The Rwanda Revenue Authority (RRA) has announced that it will introduce an electronic cargo tracking system to plug some of the loopholes importers have been manipulating to deny the country revenues.

Goods declared by taxpayers as transit have found their way back into the market without importers paying duty, denying the government much-needed revenue and creating unfair competition.

Information from RRA indicates that the taxman loses between 30-40 per cent in potential tax revenue due to non-compliance by some taxpayers.

ALSO READ: Tax body launches e-filing to curb tax losses

Level playing field

“The electronic cargo tracking system is expected to create a level playing field by stopping dumping,” said Richard Tushabe, Deputy Commissioner-General, RRA, and Commissioner, Customs Services.  

Media reports indicate that in Kenya, where the cargo tracking system is already in operation, the relevant gadget costs at least Rwf700,000.

The region is reported to have a fleet of 20,000 cargo transporting trucks that ply both the Northern and Central corridors which serve Burundi, Kenya, Rwanda, Tanzania and Uganda and provide port access to the Democratic Republic of Congo (DRC) and South Sudan.  

Improve trade infrastructure

Recently, Trade Mark East Africa (TMEA) gave Rwanda a Rwf640 million ($1 million) loan to implement the Electronic Cargo Tracking System (ECTS).

The organisation has already invested about $4 million in Rwanda to improve trade infrastructure as part of the programme to reduce the cost of doing business as well as improve RRA’s efficiency in Customs management.

Reduces its attractiveness

ECTS will be used to track, in real time, all trucks and containers transporting goods along the East African corridors, and monitor the movement of transit cargo across the country in order to ensure it exits to the intended destination. 

Although East Africa is the second fastest growing region globally, the bloc is also ranked the second-most expensive in which to trade, a factor that reduces its attractiveness.

The ECTS is expected to significantly reduce the time and cost of transit along the corridors and ultimately ease the movement of goods, hence facilitating trade.

Frank Matsaert, the Trade Mark chief executive officer, said between 2010 and 2016 his organisation would have spent about $500 million on various projects aimed at reducing or removing barriers to trade in the region.

Real time tracking has been implemented in Kenya, Tanzania and Uganda while the Rwandan ECTS is to be interfaced with Tanzania’s.
An estimated 48 per cent of the cost of imports into Rwanda is related to time costs at the ports of entry, which makes trade expensive for local traders.

With ECTS, the time is expected to reduce by 50 per cent, bringing down the overall cost of transit.

“As Rwanda is a landlocked country and mostly depends on the cargo transiting along East African routes to import and export goods, it has become imperative that more efficient and cost-effective ways of managing this cargo be sought,”  Mr Matsaert said.

Support projects

So far, the partnership is paying off, he said, reaffirming support in ensuring the success of ongoing and future projects aimed at increasing efficiency and reducing cost of trade.

Mr Matsaert pointed out that TMEA will spend about $70 million on various projects in Rwanda by 2016, all aimed at facilitating trade and improving the country’s competitiveness.

He added that TMEA is also investing $6O million to increase port efficiency.

Further, Mr Matsaert said, TMEA was working closely with Kenya’s newly elected President Uhuru Kenyatta to establish a regime that facilitates trade and promotes deeper integration.