Psf tmea sct study 2013

Implications of the EAC Single Customs Territory on the Rwandan Private Sector

Supported by TMEA

Kigali, September, 2013

Table of Contents Table of Contents........................................................................................................1 List of Figures ..............................................................................................................2 Executive Summary.....................................................................................................3 1

INTRODUCTION ...................................................................................................7

1.1 Background........................................................................................................... 7 1.2 Rwanda’s trade dynamics and the EAC ................................................................ 8 1.2.1 Merchandise Imports .................................................................................... 9 1.3 Purpose of the study .......................................................................................... 10 1.4 Policy measures for implementation of the EAC Customs Union...................... 10 1.5 The Methodology ............................................................................................... 11 2 The EAC Single Customs Territory (SCT).............................................................. 12 2.1 Strategic drivers for the single customs territory .............................................. 12 2.2 Key stakeholders to the SCT process ................................................................. 13 2.3 The SCT Models .................................................................................................. 13 3 Key issues on the way to EAC SCT ...................................................................... 14 3.1 Policy and institutional aspects of SCT ............................................................... 14 3.2 Rules of Origin and SCT ...................................................................................... 17 4 Fast-tracking SCT: Tripartite agreement ............................................................. 18 5

Implications of SCT for the Private Sector .......................................................... 19

5.1 Potential gains from the EAC SCT....................................................................... 19 5.2 Potential adverse implications of SCT on the trade services businesses........... 21 5.2.1 Snapshot of the market in Rwanda ............................................................ 21 5.2.2 Potential Impact of SCT on the market....................................................... 23 Clearing agents.......................................................................................................... 23 Insurances and banks................................................................................................ 25 Bonded warehousing ................................................................................................ 26 5.2.3 Other concerns ........................................................................................... 26 6 Conclusions ....................................................................................................... 27 7

Recommendations ............................................................................................ 28 7.1.1 7.1.2 7.1.3

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Sequencing the implementation of the recommendations ....................... 29 Needed policy measures............................................................................. 31 Business response to CU and SCT ............................................................... 32

ANNEX I: LIST OF CONTACTED PERSONS .................................................................... 34 ANNEX 2: Bibliography .............................................................................................. 35

List of Figures Figure 1: Phases of EAC Integration .................................................................................... 7 Figure 2: Total Trade Jan-Aug 2011 & 2012........................................................................ 8 Figure 3: Imports Jan-Aug 2011 & 2012 ............................................................................. 9 Figure 4: Exports Jan-Aug 2011 & 2012 .............................................................................. 9 Figure 5: Exports by Rwanda to the EAC........................................................................... 10 Figure 6: The majority of companies are small with a few large players ......................... 22 Figure 7: Insurances dominate the market....................................................................... 23

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Executive Summary Background The five EAC Partner States have taken a decision to move towards a Single Customs Territory and preparatory work is currently underway to pave the way for this forthcoming level of integration. In December 2010 the Summit of EAC Heads of State directed the Council of Ministers to expedite the process towards realising a fully fledged Customs Union including studying the prospects for a Single Customs Territory.

A single customs territory is a key component of the EAC integration roadmap which has remained pending since 2010.

In an effort to implement the Summit Decision a High Level Task Force was created for the respective Partner States to work on the technicalities and the effective attainment of an EAC Single Customs Territory. Building on this momentum, the preparatory phase and related activities geared towards an EAC Single Customs Territory are currently in an advanced stage.

A breakthrough in the process of SCT implementation was a June 2013 meeting of the Heads of State meeting held in Kampala on 25th June where it was agreed that three countries (Rwanda, Kenya and Uganda) expedite partial implementation The full implementation of SCT is expected to generate significant long-term benefits for the Rwandan private sector companies. However, in a transition period until the new procedures are implemented and the companies adjust their business models to new circumstances the SCT could generate additional cost. The first and most obvious impact will be on the companies that provide services to trader such as transporters, forwarding agents, warehousing companies and potentially insurers and banks.

In order to be prepared to represent the interests of Rwandan private sector in the process of SCT implementation, the Rwanda Private Sector Federation (PSF) has develop this research paper. The paper is looking at the process of SCT implementation, explains different models of introduction of SCT and their potential impact on the government finances and Rwandan private sector companies.

The key findings Despite the progress of the EAC integration process, the Community is yet to implement a fully fledged Customs Union and establish a single Customs Territory in between all 3

five member countries. This according to the EAC integration calendar is long overdue as it was supposed to be in place in 2010 preceding the Common Market implementation.

By moving towards the creation of an EAC Single Customs Territory (SCT) the EAC will create a single market that is wide with huge opportunities for the business community.

The EAC Single Customs Territory will assist to level the playing field for the region’s producers by imposing uniform competition policy and law, customs procedures and external tariffs on goods imported from third countries, which should assist the region to advance its economic development and poverty reduction agenda.

Further to this, the single customs territory will promote cross-border investment and serve to attract investment into the region, as the enlarged market with minimal customs clearance formalities, shall be more attractive to investors than the previously small individual national markets. In addition, private sector operators based in the region with cross-border business operations will be able to exploit the comparative and competitive advantages offered by regional business locations, without having to factor in the differences in tariff protection rates, and added business transaction costs arising from customs clearance formalities.

It was also pointed out that small landlocked countries such as Rwanda, face specific challenges in the process of implementation of the Custom Union Protocol and transition to SCT. Some of these challenges include: • • • • •

Increased competition from stronger regional partners; Loss of business at border crossings due to transfer of border control to outside EAC borders; A number of transport NTBs aggravated by the landlocked position of Rwanda; Restrictions to establishing business in EAC countries related to ownership, licensing and standards.

Lack of information on export and business development opportunities in EAC;

Addressing these issues would require balance set of policy measures to assist companies to increase competitiveness in the regional context.

Key recommendations and next steps Based on the findings of this Research Paper and the views shared by the business leaders during the consultative workshop, the following were proposed as potential issues for private sector advocacy: 4

Participation and monitoring of the SCT development 1. Channels must be developed for active contribution of Rwandan business community in the negotiations and implementation that will lead to the putting in place the EAC Single Customs Territory (SCT).

2. Enhancement of the mechanism to monitor and eliminate NTBs, including fast and efficient Dispute Settlement Mechanism (DSM) and establishment of the legally binding mechanism, not only on NTBs, but also EAC laws.

Policies to create business environment conducive to implementation of SCT 3. Harmonization of domestic taxes should be achieved through; Adoption of common domestic laws; Common procedures; codes structures and definitions; common incentive regimes: and, minimum and maximum tax rates in the shortest run with a view to adopting common rates in the long run.

4. Remove the application of Rules of Origin from EAC and work on harmonizing the Tripartite (COMESA-EAC-SADC) Rules of Origin.

