The Institutional Factors Influencing Trade Facilitation in Rwanda through EAC Customs Union

Abstract

Trade facilitation is any process involved in the reduction in trading costs associated with enforcement, regulation, and administration of trade policies. This process intended to lower the related transaction costs for firms in global commerce thereby enabling continued growth in cross border trade in goods and service. Trade facilitation is a diverse and challenging subject with potential benefits for both private business people and governments at national, regional and international levels. Governments initiated a trade facilitation reform programme following complaints about widespread corruption and poor administrative practices. The reform programme included the implementation of single-point clearance and mechanism, the introduction of risk assessment procedures and the publication of customs nights and responsibilities in export clearance. To conduct this kind of study is very important because it helped to describe the extent at which cargo clearance procedures, tariff charges and other institution factors influence the trade facilitation in Rwanda. Rwanda is a land-locked country, facing tremendous difficulties in accessing major markets in the regional as well as in the rest of the world. These difficulties emanated from high transport costs owing to the fact that she has no direct access to the sea. Rwanda has been continually showing deficit in export and imports compared to other neighboring partners the transit time greatly improved but nonetheless a sensitive consignment may be escorted on request from security organs - especially explosives, used in industries and construction works. It was noted that, through EAC customs union, Revenue Authority Digital Data Exchange (RADDEx) in an effort to facilitate trade in East Africa, Revenue Authorities throughout the EAC introduced modern computerized system and methods of ICT with great success and benefits to all stakeholders which make the work more efficient, productive and accurate. In this case, the impact here is the use of advance information by clearing and forwarding agencies that start processing customs entries prior to arrival of transit trucks at border posts. When trucks arrive at border posts, they are cleared immediately - since document formalities were completed. This study has revealed the current status on how the customs union procedures influence the trade facilitation in Rwanda. The study has revealed the areas of weaknesses for improvement. Corruption is one of the serious challenges identified in this study. Therefore, EAC members’ states should formulate policies which will combat the corruption within the EAC customs All these representatives should have an input on each of the coordination elements. The EAC members’ state should harmonize the charges and penalties not only customs laws but also trade regulations and laws. There should be a committee or a unit that will integrate this work. They should build on the work of the respective legal units of all Partner State.