KENYA – 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.