PUBLISHED ON October 6th, 2014

COMESA bond scheme speeds up movement of goods in Northern Corridor

With more than 200 Customs bonds worth $100 million executed in the clearance of transit goods on the Northern Corridor in less than three years, Uganda, Kenya and Rwanda have taken the lead in using the regional Customs bonds scheme of Comesa.

The bonds scheme, known as Regional Customs Transit Guarantee (RCTG Carnet), is designed to fast-track movement of goods under Customs seals in the Comesa region.

A Customs transit guarantee scheme is a system that ensures that Customs in a transit country receive proper payment for dues and duties for any goods in transit.

In a meeting last week in Lusaka, the Comesa bond was fixed at 0.5 per cent — a reduction from the initial 0.75 per cent.

“We thought this was too high,” said Merian Ssebunya, chair of Uganda Freight Forwarders Association.

“Economic blocs are about market access and integration. Setting the Comesa bond this high defeated the whole purpose of integration. But now 0.5 per cent is fair. It’s still high compared with the national bond of 0.25 per cent that we were paying in Uganda,” Ms Ssebunya said.

The bond has enhanced competitiveness for companies on the Northern Corridor. Studies indicate that the implementation of the RCTG Carnet reduces the cost of transport and clearance by between 10 and 15 per cent.

The RCTG was introduced in 2012 on the Northern Corridor to facilitate movement of goods from the port of Mombasa to the landlocked countries in the region.

Rwanda, which has already converted all local transit bonds into RCTG, is the stand-out performer, while Uganda has also embarked on a similar process, accommodating both small operators and big businesses.

The Comesa regional bonds scheme has generated premium incomes of over $600,000 from sureties covering 194 clearing and forwarding agents across the three East African countries.

“The RCTG scheme has matured and will sustain itself… The myth that a regional bond is only for multinationals and will hurt the businesses of small and medium enterprises has been debunked,” said Comesa Assistant Secretary-General Nagla El-Hussainy.

“Today, many small and medium clearing and forwarding agencies in Kenya, Uganda and Rwanda have formed partnerships and are doing business on the Northern Corridor,” El-Hussainy told the eighth meeting of the council of the RCTG scheme in Lusaka, Zambia on September 29.

The meeting brought together Commissioners of Customs, chief executives of insurance and reinsurance firms, revenue authorities, transporters and clearing and forwarding agents from across the Comesa region.

Source: The East African

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