A new single customs territory is revolutionising the way goods are exported and imported into East Africa. South African traders would be well advised to take note, says Hester Hopkins, senior manager at professional services firm Deloitte.

Rwanda, Kenya and Uganda have entered into an agreement known as the Tripartite Initiative for Fast Tracking the East African Integration, to the exclusion of fellow East African Community partner states Tanzania and Burundi. “The intention of the agreement is to create a single customs territory among member countries in order to facilitate trade and investment within the area,” says Hopkins.

The new agreement aims to alleviate trade barriers between member countries in an attempt to attract foreign trade. “The Port of Mombasa in Kenya, currently operated by the Kenyan Ports Authority, will act as the first point of call between the member countries,” explains Hopkins. “Clearance of the goods, as well as collection of taxes, will be done at the port. Thereafter taxes will be distributed among member countries.”

A more streamlined process

This allows for an easier, less time-consuming clearance, with the aim of eliminating multiple-clearance procedures and burdensome paperwork. “Clearance at the port of first entry will eradicate multiple-bond payments, which will lead to reduced costs for business,” adds Hopkins. “The member countries will also recognise mutual customs bonds executed by their respective insurance companies, as cargo destined for bonded warehouses will be verified at the port of origin or entry by liaison customs officials representing destination countries.”

The implementation of the single customs territory has already reduced the period for shipments from Mombasa port to only one day. “A large portion of the barriers, including the majority of the weighbridges and roadblocks, have been eliminated on the route between Mombasa port and Kigali, Rwanda, decreasing the period of travel for trucks from 22 days to 5 days,” she says. “This will lead to an enormous cost saving by importers and exporters in the area.”

Since the beginning of the year, residents can move freely between the member countries and need only provide East African identity cards when crossing borders. “This has alleviated the visa processing and paperwork of truck drivers and eased the current border congestion, which has allowed for speedier movement of cargo,” comments Hopkins.

“Rwanda clearing agents, as well as the Rwanda Revenue Authority, have started setting up shop at Mombasa port in an attempt to speed up the clearance procedure and avoid unnecessary storage costs for traders,” she continues. “Authorities aim to upgrade and interlink the customs systems of each member country to create a more streamlined system.”

Teething problems

Problems do, however, exist and will need to be addressed. “The Kenyan Ports Authority in Mombasa has bureaucratic tendencies, sometimes leading to time delays in goods clearance,” says Hopkins. “Gatuna border in Rwanda is currently not geared to handle the large increase in truck loads, which leads to further delays. Border control will need to expedite cargo clearance and reduce any forms of corruption as a means to decongest the facility.”

On a positive note, Rwanda has been rated the second most business-friendly country in Africa. “Implementation of the new single customs territory, as well as its business-friendly rating, should lead to increased trade opportunities and decreased costs for foreign traders,” asserts Hopkins.

Implications for SA

She concludes: “South Africa should consider improving its trade and investment relations with Rwanda, especially exports by the agricultural sector as Rwanda is prone to food shortages. South African exporters into Rwanda should consider shipping to Mombasa rather than Dar es Salaam in order to benefit from the single customs territory.

“Local South African traders, especially exporters of tea and coffee, as well as African merchandise, could potentially be affected by the increased trade opportunities and decreased cost of trade in Rwanda,” she says. “This could mean that foreign traders decide to import to Rwanda rather than South Africa in an attempt to cut the costs of shipping.”