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.
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.
Previously, only commodities like petroleum products, cement, spirits, and cigarettes were allowed under this 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.
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