Kenya Trade Network Agency (KenTrade) has announced it will now be possible for importers and exporters to file the taxes and other payments through the banks, using its electronic platform. The entire software is also inter-linked to the Kenya Revenue Authority (KRA) iTax System, for purposes of speedy payment of taxes. In a public notice, the agency lists KRA, Kenya Plant Health Inspectorate Services, Kenya Bureau of Standards, Port Health, Department of Veterinary Services, Horticultural Crop development Authority and Pharmacy and Poisons Board as Government units that have already hooked up to the single window platform. The system also allows importers and exporters to submit applications for import declaration forms as well as import or export permits, making their payments to some 24 banks- also connected to KRA iTax system. “We are still to go live on a full scale due to some modules that are still in the process of being integrated to the KenTrade platform. We have been rolling out in phases and the process is still ongoing,” Ann Odero, Kentrade’s Corporate Communications Manager told The Standard on phone yesterday. A spot check with clearing agents-principal users of the system revealed frustration over delays in fully setting up the platform. “What we know is that only two modules are working, the shipping agents module and the Import Declaration Form application module, only still working offline. The rest of the eight modules that are supposed to be linked to the electronic platform are still offline,” said William Ojonyo, Managing...

The East African Legislative Assembly (EALA) has given Rwandan representative Dr James Ndahiro a go-ahead to introduce a private member’s bill on electronic transactions that, if passed, will enable traders cut the cost of doing business. Ndahiro yesterday told Sunday Times that the EAC Electronic Transactions Bill, 2014, which is supposed to make provision for the use, security, facilitation and regulation of electronic communications and transactions, will benefit Rwandan businesses. “Rwandans will benefit in at least three important ways. The first is in reduced transaction costs whereby, if you are doing cross-border business, there are things you can do at your desk in any part of Rwanda without need to travel. Contracts can be exchanged on-line and money is saved,” Ndahiro said. He said such legislation will also reduce costs of doing business but also important is the innovation that comes with new technology. Most sectors in the region including agriculture, and industry, he said, require ICT in order to grow more and provide adequate and efficient automated services. Safety considerations: Modern day business is all about electronic transactions; thanks to the internet and its applications, and as such, appropriate legislation is expected to make such deals secure and valid by implementing some terms and conditions that parties involved will agree to. According to a related Eala communiqué, the bill wants to promote technology neutrality in applying legislation to electronic communications and transactions; and to develop a safe, secure and effective environment for the consumer, business and the governments of...

Italy rarely, if ever, features on the list of countries with a big presence in the East African region. Not anymore. Italy’s Minister of Economy and Finance was in Kigali and spoke to The EastAfrican’s BERNA NAMATA on the renewed interest in the region. What is driving Italy’s seemingly renewed interest in the East African region? There is growing interest from Italy — we recently launched the Italy-African initiative to intensify ties and facilitate economic integration between the Italian economy and African economies. I’m very interested in the process of integration in East Africa – it is a fascinating experiment. What we know in Europe about integration is that it is a powerful driver of growth and it is taking place within economies that are already doing very well. My expectation is that with further integration this boost will continue. This will also be instrumental in facilitating integration of the African economy into the global economy. It is important that this is about trade and investment as well as monetary integration. What specific sectors are Italian companies targeting in East Africa? Italian companies are looking for opportunities for investment and market expansion. They are also flexible enough to integrate in the economies of East Africa, which are not only integrating but also transforming themselves. Italian companies have diverse expertise including investment tools, machinery and high value added goods. They can make the best of dynamic expansionary situations because of their specific comparative advantage — they are keen on doing this....

