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PUBLISHED ON July 24th, 2014

EAST AFRICA REGION MOVES TO CUT COSTS OF DOING BUSINESS

THE implementation of the Single Custom Territory (SCT) is seen as a crucial move that will reduce costs of doing business and increase efficiency in East African Community customsservices, but for the Tanzania clearing and forwarding agents it is a blessing in disguise.

The SCT is one of the key regional integration priority policy interventions adopted by the EAC member states to consolidate Customs Union. According to Tanzania Revenue Authority (TRA), full implementation of SCT, aimed at eradicating trade barriers in East Africa, begins on July 1.

The Tanzania Freight Forwarders Association (TAFFA) president Mr Stephen Ngatunga said during a workshop on SCT awareness to key stakeholders that the SCT will be a blessing to the business community across the region but it may create heavy losses to clearing and forwarding agents.

“Full implementation of the SCT in the central corridor will expose clearing agents” employment opportunities to those from other member states to create unnecessary competitions,” said Mr Ngatunga.

He added, “The government should act with caution in implementing the SCT to protect the much needed jobs for its people. It should be an opportunity for creating more jobs and not scaling up unemployment.”

However, according to the EAC Customs Union, the effective implementation of the SCT will see the clearing agents and revenue authorities’ staff from all the member states being deployed at customs points to oversee the smooth flow of the system.

For example, for the implementation of the SCT central corridor, TRA Deputy Commissioner for Trade, Dr Patrick Mugoya, said at the workshop that TRA staff will be deployed to Mombasa Port to assist in the clearance of goods destined to Tanzania.

The Revenue Authorities in the region will take full responsibility to ensure the SCT is fully implemented as per the approved roadmap by the EAC member states. The Revenue Authorities in the region will take full responsibility to ensure the SCT is fully implemented as per the approved roadmap by the EAC member states.

He said that provisions have been made to accommodate staff from other revenue authorities at the former NASACO Building in Kurasini, Dar es Salaam.

Also the TAFFA president, Mr Ngatunga pointed out further that the risk of revenues loss if collections for Tanzania are to be made at the customs of other member states.

This is because the implementation of the SCT is expected to eradicate trade barriers by adopting a central model of clearance of goods, whereby taxes and assessments will be done only at the first point of entry and, thus, ensure faster clearing of goods as well as reduction in the cost of doing business.

The SCT initiatives are under the trilateral arrangement including Tanzania, Burundi and Uganda for the central corridor and Kenya, Rwanda and Uganda for the northern corridor that was piloted from January, this year.

However, apart from the fears expressed by the clearing and forwarding agents, the implementation of the SCT in the northern corridor has proved to be efficient and effective in cutting down the cost of doing business in the region.

Giving testimony on how the SCT northern corridor initiative has worked out, the East African Community (EAC) Director for Customs, Mr Kenneth Bagamuhunda, said positive impact has been recorded since it was rolled out as pilot project in January.

Cargo-clearance volumes have reportedly increased at less time goods clearance due to the SCT. It now takes four days instead of 18 for a truck to move from the Kenyan main port of Mombasa to Kampala. It also takes three days instead of 21 for a truck to move from Mombasa to Kigali, Rwanda.

Recent statistics show that as a result of the implementation of the SCT, northern corridor, Uganda’s import volumes has increased by 30 per cent with transport cost lowered by almost 50 per cent. “We want this to happen in the central corridor as it is already operating in the northern corridor.”

The Acting Commissioner for Customs and Excise Mr Tiagi Masamaki said during the workshop that the SCT was a good initiative transforming and making businesses more efficient and profitable.

“With the system, goods will be declared once at the country of destination before reaching the first entry point, thus cutting down operational costs as well as improving significantly the business climate in the region,” he told workshop participants.

Key stakeholders in the workshop were the Tanzania Ports Authority (TPA), TANROADS (weighbridges), Tanzania Bureau of Standards (TBS), Tanzania Food and Drugs Authority (TFDA) and clearing and shipping Agents.

“With the SCT initiative, roadblocks will be eliminated by the adoption of electronic cargo tracking systems, replacing human intervention through automation of procedures that will also impact in stopping corruption,” Mr Masamaki added.

For example, he said there will be a single weighing bridge from Dar es Salaam to Kabanga, Rusumo and Mutukula, an initiative that implies more cargo clearance at the Dar port, more revenues and employment.

He said the customs business systems and processes were currently being interfaced and harmonised for smooth takeoff of the SCT. TRA has a mechanism of tracking down the movement of goods to the country of destination.

“At the border there will be minimal controls just to crosscheck the documents and inspecting the seals to ensure they are not tampered with,” he said.

The implementation of the SCT will therefore become an important trade facilitation geared at removing all barriers to trade to create a free movement of goods in the region at minimum cost.

Source: Daily News

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.