East Africa clearing firms cautious as single customs territory takes shape

Last month, fuel companies have experienced faster systems and good volumes being brought into the country under the seamless Single Customs Territory.

Because of this, there has been a 30 per cent improvement in the clearing of goods at Mombasa compared to the same period last year according to Uganda Revenue Authority Commissioner Customs Richard Kamajjugo.

The single customs territory (SCT) which rolled out in February is the consolidation level of the Customs Union which was attainable by the removal of internal duties and other restrictive regulations including removal of internal border customs controls on goods moving between partner states.

It is meant to facilitate free circulation of goods.

AimThe SCT’s primary objective is to enhance intra-East African Community (EAC) trade, enhance local, cross-border and foreign investment, increased production and competitiveness.

This system which is being rolled out in phases, set-off with clearing of fuel destined for the different member states and come April 1, the second phase will be rolled out.

“We are now ready for goods like spirits, cigarettes and cement between Kenya and Uganda, while Mukwano Products will be between Uganda and Rwanda are the next on the queue,” Mr Kamajjugo said.

Benefits The SCT will lead to reduced cost of doing business by eliminating duplication of processes, reduced administrative costs and regulatory requirements.

The SCT has also enhanced capacity of the private and public sector agencies and created a mechanism for prevention of smuggling at a regional level.

What is being observed is a reduction in risks associated with non-compliance on the transit of goods, realisation of economies of scale and optimal use of resources in clearance of goods in the region.Sharing his experience under this system, Mr Peter Ochieng, the general manager of Hashi Energy, a fuel retailing company, said: “SCT has made life easy one has to just log online and clear all the goods that will then be loaded to the final destination.”

Unlike in the old system where traders would spend close to four hours to clear a single truck the SCT allows them spend less time along the way.Indicative results show a reduction in clearance time to four days to Kampala and six days to Kigali from Mombasa from the original 18 days and 22 days previously.

The procedure In an interview with the East African Community’s Director for Customs, Mr Kenneth Bagamuhunda, the region has adopted a destination model where duties are assessed and payable upon arrival of goods at the first point of entry.

“This means the partner states where goods are destined will collect the taxes and notify the first point of entry to release the goods,” Bagamuhunda noted.

According to Bagamuhunda, at the first point of entry, depending on the level of risk, Customs officers from the destination country posted at the first point of entry (Mombasa and Dar es Salaam) may subject the goods to physical examination before release.

The selected goods as per the schedule now move directly to the owner without going through other customs controls at the internal borders and inland customs cargo centres.

So, goods destined to a bonded warehouse located inland are declared directly for warehousing at the first port of entry and will move across the partner states on a single regional bond without subjecting them to other bonds at the internal borders.

“This will eliminate the delays caused at internal borders and reduce the costs of securing other bonds,” he said.“Initially, we used to spend and go through a lot of paper-work but now all we require is to be logged onto the internet and transaction is done in seconds,” Mr Ochieng Shares.

revious systemHe adds that unlike the previous system where they would clear and pay for each truck that comes under the SCT they are able to do it once.Mr Ochieng adds: “This means we have to pay up all the consignment. This has prepared us to organise and pay up the funds in aance.”Goods transiting through EAC to foreign countries will also move on a single bond such that they will not be subjected to any other bond along the way.

However, unnecessary Non-Tariff Barriers such as multiple weighbridges will be reduced whereby goods will be weighed only once at the entry points of each partner state

Goods originating and trading between partner states will be declared and cleared once at the country of destination prior to arrival.

This means they will not be subjected to multiple customs controls at the internal borders and inland customs stations.

Mr Kamajjugo said the customs systems of partner states have been inter-connected to facilitate seamless movement of goods with minimum physical interference by customs and other agencies. Goods will also be monitored through cargo tracking systems with no physical escort of goods and a single bond across the EAC.

ChallengesAmong the challenges is the slow attitude change by stakeholders such as clearing firms’ fear of losing business since clearance is done once upon arrival of goods at the first port of entry.

The need for strong regional institutions to coordinate the regional systems under the SCT such as the regional interconnectivity of customs systems is also a challenge.

Some of the other agencies involved in clearance of goods have not fully automated their systems and have not harmonised their laws and procedures at the regional level hence, may continue demand for physical interventions in the processes.

SOURCE: Daily Monitor

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