RRA upbeat on implementation of Customs Union

Rwanda still stands to gain tremendously from implementation of the East African Community (EAC) Customs Union, despite the effects of global financial crisis on EAC economies at the beginning of the year, officials have said. The country started the implementation of the Common External Tariff (CET) under the Customs Union in July, a period when EAC economies were being hit hard by external shocks of the crisis. 
Magerwa warehouse (File photo)
Magerwa warehouse (File photo)

Rwanda still stands to gain tremendously from implementation of the East African Community (EAC) Customs Union, despite the effects of global financial crisis on EAC economies at the beginning of the year, officials have said.

The country started the implementation of the Common External Tariff (CET) under the Customs Union in July, a period when EAC economies were being hit hard by external shocks of the crisis. 

Of the five Partner States, earlier this year (March), Tanzania was most hit by the financial crisis recording a domestic revenue fall of $192 million. 

Rwanda’s greatest trading partners, Kenya registered a revenue loss of $180 million for the period of July 2008-March this year while Uganda’ was largely affected by inflation which rose to 12.4 percent in May. 

However,  in Rwanda officials have said it is to early to determine the loss, the Rwanda Revenue Authority (RRA) is optimistic the country stands to gain a lot from the implementation of the EAC CET.

“It is still early to look at figures. There were a lot of issues at the beginning including the financial crisis which had its own effects,” Eugene Torero, the Commissioner General in charge of Customs, RRA told Business Times on Monday.

Torero also observed that his institution is confident about the gains from implementation of the regional economic bloc.

“We do not have any second thoughts! The next six months will be a good indicator of what is happening. Business is expected to thrive under the Customs Union,” he said.

“It takes 3 months for most goods ordered from abroad to arrive in the country. By the end of the year we expect to see tangible benefits,” he added.

The EAC (CET) attracts a three band structure that attracts 25 percent on finished goods from outside the community, 10 percent, semi finished and 0 percent on raw materials.

Rwanda has projected a revenue loss of Rwf12.2 billion as it joins the Customs Union though the loss is being compensated by the COMESA compensation fund.

Recently, the Ministry of Finance received Rwf 8.8 billion from COMESA to counterbalance projected revenue losses incurred.

The payment constitutes an advancement of 65 percent of the total estimated revenue loss to Rwanda which is Euros 15.9 million.

Statistics show that Rwanda’s customs revenue collection as the main revenue earner has significantly reduced from 52 percent in 2001 to 37.5 percent in 2008, largely due to implementation of regional trade agreements including COMESA Free Trade Area. The implementation of the Customs Union is expected to lead to a fully fledged phase in January 2010.

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