The cost of doing business in Uganda remains high although it is slowly declining.
The World Bank’s annual ‘Doing Business report 2018: Reforming to Create Jobs’ released late last year indicates that Uganda dropped seven places to 122 in the rankings out of 190 economies, compared to 115 out of 190 economies in the previous year 2016. This means that Uganda still performs poorly on ease of doing business.
However, importers, exporters, manufacturers, customs clearing agents, bonded warehouse keepers, transporters and freight forwarders have an opportunity to cut costs by embracing a custom’s programme called Authorized Economic Operator (AEO), a trade facilitation programme which Uganda Revenue Authority’s Customs Department is undertaking to facilitate trade and promote security of international trade.
Speaking on the sidelines of the just ended 4th World Customs Organization (WCO) Global AEO Conference in Kampala Dicksons C. Kateshumbwa, the Commissioner Customs at URA told Business Focus that under the AEO arrangement, businesses which comply with customs laws and regulations benefit from customs preferential treatments such as fast clearance of their goods through simplified procedures and reduced inspection.
AEO is derived from the WCO framework of standards called the ‘SAFE’ an acronym which stands for Security and Facilitation in a Global Environment. The SAFE is a document developed by the WCO member countries represented by their heads of Revenue administrations at its headquarters in Brussels in 2005 with major objectives of enhancing trade facilitation and promoting supply chain security.
Betty Kiguli, the Procurement Coordinator at Nice House of Plastics which is part of Mulwana Group attests to the benefits of the AEO programme.
Speaking to the press on March 16, Kiguli revealed that Nice House of Plastics and Uganda Batteries are on the AEO programme both nationally and regionally. She says that unlike before, the programme has helped them enjoy faster clearing of goods and reduced costs on deliveries.
“Before, our containers used to go through police and URA [checks], but now we only deal with one person at URA,” she says, adding that they have self management and are open when dealing with URA.
“This programme is built on trust. We open our books [of accounts] to URA,” she says, adding: “We were previously spending US$300 (Shs1.09m) on each container but this has since ceased. We import about 400 containers annually.”
This means that the company is now saving a total of US$120,000 (Shs439m) annually, thanks to the AEO programme.
Doris Akol, the Commissioner General at URA says that before companies are accredited for the AEO programme and enjoy the preferential treatment for customs, they are checked overtime to ensure that their internal processes meet the required criteria.
She reveals that 51 and 36 companies have been accredited for this programme nationally and regionally respectively.
“28% of the customs taxes come from the 51 companies on the AEO programme,” she said, adding that the benefits of the programme are mutual to the tax body and the company.
“If we get more companies to embrace the initiative, the more the taxes we get [without investing much],” she said.
Asked whether the programme is designed for only bigger companies, Akol said: “It’s not about the size of the company, but your internal processes and compliance profile. Once you meet the criteria, you are enrolled on the programme.”
She urged companies not yet on the programme to aspire to join it because the benefits are enormous.
Amelia Kyambadde, the Minister of Trade, Industry and Cooperatives said it is easier for companies on the programme to list on the Uganda Securities Exchange.
URA started the implementation of the AEO programme in March 2012 and has come to be widely acknowledged for enhancing firm customs-business partnerships, creating a transparent and predictable trading environment and facilitating a secure supply chain.
Uganda’s profile in the skies
Akol described the 4th WCO Global AEO Conference that opened on March 14 and closed on March 16 in Kampala as “extremely successful.” She added that the event raised Uganda’s profile internationally. She said Uganda was chosen to host the event because of the progress it has made in implementing the AEO programme compared to other African counties.
The first AEO programme within the African continent was materialized in the East African Community (EAC) region , leading to the signature, during this Conference, of a Mutual Recognition Agreement (MRA) – Action Plan between Korea Customs Service (KCS) and the EAC Members.
Akol said the MRA agreement with Korea means that companies in EAC on AEO programme will be recognized by Korea customs, thus enjoying the benefits of the programme beyond EAC region.
The delegates also witnessed the signature of another important MRA between Peru and Uruguay Customs represented by the Directors General of Customs.
Akol added that Uganda also held bi-lateral discussions with China and USA.
Kateshumbwa, who was at the centre of organizing the event said that Uganda shared her experiences of implementing the programme with the rest of the world, adding that many countries will be benchmarking Uganda for the successful implementation of the programme in their countries. These include Nigeria, Liberia, Zambia, Swaziland and Afghanistan and more.
The Conference was organized under the theme, “Promoting Mutual Recognition of AEOs to Strengthen and Secure Global Trade” and attracted over 1000 participants from over 95 countries to discuss dynamic developments in AEO programme and related customs matters.
In his welcome address, Dr. Kunio Mikuriya, the WCO Secretary General said that the African continent is booming with new developments in the field of security and facilitation of the supply chain.
He also commended the URA, through its Commissioner General for well organizing the conference in Kampala.
Going forward, the 5th WCO AEO Global conference will be held in Dubai in 2020.