TANZANIA Freight Forwarders Association (TAFA) has urged the government to postpone the introduction of Single Customs Territory (SCT) to give room for stakeholders’ opinions. The TAFA President, Mr Steven Ngatunga told reporters over the weekend that the SCT set to take off next month came as a surprise to them despite the fact that they are crucial stakeholders. “We are not opposing the move that aims at connecting all the East African Community (EAC) countries on matters related to customs, but we were not involved in the process and we see a lot of challenges ahead,” he said. Mr Ngatunga who was accompanied by the TAFA Member of Council, Mr Peter Asenga, said they had come to Dodoma to meet the Minister for East Africa Cooperation, Minister for Finance and Minister for Transport to make their point as to why the SCT should be delayed. He noted further that prior to establishment of the territory a law should have been formed to guide its operations including putting clear punishments to those who may dump consignments in unintended country. “We are having the East African Community Customs Management Act, 2004 but need another law to guide issues to do with SCT because some businessmen may resolve into dumping consignments in unintended country and we thus need to know what legal measures will be taken,” he said. He also pointed out that issues to do with harmonization of custom systems and taxation systems in the region had to be taken to consideration...

The massive budgetary allocations by East African countries to infrastructure development are a pointer to the seriousness with which the regional governments are taking this key aspect of the economy. Together with a raft of proposed changes to taxation legislation, the focus on East Africa as a regional economic hub is clearer now than ever before. So is the growing importance of natural resources in the region in providing a vital source of revenue. This is new ground. The trend is a pointer to the realisation of the importance of infrastructure and its multiplier effect in the overall economic growth and development of the region. This year, Kenya has allocated $266.3 million raised from the Railway Development Levy to the construction of the standard gauge railway (SGR) that will connect the country to Uganda and eventually Rwanda. Kenya will also soon commission Terminal 4 at the Jomo Kenyatta International Airport. In addition, the country has also allocated $195 million for the upgrading of Kisumu and Isiolo airports and the construction of three new airports in Mandera, Malindi and Suneka. The country has also allocated over $1.2 billion for the construction and expansion of road networks to ease the movement of goods and services. Tanzania, on the other hand, has set aside $1.3 billion for procurement of wagons, rehabilitation of the central railway line and for the construction and rehabilitation of roads and bridges. Uganda is looking at reducing congestion in urban areas, cost of transport and transportation of goods and...

Kenya has differed with the other East African partner states over the status and management of the export processing zone (EPZ) firms in the region. At the recent EAC Sectoral Council of Ministers’ meeting, Kenya proposed that domestic market access thresholds for EPZ firms raised from the current 20 per cent to 100 per cent of annual production, subject to payment of all taxes, duties and levies as per the Common External Tariff rate, plus a surcharge. But Burundi, Rwanda, Uganda and Tanzania are opposed to the Kenyan proposal, saying that the EPZs should serve the export drive as provided for in the Customs Union Protocol. “The EAC Customs Union Protocol separates the EPZs and the special economic zones schemes,” they said. Therefore, enterprises targeting the EAC domestic market should operate under special economic zones (SEZ), with appropriate incentives. The firms operating in EPZs benefit from tax incentives on imports and domestic taxes and provision of utilities, unlike similar firms operating outside these zones, hence allowing them to sell in the EAC domestic market would give them undue advantage over the others, said the four countries. The proposal by Kenya follows findings of a report by the EAC Secretariat that EPZ firms are relocating from East Africa after losing market access. The study, titled “Assessment of the performance of the EPZ firms in EAC since the coming into force of the EAC Customs Union” indicates that at least 26 EPZ firms in Kenya had withdrawn their investments and others were...

