Transporters along the Northern Corridor could cut the cost of ferrying goods by more than half if countries adopt a global transit clearance regime.

A report by the International Road Transport Union (IRU) shows that the system of using national insurance bond and cash guarantees or the Single Customs Territory could be causing congestion at ports of entry contributing to revenue losses due to the high cost of clearing goods.

IRU, whose members include transport associations and chambers of commerce, conducted a study of four transport corridors in the East African Community and the Common Market for Eastern and Southern Africa.

The study undertaken by South African consultant Michael Laurence Fitzmaurice looked at the cost of national bonds, Comesa, Regional Customs Transit Guarantee and the TIR (a French acronym for international transport by road) Carnet.

Though the report shows that transporters use any clearance systems available rather than choose for themselves, it asks countries to adopt a system shared across the borders.

“The system should include optimum features and benefits, with the least possible risk. It must be economical and should offer reductions in the transit time and costs caused by delays in transit regimes,” says the document titled “Transport Costs in East and Southern Africa”.

“It is critical that any proposed system should show the revenue officials evidence of wholesale international usage and advanced systems for monitoring and control.”

On the Northern Corridor which covers Kenya, Uganda and Rwanda, transporters pay an average of $1,320 (Sh132,000) per container as a national bond guarantee, $450 (Sh45,000) under the SCT, and $700 (Sh70,000) under the RCTG.

If global clearing system is used, they would be charged ($45) Sh4,500 for the same container.

“Given the continuing growth in collaboration of different countries bringing the continent together such as Comesa/EAC, it is prudent to consider adopting an approach for managing transit with the objective of Africa and the rest of the world as your market,” William Petty, Head of IRU Regional Committee for Africa told the Nation.

CLEARING TIME
For now, goods produced in a member country using SCT do not require an insurance bond.

If from a third country, importers either pay duty for the goods once they arrive in Mombasa or the cargo is moved through a warehousing bond which importers must buy and defer paying duty.

The report shows that traders prefer warehousing because they do not always have ready cash to pay for goods at the port.

In fact, the system allows for possible revenue leakages should the containers be diverted.

Mombasa, which handles 1.1 million containers annually, is congested largely because of the demand that importers pay for goods they haven’t seen.

Elsewhere, countries use the TIR, a system that transporters use to move goods without necessarily paying duty first.

They only buy a document called TIR Carnet and their goods are guaranteed by the international chain managed by IRU.

IRU says the SCT is helping reduce clearing time for goods, but it is only advantageous if one has ready cash, meaning Kenya Revenue Authority may delay goods at the port or track them on the corridor to prevent diversion.

Under TIR, when a data entry is made at the departure point, the information is shared across the route electronically.