KIGALI, Rwanda – Better customs system means higher revenues and better controls, lower trading cost and fewer delays.

This is why reducing transit costs, simplifying customs procedures, and improving national and regional trade environments are of critical importance.

Rwanda Revenue Authority Commissioner for Customs Raphael Tugirumuremyi said this while opening a two days 8th Meeting of Management Committee of the Regional Customs Transit Guarantee (RCTG) Scheme.

The meeting was organized by the Common Market for Eastern and Southern Africa (COMESA) and the Rwanda Revenue Authority in Kigali last week.

The aim was to discuss ways of making the RCTG programme more successful for businesses.

“A landlocked country trade to a large proportion depends upon transportation and this is why high transport costs facing landlocked developing countries have become a far more restrictive barrier to trade for these countries than tariffs,” said Tugirumuremyi .

He said: “Those countries on average pay almost three times higher for transport services than these tariffs, which is why there is a clear correlation between distance and transport costs.”

According to World Bank 1% increase of distance from major markets could result in more than 1% decrease in the volume of external trade.

“That’s why in view of this am pleased to learn that the RCTG scheme which was rolled out in the Northern Corridor countries in December 2011 has achieved the significant progress in the operations of the scheme particularly in the Northern and Central corridors’ countries,” Tugirumuremyi said.

More than 13,000 RCTG general bonds worth over $250million have been instituted and put to use in the movement and clearance of transit goods in the Northern orridor which is very significant.

Following the rollout of the EAC single customs territory a larger number of SME clearing and forwarding agents joined the RCTG scheme and are using the regional bond.

“The fear that the regional bond is only for multi- national and will hurt the business of SMEs has been once again refuted beyond reasonable doubt,” Tugirumuremyi said.

Today many Small and Medium clearing and forwarding agents in Kenya, Uganda and in Rwanda have formed partnerships and are now doing business on the Northern corridor. Such SMEs are vulnerable to challenges because for them, costs associated with challenges are a bigger proportion of turnover than for larger firms.

The RCTG Scheme however still faces some challenges particularly in the application of RCTG MIS system and the interface with the national customs system, the contribution of the various stakeholders plus the challenge of some states not being part of this programme.

Tugirumuremyi said, “Such challenges are part of the terrain and we must however proceed with the operations because we have the capacity to address them as well since failure to do so will only result in the region falling behind from the rest of the world in terms of the regional and international trade.”

“Despite the encouraging progress in the Northern and Central corridor countries, lets us look into the challenges in the implementation of the scheme in other corridors,” he said.

Source: EAST AFRICAN BUSINESS WEEK

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