There is an ongoing buzz, one that keeps ringing like a peal in our ears, about developments being made towards the enhancement of regional integration and creation of continental free trade areas.
This buzz is, largely, made of the yearning, by global markets, for products originating from the continent. We have been informed that the groupings, such as COMESA, SADC, and EAC, need to increase intra-trade among member countries. We have, also, been reliably informed that the enhancement – of integration – cannot be delayed; because it is Africa’s dream and desire to break into the European market. In fact, it is hoped that countries which are ready to join some of the larger communities, like the grand Tripartite Free Trade Area (TFTA), should go ahead to integrate and move on while others that are still undecided will be compelled to join later to ensure the process is not delayed any further.
However, and as a matter of course, some countries have not found it that easy embracing some of the major benefits of these, important and apparently important trade blocks. Their development and harmonisation of local laws with communal ones, their execution of those laws, and the implementation of the same laws has been wanting. For example, as of October 2014, when other partner states already used their national Ids and single entry tourist visas for travelling within the East African Community, the Burundi ID was still unreliable. At the same point in time, Uganda did not have a national ID, having unnecessarily delayed the provision of one to its citizens. Elsewhere, specifically, in Tanzania, the government there had embarked on a project to develop three One Stop Inspection Stations (OSIS) to reduce non-tariff barriers (NTBs) to trade which inhibit intra-trade in the East African region. Other notable impediments and developments can be highlighted from elsewhere and all over.
Rwanda, one of the East African Community countries has, over the period of the past one week, made and left tremendous impressions upon me. They have, in developing their own unique infrastructure, enabling their authorities, and harmonising themselves with the region, and organising all of them well enough, not only prepared themselves for local progress, but international success as well.
To illustrate, I attempt to detail some of the ways I found interesting and worth learning from;
- Rwanda Electronic Single Window [RESW]
In Rwanda, there is an electronic system known as the Rwanda Electronic Single Window [RESW]. It is designed for companies which are involved in International trade and regularly have to prepare and submit some information and documents to government authorities to comply with import, export, and transit-related regulatory requirements. These companies and institutions include banks, importers, clearing agents, ministries, airlines, and government departments such as the revenue authority. The RESW is described as a system that is meant to solve the problem faced by these companies by ensuring that trade related information and/or documents required will only be submitted once at a single entry point. The system allows traders to lodge information with a single web-based portal to fulfil all import or export related regulatory requirements.
In preparation for inclusion in grand trading blocks, RESW aims to facilitate international trade by expediting and simplifying information flows between trade and government institutions dealing with all kinds of controls required to imported goods. However, the specific objectives are;
- Simplify cross-border trade to enhance the trade competitiveness through improvements to trade logistics systems and processes.
- Enhance information exchange and sharing amongst customs, stakeholders and importers.
- Computerise international trade regulatory requirements.
- Reduce cost of doing business
- Strengthen transparency and reduction of corruption.
There is more than enough literature which is brief and clear enough to detail how the system works and how those involved cross-border trade can make the most of it.
- Electronic Billing Machines
One of the biggest challenges which beset both Uganda and Kenya, and thus the region, is the failure to broaden the tax base through curbing revenue leakage, one which they can overcome by focusing on the informal sector and multi-national transactions. Majority of entities or individuals engaged in the informal sector continue to remain out of the tax net. The tax administration authorities keep going after the same tax payers year on year. The result is a flat line tax base which then forces the government into a position where it has to borrow excessively to meet its obligations.
Rwanda has done comparatively better than both Uganda and Kenya. Rwanda has made the most of Electronic Billing Machines to ensure that every person’s contribution reaches the national basket. Value added tax registered persons are, for example, obliged to use certified Electronic Billing Machines that generate invoices indicating their tax administration. More specifically, users of certified EBMs are subjected to, amongst others, the following obligations;
- To issue receipts generated by certified electronic billing machines to every customer purchasing items or services;
- To ensure that all items or services sold through certified billing machines have clearly defined name and appropriate tax rate;
- To include clients TIN on the receipt upon request from the client who performs the payment prior to the start of issuing the receipt;
- Not to stop using certified EBMs for more than twelve (12) hours without prior notification to the Authority;
- To report malfunctions of certified EBMs to the Authority within six (6) hours; and
- Not to start business activity without acquisition of a certified EBM and its installation at a sales location.
The penalties for users or sellers not meeting these, and a total of thirty-one (31) other obligations, range from fines to persecution under the Penal Code.
Buyers are not exempted either. Their responsibilities are also made well known. For example;
- Whenever you buy anything, you must ask for a receipt, because it is what indicates that your tax contribution has reached the national basket;
- As a buyer, if you have a TIN or telephone number, it is your right to ask the seller to write it on the receipt you get.
Buyers are well aware that purchasing goods and services without being receipted can land them in unnecessary danger as it attracts penalties as prescribed by the law, that goods taken without receipt are considered fraudulent, that not asking for a receipt is helping a seller to evade taxes, and that having a receipt guarantees your purchased goods.
The Government of Rwanda is well aware that in focusing on the informal sector, and in encouraging more people to pay, it reduces the pressure on the few who would be paying, and thus avoids a flat line base, and consequentially, avoiding borrowing from other financial solutions.
Rwanda truly believes in one of its tax administration mottos, which is that; “tax is the main pillar to Rwanda’s self-reliance”. It has fully prepared to live by it. From experience; it takes at least two minutes to obtain a TIN, it is entirely possible to register a business online and from anywhere, it has developed an efficient customer care system with all government departments, and made readily available all the valuable information that prospective and registered businesspeople, tourists, investors in the stock market and more would need.
The legalisation to enable the two highlighted developments above has been enacted, simplified, and translated for the public’s consumption. It is readily available, and, importantly, valuable.
It is Rwanda’s customer or client-centred (business) philosophy that will continue to drive the country’s rapid growth far into the future.
There is no country in the region that can match Rwanda or hope to. At least, in the meantime. The rest can only hope to take notes from it – Rwanda, and see to it that they attempt to apply them.