The value of East African Community intra-regional trade is set to rise following the review of the cross-border passage rules of origin on export goods originating from the partner states. In the revised draft of the rules of origin agreed on by the EAC Sectoral Council of Trade and Finance Ministers, the value threshold has been lowered from 35 per cent to 30 per cent local imports. Likely beneficiaries of the rules of origin include manufacturers of edible oils, beauty products, milk products, television sets, car assembly and lubricants makers. Under the current rules of origin, only goods produced wholly from local inputs are allowed to cross national borders without attracting Customs taxes. Goods produced from imported raw materials also enjoy duty-free treatment, where the exporter can prove that at least 35 per cent of the ex-factory value was added within the region. The application of this rule has been controversial, with traders claiming it is selectively applied by Customs officials to bar Kenyan products from entering Tanzania, Uganda, Rwanda and Burundi. Last year, Kenyan manufacturers lost a bid to have the EAC Council of Ministers stop Uganda and Tanzania from charging full duty on imports. The Kenya Association of Manufacturers had in June written to the Ministry of EAC Affairs, Commerce and Tourism requesting that under the EAC Common Market Protocol, Kenyan firms be allowed into the Ugandan and Tanzania market without paying full duty as demanded by the two countries. The revised rules are expected to prepare the...

East African governments have used taxes to cushion their local industries on the one hand and encourage imports that support key sectors, such as infrastructure and energy, on the other, in a balancing act that gives fresh impetus to implementation of the Common Market Protocol. In budget proposals announced on Thursday, Kenya, Uganda, Rwanda and Tanzania have either reduced or removed duty on imports for key sectors such as energy, communications and infrastructure. The push to build infrastructure, ease the cost of doing business and fast-track the flow of revenues from the nascent oil and gas discoveries in the region have seen the four governments loosen tax policy to allow more trade with their neighbours and foreigners as well. “Massive budget allocations by East African countries to infrastructure development are a pointer to the seriousness with which they are focusing on this key aspect of the economy,” said Rishab Thakrar and Ravinder Sikand of Deloitte East Africa in an analysis. “It was never like this before. “The trend is a pointer to the realisation of the importance of infrastructure and its multiplier effect on the overall economic growth and development of the region.” Rwanda has reduced taxes on imported motor vehicles, especially tractors, heavy trucks and public transport buses. Tanzania has taken a similar route, reducing import duty from 25 per cent to 10 per cent on buses that carry more than 25 passengers for a period of one year. Regional integration aims at easing trade and stopping revenue losses...

Construction of the Sh31 billion second container terminal at the port of Mombasa is ahead of schedule and could be completed by next year. Transport Cabinet Secretary Michael Kamau said the project, whose first phase was scheduled for completion by 2016, could be completed by next year with 62 per cent of work already done. “Construction of the second container terminal is already at 62 per cent as opposed to 57 per cent, which means it is ahead of schedule and could be completed by 2015 despite the fact that the completion time was set for 2016,” said Kamau on Wednesday when he toured the project site in Mombasa. The CS also toured other infrastructure projects at the Coast including refurbishment of the Moi International Airport, construction of the 1.3 kilometre link between the airport and Dongo Kundu bypass as well as the construction of a dual carriage from the port to Miritini. He said completion of the terminal and other ongoing port upgrade efforts will uplift its status to a world class facility where bigger vessels can dock and offload cargoes. The new terminal is expected to increase Mombasa’s container handling capacity from the current 771,000 to 1.2 million containers, and help reduce the clogging that has forced some port users relocate to neighbouring Dar es Salaam port. Set on a 120 acre portion of land reclaimed from the ocean, the terminal will be designed with three berths each to be constructed in a separate phase. Kamau said the...

Transport Cabinet Secretary Michael Kamau has said money for the construction of a dual carriage road from Moi International Airport to Changamwe in Mombasa has been secured. The CS added that the ministry would next week float the tender for the project. Eng Kamau said Trademark East Africa ( TMA ) has already approved the $15 million (Sh.1.32 billion) while the Government has factored the remaining $24million (Sh.2.11 billion) in the budget to be announced today for the project. Construction of the dual carriage is one of the five Sh52 billion infrastructural projects that the Government intends to undertake, some of which are in the tendering stage while others are under construction, to make Mombasa a true East and Central Africa transport hub. A section of politicians last week claimed the Government was taking time to implement huge projects in Mombasa because of politics. Led by Mombasa Governor Hassan Joho, they accused the Government of delaying the implementation of Dongo Kundu project and shifting priority to the construction of the Standard Gauge Railway (SGR). Yesterday, however, Kamau said that the delay was inevitable, adding that “the Governor was himself the assistant minister for Transport and he is aware why this project has delayed.” Already, the Government has advertised the tender for the construction of the first phase of the Dongo Kundu project, which entails building of another dual carriageway from Miritini to Kipevu with interchanges at Miritini. Kamau made the remarks in Mombasa while inspecting the projects at the Mombasa...