5. There is a need to ensure convertibility of all EAC currencies as the Community is yet to attain a monetary union.

Policies to support businesses in transition to SCT 6. A compensatory award committee should be put in place to ensure that all loss suffered by individuals and businesses is satisfactorily attended to.

7. There is a need to put in place an appropriate mechanism to maintain the relevance of the existing clearing agents. One of the solutions could be to that Partner States allow to proportionate shares in the ports on top of sharing staff which would minimize the risks of marginalization.

8. There is a need to ensure equal treatment of business people and firms in the EAC. Rwanda as a landlocked country should ensure that its people and businesses are not discriminated against when the goods are being cleared at the first ports of entry (Mombasa or Dar es salaam). The efforts to ensure this should include a liaison office of PSF or Rwanda Development Board (RDB) being set up to ensure any necessary follow up.

Development of instruments and tools 9. The Partner States should ensure sufficient sharing of information between border agencies, nominating responsible persons for risk analysis profiling, educational/ awareness training, ensuring presence of inspection sheds and scanners at all ports and airports, watching the porous borders as a joint EAC task.

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10. Prioritize trade facilitation especially ports, border and transport issues; IT Interconnectivity of customs systems, etc. Also, there is a need for immediate removal of administrative barriers such as transit fees.

11. A central reference database should be established to serve as a depository of customs and trade information. In the short run, Partner States should review the current systems with a view to having a harmonized system. In the long run, the Community should have a robust IT system in place.

Institutional development in support to SCT 12. There is a need to put in place an appropriate institutional framework to administer the EAC Single Customs Territory by establishment of an EAC Customs Administration.

Infrastructure in support to functioning of SCT 13. Regional infrastructure should be upgraded by improving the main regional corridors and other feeding-in roads, improving the railway system and extending connectivity in line with the EAC Railway Master Plan, upgrading the ports and enhancing their handling capacities as well as liberalizing the aviation sector by open the skies and domesticating EAC regional flights through the implementation of the 5th Freedom by all the EAC Partner States.

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1 INTRODUCTION 1.1

Background

The East African Community (EAC) Partner States of Burundi, Kenya, Rwanda, Tanzania and Uganda are actively engaging on a number of important processes to take the regional integration to the next level. Parallel to continuing implementation of the Common Market Protocol, the Partner States are currently negotiating a Monetary Union and in due course a Political Federation 1 (Figure 1).

Figure 1: Phases of EAC Integration

A number of important developments are currently underway to improve the various features of the EAC common market and establish better relation to other trade regimes in the region. The implementation of the Common Market Protocol is now gaining pace with a number of activities at the EAC and bilateral level where Rwanda institutions are actively engaged. Tripartite discussions/negotiations between the EAC, SADC and COMESA aimed at concluding a Tripartite Free Trade Agreement (TFTA) is guided in Rwanda by the Ministry of Trade (MINICOM). The negotiations are also on the way for an Economic Partnership Agreement (EPAs) aimed at the formation of a free trade area between the EAC and the European Union (EU).

Despite the progress of the EAC integration process, the member countries are still behind the schedule set by the EAC integration calendar particularly on the implementation of the fully fledged Customs Union and establishing Single Customs Territory (SCT) which was planned to be completed by January 2010.

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“Impact Assessment Study of East African Community Common Market on Rwanda’s Economy”; M.A. Consulting Group-July 2013

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One of the issues repeatedly surfacing in design of different steps towards the full fledged Customs Union is the participation and influence of the private sector on the content and pace of this transition. The process of integration is mainly led by the governments and the EAC regional institutions and the proper private sector consultations about the implications of the SCT and other regional issues have not been always fully followed through.

On the private sector side there are problems as well. Judging by the way their businesses have been evolving in the regional context, the regional integration still looks as a distant prospect. Also the guidance on the how to maximize the benefits and reduce potential cost of the integration for businesses is still scarce in all EAC countries.

For these reasons the present capacity built with the private sector to actively participate in the design and the phasing of the EAC integration process appears to be limited.

1.2

Rwanda’s trade dynamics and the EAC

Overall, between January and August 2012, Rwanda’s total merchandise trade was US$1.71 billion, an increase of 18% over the same period last year. Exports accounted for US$316.3 million and imports US$ 1.39 billion up 33.1%and 15.3% respectively over the first six months of 2011. Rwanda ran a merchandise trade deficit of US$1.08 billion in the first eight months of 2012, an increase of 11% over the same period in 2011 2. The increase in the formal merchandise trade deficit has been slowed by higher export growth over import growth.

Figure 2: Total Trade Jan-Aug 2011 & 2012

Jan - August 2011

Exports (FOB US$) Imports (CIF US$) Balance (US$)

Source: BNR, NAEB & RDB

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Jan - August 2012

237 649 913 316 302 879 33.10% 1 209 751 500 1 394 477 762 15.27% -972 101 586.24 -1 078 174 883.53 10.91%

Ministry of Trade Document: Trade Performance Report “January – August, 2012”

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Variance

1.2.1 Merchandise Imports The increase in imports is largely being driven by increased imports of capital goods (up 31%) and to lesser extent intermediary goods (16%) and energy & lubricants (12%).

Imports of consumer goods are up just 4% over the same period in 2011 (table 2).A detailed breakdown of imports by type is provided in Annex 1 of this document.

Figure 3: Imports Jan-Aug 2011 & 2012

Consumer Goods Capital Goods Intermediary Goods Energy And Lubricants TOTAL

Source: BNR Trade Statistics

Jan - August 2011

Jan - August 2012

Variance

364 415 352 299 703 522 342 153 553 203 479 073 1 209 751 500

377 838 766 393 061 312 396 285 791 227 291 893 1 394 477 762

4% 31% 16% 12% 15%

Growth in imports of capital and intermediary goods are commonly associated with growth in investment in productive technology and increased demand for inputs from productive sectors.

Merchandise Exports Rwanda’s merchandise exports have been divided into three groups: traditional exports3; non-traditional exports; and re-exports. Exports from Rwanda’s traditional export sectors were up 7% in up until August 2012 over the same period in 2011 (table 4).However, the strong performance in Rwanda’s non-traditional export sectors and reexports has helped push Rwanda’s export growth up by 33% in 2012. Rwanda’s nontraditional export sectors saw a 142% increase in the first eight months of 2012 over 2011, with exports of approximately US$78 million. Re-exports, up until end of August 2012, were just underUS$44 million, an 84% increase over the same period in 2011.

