Stakeholders in Customs

24 min

Many hands, one consignment

Rwanda is landlocked: the nearest seaports, Mombasa in Kenya and Dar es Salaam in Tanzania, are more than a thousand kilometres away by road. A container of goods for a Kigali shop passes through the hands of a seller abroad, a shipping line, a port, a clearing agent, two or three customs administrations, a lorry company, a warehouse, a bank and sometimes several regulators. Each of them is a stakeholder in customs: each has a part to play, and each is affected when clearance is slow or dishonest.

Since July 2014 the East African Community has run a Single Customs Territory (SCT). Goods for Rwanda that arrive at Mombasa or Dar es Salaam are declared once, to RRA, and the duties and taxes are paid in Rwanda while the goods are still at the port. The goods then travel under a single bond, followed by electronic cargo tracking, instead of being cleared again at every border.

Definition

Stakeholder: a person or organisation that takes part in, or is affected by, an activity. Example: a lorry driver waiting at a border post is a stakeholder in customs.

Single Customs Territory (SCT): the EAC arrangement under which goods are declared and taxed once, by the destination country, at the first point of entry into the Community, and then move under one bond to their destination.

Bond (guarantee): a promise, backed by a bank or insurance company, to pay the duties on goods in transit or in a warehouse if the goods do not reach their proper destination.

The stakeholders and their roles

Stakeholder	Main roles in customs
Importers and exporters	give complete, true documents to their agent; pay duties and taxes when assessed; collect goods promptly after release; keep accurate records; are responsible for offences made on their declarations
Clearing agents and freight forwarders	lodge declarations on the Single Window; pass assessments to the client; arrange transport and storage; must be licensed by RRA and act honestly for both client and government
Rwanda Revenue Authority, Customs Services Department	receives declarations; assesses and collects duties and taxes; selects goods for checks; releases goods; licenses agents; audits traders after clearance
Regulatory agencies	approve restricted goods through the Single Window: for example, the Rwanda Standards Board for quality standards and the Rwanda Food and Drugs Authority for food and medicines
Transporters	carry the goods and the manifest; report at border posts; keep transit goods sealed and on the approved route
Warehouse and depot operators	store goods under customs control until they are cleared
Banks, mobile-money providers and insurers	receive duty payments; issue guarantees (bonds); insure the goods
Police and immigration	work with customs at border posts on security, people and vehicles
Ports and partner states’ customs	handle goods at the first point of entry and cooperate under the SCT
The East African Community	sets the common external tariff and the joint customs law, and runs the SCT
Consumers	pay for customs costs and delays in the final price, and are protected from unsafe goods

Tip

Exam technique. When asked to “explain the role” of a stakeholder, use a verb: the clearing agent lodges, customs assesses and releases, the importer pays and keeps records, the transporter reports. A stakeholder named without a verb earns no marks.

Definition

Clearing agent: a licensed intermediary between the trader and customs that declares and clears goods. Freight forwarder: a business that arranges the transport, storage and handling of goods for a client, often by several means of transport; many firms do both jobs.

RRA licenses customs agents. Among its requirements are qualified customs technicians on the staff, a tax clearance certificate and a recommendation from the Rwanda Freight Forwarders Association (RWAFFA).

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Worked example 1: who is responsible?

Problem	Stakeholder responsible	Why
A declaration shows the wrong value of the goods.	the importer, and the agent who lodged it	the importer is responsible for offences on its declaration; the agent must take care that the information is correct
Cleared goods are left in the customs area for weeks.	the importer	the importer must remove goods promptly after release
A transit lorry for Burundi unloads part of its cargo in Kigali.	the transporter	transit goods must stay sealed and leave the country; the bond can be called to pay the duties
A consignment of medicines waits for approval.	Rwanda Food and Drugs Authority	restricted goods need the regulator’s clearance in the Single Window

The cases are illustrative.

Worked example 2: before and after the SCT

Before the SCT, goods for Rwanda arriving at Mombasa were cleared at the port and then cleared again at internal borders on the way. Under the SCT, the importer’s agent in Rwanda declares the goods to RRA, pays the duties and taxes in Rwanda while the container is still at Mombasa, and the goods travel to Kigali under one bond and electronic tracking.

Stakeholder	How the SCT changed their work
Importer	one declaration and payment, at home; goods arrive sooner
Transporter	fewer stops at borders on the way; the lorry is tracked electronically
RRA	assesses and collects Rwanda’s duties before the goods leave the port

Warning

Common mistakes. (1) Thinking that hiring a clearing agent moves all responsibility to the agent: the importer remains responsible for offences on its declaration. (2) Leaving out the regulators: for food, medicines and other restricted goods their approval is part of clearance. (3) Writing that the SCT removed customs control: duties are still assessed, now once, by the destination country.

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Practice

Define stakeholder and give six stakeholders involved in customs.
State three responsibilities of an importer in customs clearance.
Distinguish between a clearing agent and a freight forwarder.
Explain the role of each in customs: (a) a bank; (b) the Rwanda Standards Board; (c) a transporter of transit goods.
Describe how goods for Rwanda that land at Dar es Salaam are cleared under the Single Customs Territory.
Explain why a bond is needed for goods in transit.
“Clearing agents add cost for importers and should be removed.” Evaluate this statement.

Show answersHide answers

A person or organisation that takes part in, or is affected by, an activity. Any six: importers and exporters, clearing agents, freight forwarders, RRA Customs, regulatory agencies, transporters, warehouse operators, banks and insurers, police and immigration, ports and partner customs, the EAC, consumers.
Any three: give true and complete documents to the agent; pay duties and taxes when assessed; remove goods promptly after release; keep accurate records; answer for offences on its declaration.
A clearing agent declares and clears goods with customs for a client; a freight forwarder arranges the transport, storage and handling of goods. Many firms do both.
(a) receives payments of duties and taxes and issues guarantees (bonds); (b) checks that goods meet quality standards before release; (c) carries the goods and manifest, reports at borders and keeps the goods sealed on the approved route until they leave the country.
The agent declares the goods to RRA while they are at Dar es Salaam; the duties and taxes are paid in Rwanda; the goods move to Rwanda under a single bond, tracked electronically, without being cleared again on the way.
Transit goods pay no duty in the country they cross because they are supposed to leave. If they are sold there instead, the bond guarantees that the duties can still be collected.
Agents do add a fee, but they know the tariff, documents and Single Window, so declarations are faster and more accurate, and RRA can hold licensed agents to rules of conduct. Small traders can use the simplified regime without an agent, so the system already balances cost and accuracy. Removing agents would probably raise errors and delays.

1Many hands, one consignment

2The stakeholders and their roles

Many hands, one consignment

The stakeholders and their roles