Chambers of Commerce from across East Africa and their members are being offered an opportunity to develop trade and commercial ties at a Global Trade Forum set to take place in Kampala on June 18. Olive Kigongo, the President, Uganda National Chamber of Commerce (UNCCI) who also serves as Vice-Chair of the East Africa Business Council said chambers in East Africa have much to benefit from developing their partnerships with chambers worldwide. “The Forum will help create new business opportunities and influence public policies across the EAC business community, improving the business environment and also helping chambers better understand the important value-added services that they provide in achieving economic development in their communities,” she said. Organized by the UNCCI, the Global Trade Forum will offer a chance for participants to foster institutional connections with their peers from around the world. As well as an extensive B2B business matching programme, the event will also provide international chamber and business delegates with a platform to engage with high-level decision makers on the region’s wide range of trade and investment opportunities. “Helping our Africa chamber colleagues benefit from the global network is a key part of the World Chambers Federation’s three-year strategy,” Peter Mihok, the WCF Chair said. He said, “This event in Kampala is just the first of several actions planned for the region.” A keynote address will be made by Maria Kiwanuka, Uganda’s Minister of Finance, Planning and Economic Development. Other speakers include Allen Kagina, Commissioner General, Uganda Revenue Authority (on...

Kenya has launched an online cargo clearance system to boost operations at the port of Mombasa and the Jomo Kenyatta International Airport (JKIA) The Electronic Single Window System, also known as Kenya TradeNet System, is expected to make it easier and cheaper for traders to clear their goods in the east African country. “With the system in place, we will progressively reduce the cargo dwell time to a maximum of three days at the port and at JKIA, easing the cost of doing business in the East African region,” noted Kenya’s President Uhuru Kenyatta, during the launch ceremony in Nairobi recently. Currently, it takes an average of seven days to clear cargo at the port of Mombasa. Officials say that the system will reduce the cost of shipping a container from Kenya to Uganda by 50 per cent from the current US$3,300 to US$1,600. Containers going to Rwanda would cost US$3,300 from the previous US$5,000, they add. The system will give traders a single platform to lodge documents associated with cargo clearance. The information can then be shared to numerous agencies including the Kenya Revenue Authority (KRA), Kenya Plant Health Inspectorate Service (KEPHIS), Kenya Bureau of Standards and the Kenya Ports Authority (KPA). The software integrates over 24 government agencies and provides various payments modes, including mobile money and 24 commercial banks. Once fully operational, the system is expected to save the country between US$150mn and US$250mn in the next three years. Savings are expected to reach US$450mn by 2020....

The importer in Kenya was required — prior to verification to apply for, process and forward to the PSI company an Import Declaration Form (IDF) — which acts as an import licence detailing the value of the goods to be imported and other descriptions. The form costs Sh5,000. On importation of the goods, a fee of 2.25 per cent of the value of the goods is currently payable (less the Kshs 5,000 paid in advance), excluding goods originating from within the EAC and duty exemption/remission goods or inputs. This fee is not refundable and is considered to be a revenue source for the Government. In April 1998, the Government appointed M/s Swiss Procurement Company S.A (SWIPCO) to audit the work of PSI companies under a programme known as “Import Verification Programme for Kenya”. This programme required Swipco to establish an international price database for imports to Kenya based on this verification process and transfer the database to the Government at agreed intervals. The Government then was using the British Definition of Value (BDV) valuation technique which required use of researched values of goods to compute taxes and not invoice values which are currently in use. Swipco services were terminated when the Government adopted the World Customs Organisation General Agreement on Trade and Tariffs (WCO GATT) valuation techniques which primarily use commercial invoices to determine value and taxes of goods imported. With the relief from fees and other related costs following Swipco, one would have expected that the Government would abolish...