Figure 4: Exports Jan-Aug 2011 & 2012

Traditional Exports Non-traditional Exports Re-Exports TOTAL Source: BNR Trade Statistics 2012

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Jan - Aug 2011 181 468 356 32 279 526 23 902 032 237 649 913

Jan - Aug 2012 194 282 548 78 033 566 43 986 765 316 302 879

Variance 7.06% 141.74% 84.03% 33.10%

Traditional exports are: Coffee, Tea, Cassiterite, Coltan, Wolframe, and other mineral exports. Non-traditional exports are all other exports outside these product areas that are produced in Rwanda. Re-exports are goods that are not produced in Rwanda but are first imported into Rwanda before being re-exported to third parties.

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The composition of Rwanda’s exports up until August 2012 have shifted somewhat, compared to the same period in 2011. Between January and August 2011, Rwanda’s traditional exports accounted for 76% of total exports with non-traditional exports and re-exports accounting for 14% and 10% of total exports respectively.

Figure 5: Exports by Rwanda to the EAC

Source: International Trade Center (ITC)

1.3

Purpose of the study

The purpose of the research was to assess the meaning of the EAC SCT and its implications, particularly on the Rwandan private sector. The research paper is providing a discussion on known and potential impact of the EAC SCT on Rwandan businesses particularly companies involved in trade services. The proposed recommendations are made to support the private sector interests in the process of implementation of the Tripartite Agreement to introduce SCT between Rwanda, Uganda and Kenya. made in June 2013, as well as formulation of Rwanda’s position during the negotiations process for the full implementation of the SCT beyond the tripartite agreement.

1.4

Policy measures for implementation of the EAC Customs Union

The efforts to ensure that the EAC achieves a fully fledged Customs Union and introduce the Single Customs Territory (SCT) would require the implementation of a number of policy measures such as: Establishing common legal framework; • Establishing common systems and procedures; • Create an interconnected payment system; 10

• •

• • • • •

Harmonize standards for goods moving through the SCT; Customs institutional framework which is either unified at the territorial level or where the sub-territorial customs administrations are interlinked through a central framework; Enabling circulation of goods with no or minimal border controls; Agreed mechanism for collection and sharing of customs revenue; Collection of Customs duties at the first point of entry; Harmonize or approximate domestic tax regimes applicable on crossborder trade; and Non-application of Rules of Origin within the EAC

Most of these policy measures are still in development. As it will be presented in the following chapters, the current policy discussion about the SCT mainly evolve around the selection of the most appropriate customs revenue collection model. There is very little discussion, if at all, about the specific requirements of businesses to smoothen the transition to more competitive environment and the barriers that companies still face in the regional context.

1.5

The Methodology

The research team used both primary and secondary data to gather the relevant information that was appropriately analyzed to present the findings. Three approaches were employed in carrying out the research. First, there was desk review on secondary information mainly sourced from national policy documents and EAC policy documents.

The aim of the desk research was to enable familiarity and understanding in regard to the subject and the relevant processes.

Second, to get informed opinions, information and guidance on undocumented information, consultative workshops were carried out focusing on representatives of companies that had been identified from the private sector. The overall query was on how the EAC SCT will impact on the Rwandan private sector in terms of the anticipated benefits, costs and opportunities of Rwanda’s firms and businesses. In this light, the research focused on the sectors and sub-sectors that are likely to be directly affected.

Third, the research team designed a set of questionnaires targeting businesses in relevant areas that were consulted and conducted targeted interviews with representatives of the companies that provide services to traders. The questionnaires were designed in way that the firms/ business representatives responded by providing 11

information that helped to analyze the expected implications of the EAC SCT on the Rwandan private sector.

2 The EAC Single Customs Territory (SCT) In EAC, the move towards a fully-fledged Customs Union (Single Customs Territory) will mean having free circulation of goods, elimination of internal tariffs, application of a Common External Tariff, free circulation of goods within the region, internal customs border controls, non application of Rules of Origins and removal of non-tariff barriers (NTBs) 4. In a nutshell, the free circulation of goods in a single customs territory presupposes the following: i. A revenue collection system that ensures reconciliation and accountability to enable goods to move from one place to the other; ii. Cessation of Rules of Origin; iii. Agreed mechanism for collection and sharing of customs revenue; iv. Harmonized or approximated domestic tax regimes applicable on cross-border trade; v. Minimal or removal of internal border controls; vi. Improved IT interconnectivity and exchange of information between agencies involved in clearance of goods and collection of taxes; and vii. Shifting the domestic taxation on imports at the time of entry of goods to the point of sale in the importing Partner State.

2.1

Strategic drivers for the single customs territory

There are three key drivers of the necessary for the realization of a fully fledged customs union, combination of which will be vital for EAC single customs territory. These are: i. Legal framework: A strong legal framework is required to give the process direction and aim and to set clear timescales and objectives. The Treaty, the Customs Union Protocol and the East African Community Customs Management Act 2004 constitute the requisite legal framework for the EAC Single Customs Territory.

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“Attainment of a Single Customs Territory in a Fully Fledged Customs Union for the EAC�; M.A. Consulting GroupMarch 2012

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ii. Institutional framework: A set of common institutions since strong central institutions are necessary to drive the process forward and keep an impartial eye on developments. This is what is critically required for the EAC to achieve a single customs territory status particularly in the administration and management of customs. iii. Removal of NTBs: Elimination of identified barriers to trade will need to be done in a gradual sequence. That sequence will need to be debated with the participation of key players such as the private sector.

2.2

Key stakeholders to the SCT process

The process of establishing an EAC Single Customs Territory is inclusive in nature so it is important that all relevant stakeholders have been brought on board. The consultation process is organized through the High Level Task Force established in each EAC country to spearhead the discussions, negotiations and all the related technical work. The Rwanda, High Level Task Force (HLTF) includes, among others; The Ministry of Trade and Industry, The Ministry of EAC Affairs, the Rwanda Revenue Authority (RRA) and the Private Sector Federation (PSF).

2.3

The SCT Models

Implementing the EAC Single Customs Territory (SCT) will require the implementation of a number of policy measures that will have an impact on the business community in the region including Rwanda’s private sector. For the EAC governments the key elements to consider in establishing a Single Customs Territory (SCT) include deciding on a first port of entry for all goods destined to the Community (EAC), developing revenue management systems and models for revenue sharing. In regard to revenue management, there are currently two possible models of Revenue Pooling and Sharing and the Destination Model. Both models have their advantages and the High Level Task Force has been tasked to recommend the best model for the EAC. However, important to note is that, irrespective of which model to be adopted in regard to Revenue Sharing, the EAC Single Customs Territory will have an impact on the Rwandan private sector particularly in terms of lost revenue from customs logistics services, cost and risks of establishing businesses at the outside borders of EAC and gain and loss of trading opportunities. In this respect and pursuant to its mandate, PSF will continue to work with its members and relevant stakeholders to make sure that transition to the SCT is as painless as possible and its dynamics enables the adjustment 13

of the businesses to new conditions. This paper is trying to capture the key issues on the path to the SCT that should form a part of the PSF advocacy programme in the coming period

3 Key issues on the way to EAC SCT The introduction of the SCT has two aspects. First, SCT is a complex legal and institutional issue for the EAC governments as they would need to transfer some of their sovereign functions to the regional level. Second aspects are implications of SCT to the private sector companies where they can have large potential benefits but also lead to a need to costly restructuring and in some cases loss of business, especially in smaller EAC countries.

