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