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.
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.