3.1

Policy and institutional aspects of SCT

There are a number of factors to consider in regard to the preparedness for an EAC SCT. There is a need to determine which SCT model to use, the appropriate policy and legal framework to be put in place and the necessary institutional framework. In response to this it has been decided that a High Level Task Force be established at the regional level and in the respective EAC Partner States to work on the technical modalities and also agree on the best model for the EAC SCT. Revenue management is one of the key areas under a single customs territory whereby Partner States institute an integrated system of collection and pooling of revenue hitherto undertaken by each of the national revenue agencies of the Partner States that form the Customs Union. The revenue management model will determine how and where the revenue will be collected and once the revenue is collected, what would be the revenue sharing system.

According to M.A Consulting Group, a regional revenue collection system is practical and relevant under the EAC Common Market and subsequently Monetary Union 5 for the following reasons: • it reduces the cost of doing business in the region through reduction in clearance costs such as bonds, demurrage and storage charges, transit fees and other related charges; • it increases the turnaround of trucks because of removal of internal borders; 5

“Attainment of a Single Customs Territory in a Fully Fledged Customs Union for the EAC”; M.A. Consulting GroupMarch 2012

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• • • • • •

it facilitates trade hence increasing turnover; it reduces cost of collection of taxes and compliance costs; results in equitable and balanced mutual benefit to the Partner States from the pooled revenues; it improves compliance due to elimination of diversion of goods since they will be duty paid at the first point of entry; it would lead to harmonization of varying tax incentives accorded by each Partner State; It would lead to removal of requirements for Rules of Origin and simplification of customs procedures.

Revenue management Models There are two possible models to consider and the EAC negotiators from the respective Partner States will have to negotiate and agree on which model to adopt for the EAC SCT. The two models are; Revenue Pooling and Sharing and the destination model with two variants.

Revenue Pooling and Sharing: Under this model, all the customs revenue is transferred to a central pool from where it is shared among the Partner States. Perhaps the biggest problem with this model is how to agree on the parameters of determining the quantum of share revenue going to each member. Furthermore, negotiating on the sharing formula can take a very long time.

Sharing pooled revenue can be done on the basis of population, GDP, GDP per capita, or a combination of two or more variables. It should be noted that any revenue sharing model should be a win-win situation which does not leave any partner state worse off than it was before the revenue sharing and pooling was agreed upon 6. If partner states agree to use this model, they should be guided by the principles laid down in the treaty.

Destination model: Under the destination model, duty is paid to the country where imported goods are consumed. The taxable moment for goods under this principle is the point of entry into the customs union. The destination model has two variants: a) Destination Model (1): Duty is collected by the country of entry and then remitted to the country of consumption once the goods are exported; under this variation, measures are necessary to ensure that Customs administrations in the 6

“Attainment of a Single Customs Territory in a Fully Fledged Customs Union for the EAC”; M.A. Consulting GroupMarch 2012

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country of consumption have confidence in the ability of the officers at entry point to correctly assess the duties. Moreover modalities for transfer of revenue from the country of entry to the country of destination are necessary. b) Destination Model (2): Duty is paid directly to the country of consumption and goods are allowed free entry into the Union at the country of first entry. Under this variation, modalities are required to ensure that the country of entry does not lose revenue if goods on which duty has been paid in another country is consumed in the country of entry or a transit country.

Illustration of the “Revenue Management� model and the potentially best option; Destination Model 1

Duty is collected by the country of entry and then remitted to the country of consumption once the goods are exported; under this variation, measures are necessary to ensure that Customs administrations in the country of consumption have confidence in the ability of the officers at entry point to correctly assess the duties. Moreover modalities for transfer of revenue from the country of entry to the country of destination are necessary.

Destination Model 2

Duty is paid directly to the country of consumption and goods are allowed free entry into the Union at the country of first entry. Under this variation, modalities are required to ensure that the country of entry does not lose revenue if goods on which duty has been paid in another country is consumed in the country of entry or a transit country.

Potentially Best Model (Best Option)

The destination model 2, allows the business community to interface with tax administrators of their respective countries. So, this is generally the best option taking into account the fact that the regional institutional framework is not yet strengthened. Partner States should adopt the variation 2 under which the clearance of goods for free circulation in the single market will be declared under the respective regime to which they are to be entered. For now, Customs Administrations at destination states should retain the control over assessment and receiving of taxes.

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3.2

Rules of Origin and SCT

Rules of origin denote the criteria for assigning citizenship of goods. In a REC, rules of origin are used to identify goods that require a discriminative tax treatment. In a customs Union, they are meant to identify goods originating the customs Union so that they can be granted tax free passage in the partner state. Theoretically, once goods enter a single customs territory, they subjected to the CET and this gives them national Status. They no longer require identification when crossing to another Partner State.

In a single customs territory, goods move either from one partner states to the other or they enter the customs territory from a third country. Where the goods enter from a third country, they are subjected to the CET and therefore do not require any rules of origin as they are not expected to undergo any special tax treatment. When these goods are exported to another Partner State, they do not require any rules of origin as they will have undergone the CET. Where originating goods are moved from one partner state to another in a single market, there is no need to prove their origin as they would have been subjected to the CET if at all they had originated from a third country. It is thus urged that rules of origin are not relevant in a single customs territory.

However, because Partner States on their own and indeed customs Unions tend to enter into trading arrangements with other RECS and other Nations, it is correct to argue that rules of origin may not be relevant in a single customs territory to the extent that they refer to trading arrangements between the customs territory and third parties.

When it comes to the application of Rules of Origin in the EAC SCT, there seems to be a debate with opponents and proponents of the idea. It should be noted that, efforts are underway to carry out a study on rules of origin as a results of joint efforts between MINICOM and PSF to address related issues. This study is expected to provide more details on the rules of origin including other related dynamics in the context of the COMESA-EAC-SADC Tripartite FTA and other Trade Agreements. This research paper recommends that the debate should be deliberated on by that forthcoming study.

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4 Fast-tracking SCT: Tripartite agreement In June 2013 at the meeting of Heads of State of Rwanda, Kenya and Uganda in Kampala reached the agreement for the three countries to expedite partial implementation of the following activities : • Operationalize the single customs territory; • Implement Single Tourist visa; • Single identity cards across the region ; • Development of the region pipeline Rwanda was entrusted to coordinate all activities related to single customs territory and single Tourist Visa.