Movement of goods across East Africa will become much faster later this year as the region moves to complete one-stop border posts (OSBP) within the Community. The OSBPs which are necessary for East Africa to become a fully-fledged Customs Union, will reduce the time transporters spend trying to clear goods at the different border points. Tanzania will launch the first OSBP at the Kabanga-Kobero border with Burundi next month and the Mutukula border post on the border with Uganda a month later. Officials at TradeMark Africa, the organisation investing on average $10 million per OSBP, said that the Uganda side of the Mutukula as well as the Busia crossing into Kenya are about 60 per cent complete. The Mirama Hills OSBP on the Rwanda-Uganda border will likely be the last to be completed this year, with its launch expected in December, while the South Sudan OSBP to be constructed on the Elegu border with Uganda will be complete a year later. Moses Sabiiti senior programme manager at TradeMark Africa, said that completion of OSBPs means that all institutions involved in the clearing of goods will have access to the same information and communications technology system, which will in turn ease the clearing of goods. The ICT system, also known as the integrated border management system (IBMS) will be accessible to revenue authorities, immigration authorities, ministries of agriculture, national drug authorities, police and the national bureau of standards, institutions that are all involved in the clearing of goods at border points....

Excise duty rates are yet to be harmonized in the East African Community, hindering the free movement of goods and services within the Common Market. The reasons for this are historical and fiscal — with states applying different rates in various ways, even for as long as 60 years, without changes. These reasons are not inconsequential, but a common excise management law that harmonizes policies would go a long way towards reducing these inequalities. Ultimately, our economies would benefit — as will government revenue coffers. States use excise duty as a revenue-boosting tax, which partly explains why harmonization is such a thorny issue. Their budgetary needs determine the rates. But the states also differ with regard to their ability to handle excise taxes. Legislation in Tanzania and Uganda dates to the 1950s. Kenya, Tanzania and Uganda have specific procedures for approval to trade in excisable products. Burundi has no excise taxes Act while Rwanda does not have formal approval procedures. Black market States use different definitions of products for purposes of levying excise duty. For example, the definition of beer in Kenya is based on whether it is malt or non-malt but in Burundi it is the brand. Furthermore, states have different policies governing provision of excise duty remissions and refunds. This has resulted in a black market for goods whose duty differential is significant enough to merit substantial trade. Traders support harmonization as it will create a level playing field and eliminate unfair competition caused by smuggling and diversion...

The East African Community has been advised to go slow on its pursuit of a monetary union and instead implement the Common Market Protocol. Dr Horst Kohler, a former International Monetary Fund head who was also president of Germany, argued that the EAC is moving too fast towards a monetary union without fully functioning structures. He said it will be difficult for the bloc to have a monetary union without sound fiscal and economic policies. “Instead of being preoccupied with the monetary union, the EAC should be focusing on the implementation of various aspects of the Customs Union to allow free flow of goods, labour and ideas,” said Dr Kohler at the first East African-German Business Colloquium in Nairobi on Wednesday. “These are the practical ways of integration and not the monetary union.” Face same problems as EU Dr Kohler, who was the patron of the colloquium, warned that if the EAC partner states do not conform to the rules of the Common Market and the Customs Union, the region is likely to face the same problems as the European Union (EU), which he said is in the process of healing “but it does not mean that EAC should take the same path. “You have to ask what a monetary union means to member states. It means member states have to give up some measure of fiscal sovereignty. While leaders and policy makers can say they are ready to move on, do the people understand what giving up sovereignty means?...

The signing of the highly anticipated trade agreement between the East African Community and the European Union has been delayed again. At the latest EAC Sectoral Council on Trade, Industry, Finance and Investment meeting in Arusha on May 30, the ministers pushed the final negotiations to July 14 due to meetings scheduled on the national budgets. The Economic Partnership Agreement (EPA) final talks between the EAC-EU ministers were earlier set for mid May. The move could delay completion of the negotiations and partner states may fail to meet the October deadline, according to business analysts. Head of the EU delegation to Kenya Christophe De Vroey said even if the agreement were sealed by July 21, the parties may not beat the deadline. “The document will still have to go through various processes before it is implemented, including being presented to the EU parliament, and it will take a minimum of five to six months before it is implemented,” he said. This means that Kenya, being the only member of the bloc that is listed as a non-Least Developed Country, will be the most hit by this delay, which will result in the country paying a 10 per cent import duty to access the EU market. “It is important that the agreement is signed before the October 1 deadline so that some form of interim ratification can be in place to avoid the imposition of duties, though as a temporary measure,” said Kenya Flower Council chairman Richard Fox. At their last...

