Cranes load containers at the port of Mombasa in March 2012. Technology has changed a lot since then. (Photo/ Flickr/ Fredrick Onyango)

Uganda’s Customs Hack: Technology Delivers Big Gains In Trade

LANDLOCKED countries have to struggle with the logistic challenge of getting goods in and out of the country, and Uganda is no different.

Uganda uses the ports of Mombasa in Kenya and Dar-es-Salaam in Tanzania to transport cargo; the bulk of it going through the former.

The 950km distance from Mombasa to the Malaba border post on the Kenya-Uganda border should take 12 hours by road. However, delays, unscheduled stops and non-tariff barriers meant that cargo heading to Uganda would take up to three weeks from entering port until final clearance, data from 2013 shows.

Unscrupulous traders took advantage of the situation and dumped or diverted cargo.

Enter a new electronic customs management system, championed by Trademark East Africa and implemented by the Uganda Revenue Authority (URA).

The system comprises three parts. First is a web-based customs management system developed by the United Nations Conference for Trade and Development (UNCTAD).

SENT DIRECTLY

The system allows manifest and cargo information to be sent directly to the border posts when ships dock in Mombasa. It is integrated with Kenya’s own online tax management system, which means that customs officials at the border crossings on both sides already have the information they need to wave the truck through.

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It eliminates the need for multiple data entries – the biggest logistical nightmare for cross border trade in Africa.

Data from the UN’s Economic Commission for Africa (UNECA) shows that in most African countries, there are two sets of documents to be filled on either side of a border, which means that the average customs transaction involves 20–30 different parties, 40 documents, 200 data elements (30 of which repeated at least 30 times), and the rekeying of 60-70% of all data at least once.

The second element of Uganda’s customs enhancement project is developing a system of accredited importers and exporters who get preferential treatment in moving goods because they have proven compliance with the tax authorities.

AUTOMATIC RENEWAL

They get automatic renewal of customs agency licenses, and reduces the need for physical examination of goods over and over again.

The third element is an electronic cargo tracking system, which enables electronic monitoring of cargo in transit and is designed to ensure that the cargo is not diverted. It uses Global Positioning System (GPS) data that provides co-ordinates to give cargo location on the map.

A command center that tracks over 15000 trucks annually, is housed at URA with satellite response centers set up at designated points in the country.

The system means that Uganda customs’ charges can be assessed at the port of entry and paid prior to the arrival of goods at the borders, thus eliminating dual handling.

THE SAVINGS

Data from Trademark East Africa indicates that this has reduced average clearance time of  fuel imports at the Malaba/Busia border points from 3 days to 8 hours; a reduction in multiple customs declarations by 90%; and total elimination of transit bonds (bank guarantees for cargo). The total estimated savings from these results is in the region of $373 million per annum.

The time of transit from Mombasa to Uganda has dropped from 21 days to just 4 days, boosting market competitiveness and lowering the cost of doing business.

That means that fuel importers like Vivo Energy have been able to invest the savings in expanding their business; Vivo Energy recently completed the construction of a depot with a 10 million litre fuel storage capacity. This is enough for 16 days continuous supply of petrol, diesel and kerosene, plus 21 days supply of aviation fuel in Uganda.

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