Operating mode of this agreement include: • All importations to Rwanda and Uganda to be declared using pre-arrival and selfassessment declarations; • Duties and Taxes shall be paid and collected in country of destination; • Verification of high risk goods to be consumed in Rwanda and Uganda shall be done at Mombasa; • Low risk consignments shall be cleared at the Port and shall be delivered directly to importers; • No transit guarantee shall be applied to those goods; • Securing cargo from Mombasa to destination country will be done by developing Information exchange and cargo tracking system.

Based on the above agreed roadmap, committees were established at the country and regional level to conduct detailed analysis of the requirements to fast-track the abovementioned activities. The following committee are overseeing operationalization of the tripartite agreement to introduce SCT : 1. Business processes committee; 2. Enforcement committee; 3. ICT related committee 4. Infrastructure and legal committee The composition of the committee from the Rwanda side includes members from government institutions and private sector organisation. On the side of the government MINEAC, RRA, MINICOM and RBS are on the driving seat while for private sector the PSF and ADR are the key implementers.

By the end of August 2013 the SCT implementation has already advanced and included: 18

• • • • • • •

Customs Clearing Process and procedures documented and agreed upon with three countries Uganda, Kenya and Rwanda Customs computers Systems integration moved to testing phase Information meetings with clearing and forwarding agents within the three countries were conducted Office space in Mombasa was secured for Rwandan clearing agents.

All Insurance companies are able to issue Regional acceptable customs bond guarantee Kenya ports Authority computer system integration has entered testing phase Kenya Port Authority opened an office in Rwanda at Insurance plaza and accounts in Rwanda are opened to for depositing ports charges

5 Implications of SCT for the Private Sector In this section we discuss the positive and potential adverse effects of the introduction of the SCT in Rwanda, particularly as a result of the implementation of the tripartite agreement.

5.1

Potential gains from the EAC SCT

The benefits from SCT implementation, although known from other trade blocks, would be demonstrated the best by the successful operationalization of the tripartite agreement between Rwanda, Uganda and Kenya. Once this agreement is fully implemented the advantages will include: • Elimination of the need for Police Road blocks • Reduction of number of customs declarations from 4 to 1.

• Reduction of Customs security Bonds from 3 to 1 for goods destined for Warehousing • Weighing once, since the weighbridge certificate will be recognized along the corridor • Enforcement of EAC Axle Load Legislation of 56 tons weight limit • Fast tracking truck’s drivers clearance process by immigration • Facilitation of staff from Uganda and Rwanda deployed at the port of Mombasa.

• Single lodgement of customs declaration in the country of destination for goods originating outside the three countries and within the territory • Payment of taxes in the destination country to be confirmed before release of the goods from the point of entry.

• Electronic exchange of information • Free movement of labour and removal of work permits for citizens of the three countries

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Other benefits of the agreement will include: • Reduction of Time spent to move along the corridor from 18 days to 5 days from Mombasa to Kampala • Reduction of Time spent to move along the corridor from 21 days to 8 days from Mombasa to Kigali • Reduction of costs associated with clearance of Goods from Mombasa to Kigali or Kampala • Increase of business turnaround time of trucks from the current 1 round trip to 3 per month hence impacting on economic growth/development • Reduction in tax evasion and increase in revenue collections.

Further, the implementation of an EAC SCT would present a number of advantages as well and most business people believe that there are potential gains to count on, under the arrangement. The potential gains highlighted during the consultations with the private sector also include; i. Less border controls in a wider market: The arrangement under the EAC SCT would lessen internal border controls and use of RoOs, since it would not be necessary to test locally produced goods for compliance with origin conferring criteria. Again, strict bond controls would not be required and there would be no need to track consignments to ports of destination. This would also lessen the need for risk management control and post clearance audits. ii. Taking advantage of economies of scale: The EAC SCT is expected to reduce the cost of doing business and as a result promote intra-regional trade and market share of the locally produced products; iii. Increased cross border trade: While encouraging cross border trade and investment the EAC SCT would potentially promote SMEs and informal sector to trade across borders hence stimulating production and trading of agricultural products; and iv. Encouraging faster business transactions: The arrangement would further enhance movement of exports from inland to the ports of exit. This will also be advantageous for the imports as well because as Rwanda is a landlocked country, it would be possible to expedite the process of importing through the regional ports of Mombasa and Dar es Salaam.

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The SCT could further release the comparative advantage of Rwanda in the EAC context as well as increase Rwandan export to EAC. So far the foreign investors have not been attracted to Rwanda in great numbers (Figure 6) mainly because the size of the market, the cost associated with the landlocked country and the barriers to operate inside EAC borders. By lowering transport cost and simplifying customs procedures, Rwanda would further improve its overall doing business ranking, particularly in relation to its EAC partners. This would enable the country to offer to all investors, but particularly those from the region, a safe and productive environment for investing in key export sectors and easier access to EAC markets.

5.2 Potential adverse implications of SCT on the trade services businesses The following sections discusses how the changes arising from introduction of SCT described above will potentially impact businesses as well as other potential unintended consequences of the introduction of the SCT. Regardless of which revenue sharing model that is finally adopted for the whole SCT, there could be short-term negative consequences to the private sector arising from the changing dynamics of how business will be conducted, especially in regard to clearing of goods.

This is particularly relevant for companies in the trade logistics involved customs and goods handeling operations. Key sectors that will likely be affected include clearing agencies, freight forwarders and bonded warehouses. However, other businesses such as bankers and insurers will be also potentially affected.

In addition to less favourable conditions for transfering busininsess in the EAC counties such as Tanzania, the Rwandan companies in trade logistics sectors will have to compete with large regional and international logistics companies with already established businesses in parts and land crossings in the EAC.

5.2.1 Snapshot of the market in Rwanda There are 118 registered clearing agents in Rwanda. Of those 6 are manufacturing or trading companies that RRA allows to act as clearing agent for their own imports, and one is the World Food Program.

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Clearing agents are required to have a minimum standing bond of RwF150Million with an accredited financial institution. Of the 111 registered clearing agents 94% have a standing bond of just RwF150Million. Only 7 companies have a standing bond exceeding the regulatory minimum.

Following RRA records, formal tax-paying employment is little over 1,100. The average clearing agent has 12 employees with an average yearly pay of RwF1.5Million. The figures are however misleading due to the presence of few very large companies. The median company is in fact sizably smaller, with a payroll of 7 and employees paid an average of about RwF1Million per year.

Figure 6: The majority of companies are small with a few large players

Employees Average yearly Wage RwF Mean 12 1,469,606 Median 7 928,048 Min 2 105,000 Max 226 10,968,609 Source: Author’s calculation from RRA records

Interviews with clearing agents indicate that the workforce is educated and supports 5 – 10 family members each, placing the total number of dependants on the sector anywhere between 5,500 and 11,000.

