PUBLISHED ON March 2nd, 2015

Single Customs regime: It now costs less to clear cargo at port

The cost of clearing cargo at the port of Mombasa and of transport along the Northern Corridor has gone down by 30 per cent since the implementation of the East African Single Customs Territory (SCT).

At the recently concluded Heads of State Summit, the EAC presidents in their communique said that since it was started, the Customs arrangement has offered local businesses huge benefits in moving goods and raw materials.

However, industry players in the cargo-clearing industry say that the reduced costs are as a result of the interventions mostly on the Northern Corridor.

Gilbert Langat, Kenya Shippers Council chief executive, said that the reduction of weighbridges, roadblocks and the removal of unnecessary check points have had a bigger impact on the movement of cargo along the Northern Corridor, resulting in reduced time and costs, especially with regard to cargo destined for Uganda and Rwanda.

“For example, the average time spent clearing and transporting cargo from Mombasa to Kampala has dropped from eight days to an average of four, and from 17 days to eight days to move cargo from Mombasa to Rwanda and Burundi,” said Mr Langat.

The cost of clearing a container destined for Kampala was $3,375 before the launch of the SCT, but is now down to $1,731. The cost of clearing a container destined for Rwanda was $4,990 but is now down to $3,387.

“The SCT is a work in progress and until it is fully implemented and all goods are cleared through the system, it will be hard to say clearing time of goods has significantly reduced,” said Mr Langat, adding that with Tanzania and Burundi now on board, it is expected that the region will move faster towards its full implementation.

Destination model

Under the SCT arrangement, the EAC member states will adopt a destination model of goods clearance, where assessment and collection of revenue is to be done at the first point of entry.

Kenya and Tanzania have created space for their partners to set up Customs clearing units at the Mombasa and Dar es Salaam ports respectively, which will allow Customs agents to work together.

“An arrangement in which partner states can jointly collect Customs duties is still under pilot process on some selected goods,” said Mr Langat.

Kenya, Uganda and Rwanda have been experimenting on the SCT system since April 1. Joint revenue collection will allow importers in the countries to lodge import declaration forms in their respective home countries and pay relevant taxes to facilitate the export process.

The EAC has resolved to implement the SCT regime in pursuit of a fully fledged Customs Union as envisaged by the EAC Treaty. Since 2008, cheap imported sugar has been finding its way into the Kenyan market through porous borders or legitimately through Comesa.

Uganda rolled out wet cargo (liquid cargo) while Rwanda rolled out both wet and dry cargo (cargo such as coal, finished steel or its ingredients, grain, sand or gravel, or similar materials) for clearance at the port of Mombasa.

Other goods cleared under the system include edible oil, steel products, wines and spirits, confectioneries, plastic products, milk and milk products.

Source: The East African

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