single Window System has enabled Rwandan importers to transport their cargo directly from the port to the owners’ premises without storing them in warehouses as was the case before.

With the option of not using using warehouses, traders can now save on the time their goods used to spend in Magerwa as well as warehouse charges. Previously, all importers would have their cargo pass through warehouses from where the goods would be cleared upon presenting the relevant papers.

The implementation of the Single Customs Territory and the Single Window System have reduced tax payments at Magerwa, where it is mostly done at entry points and information relayed to the tax authorities.

Importers are now taking their cargo directly to the business premises, leaving some warehouses empty. There are over 10 warehouses in the country with six located in Gikondo and three at Kigali International Airport.

“With the Single Window System and Single Custom Territory, clearance of goods has become faster, rendering warehouses irrelevant since fewer importers now use them,” said Fred Seka, an importer with dealings in freight and forwarding companies.

Previously, Magerwa used to handle over 90 per cent of Rwanda’s total imports.

The reduced warehouse services are also likely to see a number of people employed in this business lose their jobs. The Single Customs Territory has reduced administrative costs and regulatory requirements, making movement of goods across partner states faster.

The objective of a single window system is to reduce the number of days a trader takes to transport his goods from Dar es Salaam to Kigali from nine to five.

Two years ago, in order to serve landlocked interior of East Africa whose business is increasingly becoming lucrative for Mombasa port, Kenya Ports Authority opened an office in Kigali.

With this office in Kigali, traders in Rwanda, Burundi and eastern DRC are able to pay and clear their cargo at the port right from Kigali, saving dealers time and money spent in Mombasa.

Although Rwanda’s cargo through Mombasa keeps increasing, the port receives more cargo destined to DRC through Rwanda. In 2012, Mombasa port handled cargo worth over 400,000 tonnes for DRC up from 350,000 tonnes cleared a year before.

In the same period, Congo’s cargo handled by Mombasa port almost double that of Rwanda which stood at slightly over 250,000 tonnes which justifies the intensified interest Mombasa port has in DRC.

The ports of Mombasa and Dar es Salaam have been engaged in cut-throat competition to win over importers and exporters from the regional landlocked countries.

However, over 60 per cent of Rwanda’s cargo still goes through Dar es Salaam because of the distance between Dar es Salaam and Kigali is shorter than Mombasa and Kigali.