The port of Mombasa has now fully adopted a regional guarantee scheme for cargo cleared at the facility as partner states of the East African Community moved to seal tax leaks and improve efficiency through a seamless trade platform.
Starting February 1, all maritime products cleared under the Single Customs Territory (SCT) and the Transit Regime are now only secured by the Regional Customs Transit Guarantee (RCTG) instead of the previous National Transit Bond (CB8).
This follows a directive by the Kenya Revenue Authority (KRA) that targets to reap the full benefits of the SCT platform.
Kenya is a key gateway to the region as the Mombasa port handles imports such as fuel and consumer goods for Uganda, Burundi, Rwanda, South Sudan, the Democratic Republic of Congo and Somalia as well as exports such as tea and coffee from the region.
A customs transit guarantee scheme ensures that customs officials in a transit country receive proper payment for dues and duties for any goods moved through their territory.
Typically any person importing goods must deposit a security in form of cash, insurance bond or bank guarantee to cover for payment of custom duties or other charges due on the goods in every transit country in case the goods in transit are short landed or diverted for consumption in the country of transit.
The issue of depositing cash or lodging an insurance bond or bank guarantee at each country of transit has been criticised as serious drawback to trade because it’s costly as a result of the premium rates, bank charges and bond fees.
The national transit bond system has also been criticised for tying down huge sums of money and financial assets deposited in different countries and leading to delays at border crossing points as traders look for bonds, hence longer vehicle turn-around and transit times.
A regional scheme improves efficiency in customs operations, handing relief to traders and shippers.
Member states of the Common Market of Eastern and Southern Africa (Comesa) already have the Regional Customs Transit Guarantee scheme commonly known as RCTG Carnet or Comesa Carnet.
Statistics show that the implementation of the RCTG Carnet more than five years ago has helped reduce the cost of transit trade and transport between 10-15 per cent and enhanced competitiveness through the expansion of regional and global trade.
Trade in East Africa has become increasingly seamless following the adoption of the single customs territory.
Under the SCT deal that began in 2014, clearing agents within EAC have been granted rights to relocate and carry out their duties in any of the partner states as part of a strategy to improve flow of goods and curb dumping.
Kenya, Rwanda and Uganda were the first to take up the SCT arrangement starting April 1, 2014, with Tanzania joining the scheme two months later.
Besides the SCT and RCTG, Kenya, Rwanda and Uganda have also adopted a joint electronic cargo tracking system to bolster the fight against dumping of cargo on transit.
KRA commissioner-general John Njiraini said the regional cargo tracking system would enable the three countries to seamlessly monitor cargo from Mombasa to Kigali and eventually Juba, curbing revenue leaks.
“This approach will remove the opportunities presently exploited by crooks at the changeover of seals at border points by requiring affixation of only one seal to be disarmed on arrival at destination,” he said.
The three countries at a meeting in Mombasa on January 16 agreed to establish joint enforcement teams to police transit cargo operations, besides other actions including the centralisation of transit cargo clearance at the Kilindini port.
The tracking system comprises satellites, a central monitoring centre and special electronic seals fitted on cargo containers and trucks, which give the precise location of goods in real time.
The system triggers an alarm whenever there is diversion from the designated route, an unusually long stopover or when someone attempts to open a container.
Besides curbing theft of cargo, the system also helps to seal loopholes that cause the country losses in revenue through suspected under-declaration of the value of exports or theft of cargo.
“The new system’s key strength is that unlike presently, the three Northern Corridor countries shall use one system and one platform, with seamless visibility from Mombasa to Kigali and eventually Juba,” Mr Njiraini said.
KRA in its recently launched sixth strategic plan for 2015-2018 banks on the implementation of the electronic cargo tracking system to help minimise revenue leaks due to diversion of cargo.
Kenya introduced the system in July 2009 as it intensified its purge against dumping of transit goods in the local market.