Cargo containers at the port of Mombasa where Rwanda imports come
through. Rwanda plans to fully automate clearance of exports and imports
as it seeks to boost domestic revenue collection. PHOTO | FILE | NMG
Kigali plans to fully automate clearance of exports and imports
as it seeks to boost domestic revenue collection and significantly cut
cargo clearance time, thus reducing international trade costs and
increase the flow of taxable goods.
The move comes at a
time when Rwanda is under pressure to boost its domestic revenue
collection to finance its budget deficit, estimated at 4.9 per cent of
GDP — as foreign aid falls.
As part of the new tax
administration measures, the Rwanda Revenue Authority announced that
Customs advance decisions — data Customs official use to arrive at
tariffs is to be automated — can be provided at the request of the
trader at any time.
Automation saves clearing agents
time spent searching for the information to verify that the tariffs
Customs officials arrived at are correct.
Furthermore,
the RRA is also to fully automate the Authorised Economic Operators
(AEO), programme conceived by the Commissioners of Customs of the East
African Community in 2006.
Under this programme, compliant traders are given AEO status, which means they are low risk companies and trusted by Customs.
Fewer controls
According to
experts, this implies that Customs can handle the consignments of such
companies using fewer controls. That way, the EO programme becomes an
instrument for growing compliance.
However, the
beneficiaries of the programme are compelled to present their AEO status
papers in other countries in the region for vetting if they are to be
accorded preferential treatment.
At the Kigali
International Airport, a cargo community system, that facilitates
verification of consignments using a single portal for all agencies is
to be introduced, doing away with multiple checks for security, clearing
agents, cargo handling personnel, standards body and Customs subject to
cargo.
Other plans
Also
planned is a single e-portal for traders to interact with the trade
agencies. The current practice is for traders to seek export application
and licensing of commodities from multiple agencies.
These
tax administrative measures, according to experts, could further cut
the average clearing time for imports through Customs to less than a
day, from 34 hours to one-and-a-half half days in 2014.
The export clearance times could also fall from 34 hours or 1.5 days, to less than 12 hours.
“These
projects will enable RRA to establish a true paperless trade
environment in Rwanda. It will enhance its ability to network globally
with other Customs administrations and the trading community,” said
Patience Mutesi, TradeMark EastAfrica's Rwanda country manager.
TradeMark
East Africa is to invest $1.57 million (Rwf1.4 billion) in the next
four years to upgrade Rwanda’s Electronic Single Window and Authorised
Economic Operator Programme to ensure that the trade environment in
Rwanda becomes more competitive and attractive to investors from around
the world.
“This programme will improve our
international traders’ access to better services from RRA, improves
transparency and reduce their cost of doing business in the country.
“TradeMark
is glad to be associated with RRA in this initiative and we shall also
provide technical support to the programme where necessary,” said Ms
Mutesi.
The earlier automation through the rollout of
the Rwanda Electronic Single Window (ReSW) and Authorised Economic
Operators project has been a boon to the Rwanda economy.
An
independent evaluation of ReSW, which was commissioned by TradeMark in
2016, shows that the Rwanda economy could save from $15 million-$20
million annually if the economic benefit of time savings in clearance
and the reduction of cargo clearance costs is factored in.
High costs
However,
despite the early gains of automation, trade experts say micro and
small business exporting and importing goods still face high costs and
spend longer hours at Customs.
While the 2019 World
Bank Doing Business Survey ranks Rwanda among the economies that have
for years been consistently improving the business environment through
regulation, it scored poorly in the facilitation of cross-border trade.
According
to the survey, Rwanda ranked 88 out of 190 countries surveyed. The
report says traders spend $696 on import and export documentation and
compliance with Customs rules.
The traders also have to wait five days before a consignment is delivered at the ports of Mombasa and Dar es Salaam.
These
delays, say experts, translate into increased costs in the form of
parking fees, demurrage, warehousing rent and storage and other related
costs.
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