Traders in landlocked states in East Africa are pushing for a single customs bond guarantee scheme for the whole region amid concerns that high cost of complying with Kenyan and Tanzanian laws have raised their cost of production.
While the region operates as a single customs territory, Tanzania does not recognise the Common Market for Eastern and Southern Africa (Comesa) Customs Bond Guarantee Scheme which shippers execute at the Mombasa port to move goods through Kenya, Uganda, Burundi, Rwanda and South Sudan.
Tanzania is the only East Africa Community (EAC) state that does not belong to the Comesa trading bloc, having opted to integrate its market with Southern Africa Development Community countries.
That means a trader who orders goods through Dar es Salam will have to execute a Tanzanian security bond then revert to either national or Comesa one after crossing the border.
“Manufacturing in a landlocked country that imports nearly everything through Kenya or Tanzania is a real challenge,” said Mr Salim Somji, chairman of Burundi-based Siphar S.A, a pharmaceutical manufacturer.
“When everyone is thinking of competing in the expanded EAC market, we can only think of competing in other landlocked states of the region.”
Regional customs bond guarantees ensure that the government is able to recover duties and taxes from the guarantors should the goods in transit be illegally disposed of for home consumption in the country of transit.
While Comesa bond is more expensive, with its value being at 0.5 per cent of goods on transit, traders say it is efficient.
The national guarantee schemes, which cost as low as 0.2 per cent of the cargo value, must be executed at every border point, causing delays.
To cut cost of imports for landlocked countries, traders say the EAC bloc needs to come up with a regional bond scheme that incorporates Tanzania.
“We prefer a single regional bond being executed at the port of entry instead of several national security bonds,” said Mr Businge Rwabwogo, general manager in charge of operations at Kampala-based Mukwano Group of Companies, a firm which ships in between 200 to 250 containers of raw materials per month through Mombasa port.
At a recent media tour organised by the EAC and German agency GIZ, traders asked the shipping lines to take cue from governments “which allow us to move goods on the strength of bonds” and stop demanding cash deposit on containers.
They also accused Kenya of charging $200 (Sh20,000) as toll charges on EAC registered trucks and a lesser $100 on Kenyan vehicles.
Kenya and Tanzania, the traders said, are fond of erecting roadblocks that slow cargo movement every time shippers lobby successfully for a weighbridge to be removed.
Overall, says Mr Rwabwogo, it costs $4,800 to move a 40ft container from Dar to Kampala and only $2700 from Mombasa to Kampala due to efficiencies on the Kenyan corridor.