By James Karuhanga
Delays in clearing goods, corruption and theft at the Port of
Dar-es-Salaam in Tanzania, and high fees charged by some regulatory
agencies continue to hurt trade along the Central Corridor, officials
have said.
Members of the East African Business Council (EABC) brought the matter
up during a Public-Private Dialogue (PPD) in Dar-es-Salaam last week.
Traders also complained about value added tax (VAT) charged on auxiliary services levied on goods on transit.
Omar Kassim, chairperson of Uganda Clearing Industry and Forwarding
Association (UCIFA), said the issues need to be addressed to ease doing
business.
Kassim, who is also EABC vice-chairperson for Uganda, said, for
instance, clearing of goods in Tanzania takes 10 days on average, while
in Rwanda the same task takes a maximum of three-days.
“Long clearing time in Tanzania is attributed to complicated
documentation and compliance activities as businesspersons require 10
documents to import or export to Tanzania,” Kassim said.
Various documents, he argued, attract different costs estimated to be
double the average costs incurred in other sub-Saharan countries.
“As if that is not enough, delays and challenges linked to documentation
and border compliance has bred corruption among trade facilitation
agencies,” Kassim said.
According to Tanzania’s VAT Act 2014, supply of international transport
services is zero-rated regardless of who the supplier is. Eighteen per
cent VAT is applicable to additional services such as cargo inspection,
preparation of customs documentation, container handling and storage.
Sources say for goods in transit to qualify for to zero-rate, the
services must have a road consignment note of respective goods, copies
of customs documents, among others.
The challenges are not completely new.
The 2016 World Bank’s Ease of Doing Business ranked Tanzania on trading
across borders at number 180, out of 189 economies. Tanzania is worst
performer in EAC on trading across borders; due to lengthy time and cost
associated with the logistical process of exporting and importing
goods.
“We need to put our hands together in finding solutions to the existing
challenges if we are to make our integration fruitful,” said EABC
vice-chairperson Felix Mosha.
However, Tanzania Revenue Authority (TRA) says clearance of goods at the moment takes fewer days “except in isolated cases.”
Jocktan Kyamuhanga, a senior TRA official, said: “It currently takes a
maximum of three days for the clearance process to be complete except
for isolated cases where the importer fails to adhere to procedures.”
According to Kassim, Tanzania should – like other EAC partner states –
not charge VAT on auxiliary services levied on goods in transit.
The clause says no partner state shall impose, directly or indirectly,
on the products of other partner states any internal taxation of any
kind in excess of that imposed, directly or indirectly, on similar
domestic products.
Traders say there is discriminatory excise duty on local content in
cigarettes, fruit juice and wines in Tanzania, and this is making same
imported products from partner states to Tanzania attract higher excise
duty than similar domestic products.
Discriminatory taxes between domestic and imported products from EAC are
against Article 15 that prohibits EAC partner states from enacting
legislation or applying administrative measurers that directly or
indirectly discriminate against the same or like products of other
partner states.
The issue, particularly on cigarettes is often reported as a non-tariff
barrier (NTB) but Tanzania is accused for putting it in its budget and
finance Act.
Commenting on the matter yesterday, Jesca Eriyo, EAC deputy
secretary-general (productive and social sectors), said the bloc made
strides in terms of trade and customs procedures since the Customs Union
Protocol was signed in 2014.
The protocol demands that partner states ease procedures at ports, on
roads and immigration procedures to enable smoother facilitation of
people and trade across borders.
Eriyo said: “This, however, still has few challenges because our
countries have their own rules besides other EAC rules. Implementation
is still a challenge. It is not possible to resolve all issues at ago
but we have forums where business people sit together and voice key
challenges.
“There are certain applications that are not proper and I think these
types of discussions held between our private sector and regional
governments are good. And I hope such applications can be relaxed.”
Besides corruption, divergent interpretations and application of new EAC
Rules of Origin, which came into force in January 2015 is also an
issue.
“Some competent authorities are still issuing old EAC Certificate of
Origin basing on previous EAC Rules of Origin. It brings frustration to
businesses at the borders,” Kassim said.
Eriyo said Tanzania usually takes time to assess issues before making a decision.
“On one hand, it is good because sometimes, in the process of taking
time, they actually do a thorough work. But sometimes delays are
unnecessary. I pray that they should be able to balance between being
thorough and being timely so that we facilitate business in the region,”
she said.
“There are also issues related to corruption and I am happy that now
with President John Magufuli’s administration, there are people who are
finding it difficult. There is optimism.”
Unlike other partner states, Tanzania is also blamed for being slow in implementing the Single Customs Territory.
Cargo theft
Last year, Mineral Supply African Ltd (MSA), Rwanda’s leading exporter
of precious stones, and another shipper, Trading Services Logistics
(TSL), lost minerals worth $2 million (about Rwf1.5 billion) in
Dar-es-Salaam.
The cases of lost cargo at the port’s inland container deports has led
to the suspension of scores of clearing and freight forwarding agencies,
EABC says, a situation that affected shipping agencies in Tanzania as
it scared off businesspersons who opted to use alternative routes.
Kassim said: “When cargo trucks enter a port, transporters are told that
a system cannot read the number plates of trucks because of lack of
Internet connection and trucks wait for up two days.”
The business community raised the issue of slow progress in linking
Tanzania Ports Authority (TPA) to the Tanzania Customs Integrated System
system for collection of taxes and 24/7 banking services to TPA.
TPA director-general Deusdedit Kakoko vowed to tackle bureaucracy, corruption, delays and theft of cargo in Dar.
Eng. Kakoko said a crew of IT professionals specialising in ports
operations will deploy a customised surveillance and monitoring system
as part of solution for the identified challenges at the port.
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