Tuesday January 28 2014

Embrace Single Customs Territory to fast track EAC integration

By Charles Kazooba

This month we have begun implementing the Single Customs Territory (SCT) following a directive of the 14th East African Community (EAC) Heads of State Summit in Kampala at the end of November last year.

The January 1, commencement date of the SCT was agreed upon during the summit that brought together presidents from the five EAC partner States of Kenya, Uganda, Rwanda, Burundi and Tanzania.

Under a Tripartite arrangement for fast tracking the East African Integration, Kenya, Rwanda and Uganda have moved ahead to roll out the Single Customs Territory by putting in place the necessary systems and even deploying their Customs officers to the port of Mombasa to implement the Single Customs Authority.

Previously, a trader moving goods to Kigali, Rwanda, via the Northern Corridor had to deal with customs officials at three different points of entry — at Mombasa, the Kenya-Uganda border as well as at the Uganda-Rwanda border.

Under this Single Customs Territory the EAC member states adopted a destination model of clearance of goods where assessment and collection of revenue was to be done at the first point of entry, which allows free circulation of goods in the single market with variations to accommodate goods exported from one partner state to another.

However, only assessment is being done at the point of entry and payment of taxes will still be done at point of final destination—in Partner States—until a single revenue collecting body and a revenue sharing model are put in place.

An SCT presupposes a single customs body that collects duty at the region’s designated entry and exit points and sharing it out to members under an agreed formula.

To be more direct, assessment of goods imported by traders from Uganda, Kenya and Rwanda will only be conducted at the first point of entry and trucks weighed only on crossing the border. But partner states will in the meantime continue to retain control over their revenue collection function.

Generally, the SCT is expected to speed up movement of goods along the Mombasa-Kampala-Kigali route—and materially cut the cost of doing business in the three countries.

Return journey transporting cargo from Mombasa to Kigali would take less than 10 days compared to the 20 days trucks currently take and there would also be fewer checks along the route.

It has been taking weeks to transport cargo because of roadblocks and weighbridges yet the longer a truck stays on the road, the more costs to maintain the drivers.

These costs are not absorbed by the truck owner, but are passed on to a trader who in turn passes them on to a consumer.

We also expect cargo clearing costs to drop by about half since the transit bond fees along the corridor will be scrapped. With a single territory, there will be no requirement for transit bond on Uganda or Rwanda-bound cargo.

A bond is like some kind of guarantee that goods transiting to Rwanda, will not end up in Kenya or Uganda.

Doing so will assist in professionalising trade in the region and help us get rid of brokers who contribute to the high cost of doing business.
When a clearing firm executes a bond for a client, it is guaranteeing that the goods will reach their destination.

Therefore, as we roll out this SCT our attitude should be regional and not nationalistic since it is crucial to fast track integration, and is going to be crucial to the success or failure of the EAC Customs Union. Yes, the realisation of a single customs territory in particular, will be achieved when the partner states and the elected leaders show leadership often against fierce domestic resistance.

Mr Kazooba is a journalist specialising in regional integration in Africa. charleskazooba@gmail.com