East Africa: Remove Hurdles to Trade, Tanzania Urged

The barriers, according to members of the East African Business Council (EABC), include delays in clearing goods in Tanzania, corruption and theft of goods at the Dar es Salaam Port, high fees charged by some regulatory agencies, an influx of substandard goods and value-added tax (VAT) charged on ancillary services on goods.

Moreover, different standards by quality assurance agencies within the region also impede trade.

"Let's find solutions to the challenges to make our integration fruitful," EABC vice chairman Felix Mosha said at a Public-Private Dialogue (PPD).

The one-day event organised by EABC, the East African Community (EAC), Trademark East Africa (TMEA) and the Tanzania Private Sector Foundation (TPSF) brought together officials from the Tanzania Revenue Authority (TRA), Tanzania Bureau of Standards (TBS), Tanzania Food and Drugs Authority (TFDA) and Tanzania Ports Authority (TPA) to interact with regional businesses.

According to the chairman of the Uganda Clearing Industry and Forwarding Association (UCIFA), Mr Kassim Omar, cargo theft at the Dar es Salaam Port, execution of single customs territory (SCT) and issues on trading across the border need to be addressed.

Indeed, according to 2016 World Bank Report on Ease of Doing Business Tanzania's worst performance was on trading across borders where it ranked number 180 out of 189 countries.

Tanzania was also worst performer amongst the five-EAC Partner States on trading across borders.

Trading across borders records the time and cost associated with the logistical process of exporting and importing goods.

Tanzania performance is evidence of the challenges that businesses faced when involve on import/export in the country, says Mr Kassim, who is also the EABC vice chairman for Uganda chapter.

For instance, he says in average clearing of goods in Tanzania takes average 10 days while in Rwanda the same assignment takes a maximum of three days.

"The long time of clearing cargo in Tanzania is attributed to complicated documentary and compliance activities as business persons require 10 documents to import or export to Tanzania without them it is impossible to clear goods" Mr Omar explains.

He argues that these 10 documents attract different costs estimated to be double of the average costs incurred in other sub-Saharan countries. "As if that is not enough, delays and challenges linked to documentary and border compliance has bred corruption in varied trade facilitation agencies" he says.

Tanzania Revenue Authority (TRA) says clearance of goods at the moment takes fewer days expect in isolated cases.

"It currently takes a maximum of 3 days for the clearance process to be complete except under the isolated cases where the importer fails to adhere to procedures," said a senior TRA official who was speaking on behalf of the tax body's commissioner for customs and excise duties, Mr Jocktan Kyamuhanga.

Mr Kassim said Tanzania should also walk on the footsteps of other EAC members by not charging VAT on auxiliary services levied on goods in transit.

He said doing so was against the Article 15 of National Treatment of EAC Customs Union Protocol.

However, TRA strongly opposed the claim that the drop in the flow of cargo at Dar es Salaam port was attributed to the introduction of the VAT in question.

"The 15 per cent decrease in the amount of cargo is due to other factors and not VAT as claimed," a TRA representative noted, adding that Mombasa Port doesn't levy VAT but its cargo has gone down by 25 per cent.

There was also discriminatory excise duty on local content in cigarettes, fruit juice and wines in Tanzania. This is making same imported products from EAC Partner States to Tanzania attracting higher excise duty than same domestic products, Mr Kassim notes.

Discriminatory Taxes between domestic and imported products from EAC Partner States is against Article 15 on National Treatment of EAC Customs Union Protocol which prohibits EAC Partner States from enacting legislation or applying administrative measurers which directly or indirectly discriminate against the same or like products of other Partner States

This issue especially on cigarettes has been frequently reported as one of non-tariff barriers (NTBs) but Tanzania is accused for putting it in its budget and finance Act.

There has been different interpretations and application of the new EAC Rules of Origin, 2015 that came into force in January 2015

Some products especially all-edible oils manufactured in the EAC region by using wholly obtained raw materials are denied Community Preferential Tariff Treatment of zero percent import duty instead of edible oils manufactured from imported crude oils outside EAC.

"Some competent authorizes are still issuing old EAC Certificate of Origin basing on previous EAC Rules of Origin which was repelled in January 2015 and it brings frustration to businesses at the borders" Mr Kassim says.

Unlike other EAC partner states, Tanzania has been slow in implementing aSingle Customs Territory.

TRA officers for export joint verification and release at inland container depots are not always on duty, he explains, adding that early closing hours of TRA (3.00pm) in Nairobi frustrate traders.

Inadequate number of TRA Staff posted in other EAC Partner States to every export point from those countries to Tanzania, is also highlighted as among the challenges for trade enabling.

Non-mutual recognition of clearing agents from other EAC countries by TRA (cumbersome requirements for licensing) as other EAC clearing agents find difficult to access TRA system due to long process of getting pass words.

There have been recent complaints over loss of cargo at the Port of Dar es Salaam. The high number of cases of lost cargo at the port's ICDs led to the suspension of scores of clearing and freight forwarding agencies.

This situation had a negative impact on shipping agencies in Tanzania as it scared off many business people who opted to use alternative routes

"When cargo trucks enter into the Port, transporters are told that a system cannot read the number plates of trucks because of lack of Internet connection and trucks wait up two days, Burundi transporters being a case on hand" Mr Kassim says.

The businesses also raised the issue of slow progress in linking TPA to the Tanzania Customs Integrated System system for collection of taxes and 24/7 banking services to TPA.

Responding, to the business community's concerns, TPA director general Deusdedit Kakoko vowed to tackle bureaucracy, corruption, delays and theft of cargo at the Dar es Salaam port within the next two months.

Mr Kakoko divulged that a crew of IT professionals specializing in ports operations will deploy a customized surveillance and monitoring system as part of solution for the identified challenges at the port.

"I hope that by September this year, the surveillance system will be in place, bringing to an end all the logistical woes that apparently to be driving more and more TPA customers to the neighboring ports of Mombasa in Kenya, Beira in Mozambique and Durban in South Africa" he explains.

The deputy minister for Foreign Affairs and East African Cooperation, Dr Susan Kolimba, assured the EAC businesses that Tanzania would continue addressing all obstacles that seem to be frustrating intra-EAC trade.

Source: The Citizen