On the other side, the market is dominated by insurance companies, with two large insurance companies capturing 94% of the value of standing bonds. Banks are present in the market but with a smaller exposure as they collectively capture slightly over 1% of the market in value and 3% in volume.

Insurances appear to be granted a comparative advantage in the sector by lighter regulatory requirements. Not being deposit taking institutions, insurances risk taking is not as heavily regulated. While insurance companies charge between 1 and 1.5% of the total exposure as premium, banks tend to require 100% coverage of the exposure.

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Figure 7: Insurances dominate the market

Source: Author’s calculation from RRA records

5.2.2 Potential Impact of SCT on the market As illustrated in previous sections, it is unclear at this stage the form that the SCT will take. In a destination-based model, seamless circulation of goods relies crucially on the presence of an appropriate infrastructure and either compensation funds or regional bonds. Absent these preconditions, partner states will still require bond coverage for transit goods, resulting in no change from the status quo.

Depending on whether only import duties or domestic taxes associated with imports are paid at point of first entry – a point still unresolved in negotiations – transit bond might simply shrink in value. Given the existing market structure, with clearing agents charging a fix amount per guarantee and financial guarantors charging a percentage of the overall exposure, a lower required standing bond would result in a loss in revenue to guarantors but not necessarily to clearing agents.

This section will abstract from such complications, and suppose an arrangement is found for all import related taxes to be paid at point of first entry and clearing infrastructure not to be a concern– the worse case scenario for Rwanda-based clearing agents.

In this case demand for transit bonds, international or domestic, and bonded warehousing will be limited to (i) goods in transit to and from say the DRC, (iii) goods in transit to and from special economic zones, and (iii) for those companies that have reasons not to want to clear imports immediately.

Clearing agents Domestic transit bonds constitute about half of Rwandan clearing agents revenue, with the rest of revenue coming from fees and charges from other border crossing related procedures. Drop in demand would doubtlessly result in the closure of a number of 23

clearing agents, reduced turnover in insurance companies and banks and job losses in the sector.

In the transition to the full SCT operation the small clearing agents with only domestic operations would be hit the hardest. International clearing agents based in Rwanda, on the other hand, revenue would shift from the domestic an international branch. It is difficult for the purpose of this study provide credible data for the full impact on clering agents just for the illustrative purposes let’s suppose that: i. Companies with 10 employees or less would close, ii. Companies employing between 10 and 20 would have to downsize by 50%, iii. Companies employing between 20 and 30 would have to downsize by 30%, iv. All larger ones by 15%; This scenario would lead to approximately 45% of the clearing agent’s employment would be lost – approximately 500 jobs. These skilled and well paying positions; interviews indicate clear signs of concern on whether similar jobs could be found elsewhere due to skilled unemployment. Indicated dependency rate implies that anywhere between 2,500 and 5,000 people could be affected indirectly.

This scenario however is extreme. As argued earlier in the paper, it is unlikely that infrastructure constraints will allow immediate shift of clearance at external borders and uncertain whether collection of domestic taxes on imports will be moved to the domestic tax department. Gradual improvement of infrastructure and slow adoption of new regulation is conversely likely to slow growth in the sector to a stall and eventually lead to its decline.

Interviews with clearing agents indicate concern over the lack clarity on the scope and timing of the reforms. A number indicated willingness to relocate to the ports, where activity should shift. However, Two concerns stand: first, decision to divest must be well informed, and information is scanty. Second, regulations abroad are perceived to skew competition in their disfavour. Interviews report that is currently difficult to obtain working visas and near impossible to set up a business in the coastal countries without a local partner, which in the case of Tanzania would be required to be the majority shareholder.

In order to mitigate the impact on Rwandan clearing agents, it is important that their license is recognized, they are allowed to work and establish a business in the costal countries.

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As an important aside, it must also be noted how business of Rwanda-based clearing agents depends on limited clearing facilities at the Rwanda borders. As investment in upgrading facilities takes place, more and more goods will be cleared upon arrival lowering business volumes for clearing agents.

Taken to the extreme, infrastructure upgrades at the border could yield the same effect as the SCT on Rwanda-based clearing agents. This would be a natural consequence of lowering costs of trade. The large literature on the relationship between trade and economic growth indicates a positive relationship between the two 7, hence one would expect reduced cost of trade to increase economic activity thus compensating for the short run losses.

Insurances and banks Interviews with insurance companies indicate transit bonds to be a profitable part of their business due to its very low claim rate. Reducing premiums – down to 1 - 1.5% from 3% last year – indicate increasing competition among insurance companies.

Exposure to this product for some insurers is sizable, peaking at slightly 12% of gross premiums for the most exposed company. Interviews report that a reduction in business in this sector would have non-negligible effect on insurers’ financial position, however not serious enough to cause any closure.

Exposure of banks is low. Banks hold a minor percentage of the transit bond guarantees, which contributes to an almost negligible share of their turnover. Interviews with bankers however highlighted concerns regarding job losses in the sector, as employees are current clients.

A prominent bank highlighted opportunities coming from the shift in revenue collection.

Leveraging on the new regional payment system financial institutions can gain from the increased number of international transfers.

Neither banks nor insurers are recognized guarantors in other EAC member states, something for which they would need to establish a local subsidiary. Banks however stressed issues related with this. Quoting the COO of a prominent bank “There is a lot I

7

See(De Melo & New Farmer, 2010) for a simple discussion on the topic.

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can do with 10 million USD before I deposit them on an account of the central bank of Kenya as minimum capital requirement to open a branch in Mombasa”.

It is unclear to what extent this applies to insurers and further research on the impact of effective regulations is recommended. If allowed to register and operate in the costal countries banks and insurances could plan ahead to capture part of the business that will shift in that direction thus mitigating the impact on Rwanda’s financial sector.

Bonded warehousing There are two main providers of bonded warehousing in Rwanda, one reports the business to make up to 20% of its turnover, and the other is fully reliant on the service.

In addition, banks report that with the development of the Special Economic Zones substantial investments have been made in bonded warehousing.

There is concern among clearing agents, freight forwarders, bankers and insurers on how the introduction of the SCT will affect the business of bonded warehouses:If all goods are to be cleared upon first point of entry, and transit bonds to disappear, will there still be business in bonded warehousing?

While business volumes could drop should imports all be cleared either at point of first entry or at the borders of Rwanda, it is unlikely that bonded warehouses will become obsolete as bonding services will still be needed for re-exports and not all goods will be cleared either at port of first entry or at the Rwandan border.

5.2.3 Other concerns When discussing the possibility of goods being cleared at point of entry, international freight forwarders raised a number of concerns. This section records them in no particular order.