Rwanda has secured parliament’s commitment to pass the EAC Monetary Union Protocol ratification law this month, putting the country ahead of its regional peers in the implementation of the protocol signed by heads of state in Uganda in November. Tanzania and Rwanda have made the biggest steps so far among their EAC peers in ratifying the protocol on the monetary union as the clock ticks towards the July deadline. While Tanzania expects to ratify the protocol early next week, Uganda, Burundi and Kenya are in the process of ratifying the crucial protocol but were non-committal on the execution date. Tanzania’s Deputy Minister for EAC Co-operation Dr Abdallah Saadalah said the national parliament in Dodoma would approve the protocol on June 9. “Parliament is scheduled to sanction the EAC Protocol on Monetary Union on June 9, 2014,” Dr Saaadalah told The East African. Rwanda’s Finance Minister Claver Gatete secured parliament’s go-ahead on the protocol after pleading with the House to approve the ratification without subjecting it to the rigorous processes of parliamentary standing committees. Although the request was not granted, MPs gave a guarantee that the law would be passed in the course of the month. “We need the protocol ratified by July 1 this year. We need to ready ourselves,” Mr Gatete toldThe EastAfrican after his presentation. Jean Marie Gatabazi, of the ruling Rwanda Patriotic Front (RPF) party, however asked: “The Euro zone has been struggling due to a recent financial meltdown… part of the problems originate from fiscal indiscipline....

East African Community partner states posted progress in eliminating non-tariff barriers (NTBs) in the first five months of the year with the number of new barriers falling gradually, which reduced the cost of doing business and opened up more opportunities across the bloc. But the five countries of Kenya, Uganda, Tanzania, Rwanda and Burundi continued to erect new barriers, frustrating the implementation of free trade in the region. Countries are involved in long standing trade disputes that could further complicate movement of goods and services. The latest report by the EAC Sectoral Ministers Council on Trade, Industry, Finance and Investment said that since the beginning of this year, up to 10 NTBs have been resolved. However, nine NTBs were reported as new in the same period. Just who is erecting new barriers and what are the complaints? It is expected that more NTBs will be resolved by the end of this year. Cumulatively, 62 NTBs out of over 100 have been eliminated by partner states since last year, the report says. As a result, businesses could benefit from a reduction in the cost of doing business in the coming months with the lessening of NTBs — mainly weighbridges, roadblocks, poor infrastructure, unnecessary delays at border posts, and lack of harmonised import and export standards, procedures and documentation. Last year, the EAC Secretariat reported that a total of 55 NTBs were resolved within a period of 12 months, up from 36 that were resolved in 2012. However, 24 NTBs are unresolved....

Kenya, Uganda and Rwanda agreed to implement the Single Customs Territory (SCT) in January 2014. They have since been test-running the procedures for a select group of intra-EAC traded goods, like cement, cigarettes, neutral spirits, milk and milk products, and confectionary since April 1. Under this arrangement, an importer needs to electronically lodge import declaration forms in his home country following which the relevant exporting tax authority will issue him with a road manifest for his cargo to depart from the EAC country of export. This is referred to as the destination model of goods clearance where taxes are assessed and collected at their first point of entry into the SCT. The SCT envisions free flow of goods within the territory, making it similar to the more advanced European Union which is virtually borderless. Under full implementation of the SCT, commodities that are produced within the EAC would still enjoy zero import duty when crossing borders but with no more need for a certificate of origin. This removal of tariff barriers has been a major milestone for the regional bloc and has led to a significant rise in trade between the partner states. The SCT also envisages minimum border controls, improved ICT interconnectivity among partner states and the timely exchange of customs information. Reforms Some of the notable gains made by partner states include Kenya’s implementation of an electronic cargo tracking system that is integrated to the Kenya Revenue Authority’s Simba System to curb illicit diversion of export-cargo into the...