EAC 

Monday, February 10, 2014 

Teething problems for Single Customs

The tripartite Single Customs Territory came into force this month together with other East African Community projects like use of National Identification Cards to cross borders and the single tourist visa.

However, according to Gerald Mukubu, head of advocacy at the Private Sector Federation, there are still a number of technical glitches affecting both the Rwandan and Ugandan clearing agents at the Mombasa port.  East African Business Week caught up with him and below are the excerpts from the interview.

Question: What are some of the challenges being faced in implementing the Single Customs Territory along the northern corridor?

Answer: It has been a very crucial period for our freight forwarders whereby the three heads of state of Kenya, Uganda and Rwanda agreed to have all Non-Tariff Barriers eliminated. 

However, the clearing agents have been facing some small technical challenges which has led to them having delays and cash flow problems.

In fact, there have been delays in getting port clearance passes for the Rwandan clearing agents from the Kenya Ports Authority which means that very few have opened offices at the port but after the meeting we had with them last week, the authorities said they would look into the matter and very soon the agents would be ready to start since they all fulfilled the requirements.

That aside, there is a Rwandan clearing agent there I know who has also been experiencing challenges of paying container deposits of $2,500 per container to the shipping lines, container cleaning charges of $80 and transit charges which are just too much for him.

He paid $20,000 in container deposits in November last year and up to last week when he was refunded, he had cash flow problems.

As for the transit charge, the agents were complaining why they have to pay for it as we are in a single territory.

At the end of the day, the agent loses out when being refunded as the charges are first deducted and the balance refunded in Kenya shillings which also makes them lose out on foreign exchange.

Why do the shipping lines charge the high container deposit and is it only charged it to Rwandan and Ugandan freight forwarders?

The container charges are there, because some importers sometimes don’t bring back the containers or bring them when they are very dirty.

The charges were there even before the implementation of the Single Customs Territory and the clearing agents normally pass the fee onto the importers.

The Kenyan agents also pay the fees, but those who don’t pay were found to own some of the shipping lines and at the same time are clearing agents.

However, according to the European Union regulation, one is not allowed to be a shipper at the same time a clearing agent which has made others not to pay the charges on amicable grounds since they have worked together for a long time and know each other.

So what needs to be done to solve these challenges?

We sent a delegation to Mombasa of clearing agents to Mombasa to join their Ugandan and Burundian counter-parts last week and they met the Kenya Ports Authority officials and some of the shipping lines.

The agreement was that there should be harmonization of the practices so that the agents can all compete favorably.

However, the shipping lines said reduction of the container deposits will take some time.

The forums with the various stakeholders are going to continue where we shall discuss more on how to remove these barriers.

In spite of the challenges, what are the benefits that importers have got from the project?

The reaction from the traders has been positive, because the weighbridges and the number of stops have been reduced.

I am sure we are seeing an increase in trade volumes and revenue along the northern corridor.

When do you think the Single Customs Territory will be fully implemented?

Since this is a good initiative for us, we are looking at also engaging Burundi and Tanzania more since they have been complaining of exclusion from the agreements.

It’s not only supposed to be implemented along the northern corridor but also along the central corridor but the two countries have been very slow in coming for the discussions thus the exclusion.

 Once every country in the East African Community is on board, we will be able to talk about the fully fledged Single Customs Territory.

By EABW, Monday, February 10th, 2014