First, capacity: infrastructure is currently insufficient to sustain clearing of all imports into the EAC at the ports. If clearance at point of entry is enforced without investment in infrastructure, capacity shortages will cause delays, which will increase directly – via increased parking fees – and indirectly – via increased import time – the cost of importing.

Second, paying duties at point of entry and clearing at point of arrival creates issues in the not-too-infrequent case in which only a portion of the consignment is received. If duties are paid on what is believed to be the full consignment and upon clearing at point 26

of arrival it results the consignment is partial, a refund mechanism needs to be put in place, causing more work and delays.

Third, International freight forwarders often pre-finance imports, charging the customer when the good arrives in its bonded warehouse in the destination country; the good is not released by the freight forwarder until the bill is paid. If goods were to be cleared at the point of first entry, there would be no need for them to transit through the freight forwarders’ warehouse making pre-financing of imports a more difficult task.

Finally, removal of internal borders will bring about greater competition among EAC firms at the EAC market. Considering very small exports from Rwanda to EAC, Rwanda chances and indeed the interest to compete at the regional market with large companies from Uganda and Tanzania seems to be small. The National Export Strategy is prioritizing sectors of Tourism, Mining, Coffee and Tea as well as Horticulture and Handicrafts as the key expert sectors in the future. All these sectors have very small exports to EAC and are mainly focusing on the markets in Europe, North America and Asia.

6 Conclusions Generally, in view of the current global trend where trade negotiations are increasingly being carried out under regional blocs, formation of a customs union in East Africa is not a matter of choice but a necessity. It would be difficult for partner states to negotiate a Free Trade Area (FTA) with other regional blocs unless they have liberalized trade among themselves. Due to the multiple memberships of the partner states in other regional organizations, the EAC Customs union could enter into a FTA with other trading blocs, or in the extreme circumstance, merge with them to make a larger trading bloc.

This can further be viewed in light of the current negotiations for the establishment of the COMESA-EAC-SADC Tripartite Free Trade Area (TFTA).

By moving towards the creation of an full EAC Single Customs Territory (SCT) the EAC will create a single market that is wide with huge opportunities for the business community. The EAC Single Customs Territory will assist to level the playing field for the region’s producers by imposing uniform competition policy and law, customs procedures and external tariffs on goods imported from third countries, which should assist the region to advance its economic development and poverty reduction agenda.

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Further to this, the single customs territory will promote cross-border investment and serve to attract investment into the region, as the enlarged market with minimal customs clearance formalities, shall be more attractive to investors than the previously small individual national markets. In addition, Private sector operators based in the region with cross-border business operations will be able to exploit the comparative and competitive advantages offered by regional business locations, without having to factor in the differences in tariff protection rates, and added business transaction costs arising from customs clearance formalities.

In addition to great benefits, the full CU and the SCT will require swift restructuring of the trade logistics businesses in Rwandan to avoid loss of business and employment. In this context, it would be very important that the interests of these businesses are taken into account in parallel to the SCT negotiation process that is currently on the way.

Careful phasing of the SCT introduction linked to a more general progress on removing of trade and other barriers for companies to freely operate at the EAC territory will be needed. These foreign policy measure should be coupled with the domestic policy targeting the affected sectors to avoid otherwise immanent loss of business and employment.

Finally, as much as most of the private sector has general knowledge about the EAC integration process in general and the EAC Single Customs Territory specifically, it is evident that, there is a need to further train the private sectors stakeholder on these issues and more awareness workshops are needed to take the full opportunity of the SCT and even the immediate partial implementation of the tripartite agreement.. In this regard, the concerned government institutions and development partners should enhance efforts and mobilize resources to further the related awareness campaigns.

7 Recommendations For Rwanda’s private sector, there is optimism in terms of EAC integration process.

Already, for the past recent years, there is a general appreciation that the EAC has realized tangible benefits in terms of increased revenue, intra EAC trade, and new investments. Generally, the majority in the private sector, feel that, with deepened integration and free circulation of goods within the EAC, the trade in the Community will be enhance and costs of doing business reduced. The critical issue is the challenges facing its smooth implementation and those that hinder the fulfilment of the ultimate

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goal of deepening integration through increased trade among the EAC countries and increased competitiveness of private sector, both regionally and internationally.

Since Rwanda joined the EAC in 2007 and started implementing the EAC Customs Union in 2009, the implementation of customs union instruments has been progressing well though there are some challenges encountered when implementing some instruments.

All in all, there is a general feeling that the governments in the respective Partner States are working hard and showing commitment to resolve related challenges.

The paper proposes relevant recommendations and an appropriate sequencing of implementation in regard to recommendations that could be implemented in the short term, medium term and long term respectively. The paper also points out the needed policy measures as well as what should be the business response.

7.1.1 Sequencing the implementation of the recommendations Based on the findings of this Research Paper and the views shared by the business leaders during the consultative workshop, the following were proposed as potential issues for private sector advocacy. In regard to sequencing the implementation of the pointed out recommendations, the proposed approach below presents what should be implemented in the short term, the medium term and long term respectively; THE RECOMMENDATIONS TO BE IMPLEMENTED IN THE SHORT TERM Key Recommendation Participation and monitoring of the SCT development and particular the tripartite SCT agreement

Development of enabling and supporting instruments and tools

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Specific Actions 1. More awareness campaigns and information dissemination efforts should be enhanced.

2. Enhancement of the mechanism to monitor and eliminate NTBs, including fast and efficient Dispute Settlement Mechanism (DSM) and establishment of the legally binding mechanism, not only on NTBs, but also EAC laws.

1. The Partner States should ensure sufficient sharing of information between border agencies, nominating responsible persons for risk analysis profiling, educational/ awareness training, ensuring presence of inspection sheds

and scanners at all ports and airports, watching the porous borders as a joint EAC task.

2. Prioritize trade facilitation especially ports, border and transport issues; IT Interconnectivity of customs systems, etc.

3. A central reference database should be established to serve as a depository of customs and trade information. In the short run, Partner States should review the current systems with a view to having a harmonized system. In the long run, the Community should have a robust IT system in place.

THE RECOMMENDATIONS TO BE IMPLEMENTED IN THE MEDIUM TERM Key Recommendations Ensuring policies to create business environment conducive to implementation of SCT

Specific Actions 1. Harmonization of domestic taxes (VAT, Excise Duty and Withholding Tax) should be achieved through; -

Adoption of common domestic laws;

-

Common procedures;

-

Codes structures and definitions;

-

Common incentive regimes: and,

-

Minimum and maximum tax rates in the shortest run with a view to adopting common rates in the long run.

2. Remove the application of Rules of Origin from EAC and work on harmonizing the Tripartite (COMESA-EAC-SADC) Rules of Origin.

