Tanzania signs up for customs deal alongside Kenya, Uganda and Rwanda

Dar es Salaam, Tanzania (Capital Markets in Africa):- Tanzania has joined Kenya, Uganda and Rwanda in fast tracking the movement of goods along the main corridors (Northern and Central) under the customs seals in the COMESA region. This follows the signing of an inter-surety agreement by Tanzania’s National Insurance Corporation (NICT) to join the COMESA Regional Transit Guarantee (RCTG) scheme thereby allowing the country to issue regional customs bond guarantees. The RCTG Scheme is a customs transit regime designed for the ease of movement of goods under customs seals in the COMESA region and to provide the required customs security and guarantee to the transit countries.

The scheme ensures that customs in a transit country receive proper payment for dues and duties for any goods in transit. Bonds or guarantees are given by the owner of goods or their agents to the benefit of the customs of the country of transit.

“This will now enable the NICT to issue regional customs transit bonds as part of the national chain of sureties that are signatories to the Inter Surety Agreement,” said NICT acting managing director Sam Kamanga.

Tanzania Revenue Authority has already configured its national IT system.

In 2014, Uganda, Kenya and Rwanda started using the COMESA customs bonds scheme after the rollout of the EAC Single Customs Territory.

The rolling out of the RCTG on the Northern Corridor from Mombasa to Kampala and Kigali has reduced transit time from an average of 21 days to four days.

Trucks with RCTG spend about 30 minutes on both sides of the border post in contrast to an average of two days for trucks that are not in possession of a single regional transit customs bond guarantee. “A three-day delay in clearing a transit truck at a border post added USD 1,500 to the cost of doing business,” said COMESA Secretary General Sindiso Ngwenya.

“The implementation of the RCTG aided by a virtual trade facilitation system that integrates all trade documents and different customs authorities in real time on the basis of a single sign would significantly reduce trade costs and enhance the competitiveness of economies,” he added.

The COMESA regional bonds scheme has so far generated premium incomes of over USD 600,000 from sureties covering 194 clearing and forwarding agents across the three East African countries. It was fixed at 0.5% — a reduction from the initial 0.75%.

The RCTG was introduced in 2012 on the Northern Corridor to ease movement of goods from 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 embarked on a similar process, accommodating both small operators and big businesses.

The scheme will also be rolled out in the Central corridor, which covers Tanzania, Burundi and DRC. However the North-South Corridor countries are still held back by key member states like Zambia not ratifying the RCTG agreement. The Ethiopia-Djibouti corridor is still experiencing challenges relating to the sharing of premiums on RCTG bonds.

We believe that the advent of the COMESA bond scheme is another good step towards improving the ease and lowering the costs of doing business between COMESA member states. This is borne out by the clear benefits which are being witnessed in countries such as Rwanda, Kenya and Uganda with the lowering of transit times and costs. As we have opined before, improvements in regional trade will go a long way towards ensuring sustainable economic growth in SSA and we welcome Tanzania’s move to implement the customs seals.