3. There is a need to ensure convertibility of all EAC currencies as the Community is yet to attain a monetary union.

Ensure appropriate policies to support businesses in transition to SCT

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1. A compensatory award committee should be put in place to ensure that all loss suffered by individuals and businesses is satisfactorily attended to.

2. There is a need to put in place an appropriate mechanism to maintain the relevance of the existing clearing agents.

One of the solutions could be to that Partner States allow to proportionate shares in the ports on top of sharing staff which would minimize the risks of marginalization.

3. There is a need to ensure equal treatment of business people and firms in the EAC; -

Rwanda as a landlocked country should ensure that its people and businesses are not discriminated against when the goods are being cleared at the first ports of entry (Mombasa or Dar es salaam);

-

The efforts to ensure this should include a liaison office of PSF or Rwanda Development Board (RDB) being set up to ensure any necessary follow up.

THE RECOMMENDATIONS TO BE IMPLEMENTED IN THE LONG TERM Key Recommendations Ensuring Institutional development in support to SCT Enhancing Infrastructure in support to functioning of SCT

Specific Actions 4. There is a need to put in place an appropriate institutional framework to administer the EAC Single Customs Territory by establishment of an EAC Customs Administration.

5. Regional infrastructure should be upgraded by; -

improving the main regional corridors and other feeding-in roads;

-

improving the railway system and extending connectivity in line with the EAC Railway Master Plan;

-

upgrading the ports and enhancing their handling capacities; as well as

-

liberalizing the aviation sector by opening the skies and domesticating EAC regional flights through the implementation of the 5th Freedom by all the EAC Partner States.

7.1.2 Needed policy measures Program of Elimination of Internal Tariff: The private sector view is that the internal tariff elimination should be carried out as scheduled. However, as private sector tries to address issues of competitiveness at firm level, EAC Partner States should be committed to addressing issues of competitiveness which are beyond firm levels such as energy, infrastructure, telecommunications transport and cost of and access to finance.

EAC Rules of Origin: There is a wide consensus that the administration of EAC Rules of Origin has so far been executed fairly well in the region. However, some are questioning 31

whether, the Rules of Origin will be necessary or relevant within a fully-fledged Customs Union or a Single Customs Territory. In clarifying this issue, it has been suggested that the negotiators should consider reviewing the current rules of origin in light of memberships to other regional economic communities (RECs) and specifically in view of the COMESA-EAC-SADC Tripartite Free Trade Area (TFTA). In this respect, the EAC Partner States should work on how best to remove the usage of rules of origin in the fully fledged customs union taking into consideration the issue of multiple memberships in SADC and COMESA and porous borders.

Elimination of Non-Tariff Barriers (NTBs): Though a mechanism for identification, monitoring and elimination of Non-Tariff Barriers has been developed and agreed by EAC Partner States still NTBs to trade are major challenges to the intra-EAC trade and increasingly erode the benefits that would accrue from EAC integration process. NTBs are viewed to be most severe in the following clusters: police road blocks, weighbridges, mutual recognition of standard marks/export certification, business registration and licensing and immigration procedures. The Partner States should be committed to the elimination of NTBs by making the mechanism more effective in eliminating the NTBs as opposed to the current scenario whereby the region is busy recording NTBs instead of eliminating them.

Standards: EAC Partner States should expedite the process of harmonizing all EAC standards. In the short term, the EAC bureaux of standards should honour each other’s mark of quality through the mutual recognition principle. Other regulatory agencies in the region should also honor quality marks and avoid unnecessary duplication. As matter of urgency the EAC Partner States should expedite the implementation of SQMT (Standard, Quality, Assurance Metrology and Testing) Act in the region.

7.1.3 Business response to CU and SCT The key business adjustment measures recommended as a response to introduction of the CU and SCT include: Embracing regional competition: This will require Rwandan firms to think regional and build their strength locally but focus on competing regionally.

Operating regionally: This will require Rwandan firms to spread wings and operate regionally by having regional presence through all possible ways including opening branches in the other EAC Partner States and along the coastline.

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Enhancing Joint Ventures: For some businesses that are not able or are not yet ready to compete regionally or to spread their wings beyond the borders could consider joint ventures with similar firms. These initiatives can strengthen the weak firms to serve better and to enhance their competitiveness regionally.

Strategic relocation: Another strategic orientation for some firms will be to consider relocation, especially along the coastline for some specific businesses, such as; clearing and forwarding.

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ANNEX I: LIST OF CONTACTED PERSONS NAME

COMPANY/ORGANIZATION

Vianney SHAKA

Adonia Clearing Agency

Goretti MINSHIMIYAMANA

African Business Agency

H. Oswald BARINYANZA

AIB

Jean Pierre Majoro

ASSAR

John Bosco Rusagara

Association of Freight Forwarders

Isaiah Chindumba

BCR

Lawson Naibo

BK

Roger Nkubito

Bollore

Deo ARADUKUNDA

Cloffik Limited

Juvenal Seruzindu

COGEAR

Leonard HABIYAKARE

Import, Export, Transport, and Manufacturing

Bastian Schmitz

Interfreight

Alphonse Mihayo

Jasmine Cargo Clearing

Alphonse MIHAYO

Jasmine International Agency

Ancille BENIMANA

Light Clearing Agency

Pradeep Avadhani

MAGERWA

J. Nepo KABAYINZA

Manumetal

Innocent SAFARI

MINEAC

Sanath JAYANETTI

MINEAC

CallixteNsengiyumva

Omnibus

GaudensKanamugire

Phoenix insurance

Andrew O. RWIGYEMA

Private Sector Federation (PSF)

Gerard MUKUBU

PSF

Laurent MBONIGABA

PSF

William Musoni

RRA

FlaviaBusingye

RRA

Flavia BUSINGYE

Rwanda Revenue Authority

Jean BISIMBUKUBOKO

Safari Center Limited

H. Pascal BIBARIMANA

Sonarwa

Herbert Bamika

Sonarwa

Ellie NSENGIYUNVA

Sulfo Rwanda

Susan MUKANKUBANA

Top-Freight Limited

Causilde KABASINGA

Zenith Limited

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ANNEX 2: Bibliography Adam Smith International. (2012). Study on the Attainment of a Single Customs Territory (SCT) for the East African Community: Lessons and Best Practices from other SCTs. De Melo, J., & New Farmer, R. (2010). Using trade to grow, lessons (and questions) from international experience for Rwanda. The IGC. Frazer, G. (2012). The EAC Common External Tariff (CET) and Rwanda. The IGC. M.A. Consulting Group. (2012). ATTAINMENT OF A SINGLE CUSTOMS TERRITORY IN A FULLY FLEDGED CUSTOMS UNION FOR THE EAC�.

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