Making Africa's customs more efficient

By Daniel Dickinson
BBC News, Dar es Salaam

In the past, it was normal to wait for up to a month to clear goods out of the port of Dar es Salaam Jayesh Shah, the managing director of Sumaria Group

A queue of container trucks battered by hundreds of thousands of kilometres on the unforgiving roads of East and Central Africa snakes out of the port of Dar es Salaam.

Amongst the rainbow of container colours are ones imported by the Sumaria Group, one of Tanzania's biggest and most successful companies.

Each month it imports up to 100 containers filled with a kaleidoscope of raw materials to supply the company's numerous activities; plastic granules from the Middle East and China to manufacture plastic products, pharmaceutical ingredients from China and India to produce drugs, and sugar from Swaziland to make soft drinks.

In the other direction, the company is exporting some 300 containers of cotton each year, as well as a cornucopia of its manufactured products; plastic kiosks, drinks medicines, and more.

If there is one man in Tanzania who should know about the pitfalls of importing and exporting it is Jayesh Shah, managing director of Sumaria Group, a company which has been in business for half a century.

"In the past, it was normal to wait for up to a month to clear goods out of the port of Dar es Salaam and this had a huge impact on our business," he says.

"It meant you had to keep large stocks of raw materials to keep production moving. In the worst situations, when cash flow became a problem, production had to stop and profits were badly affected."

Reform programme

Tanzania's trade is made up of a complicated web of up to 27 government agencies and private enterprises, including inspection departments and regulatory authorities. Then there is the harbour authority, the container terminal company, shipping lines and agents, clearing and forwarding agents and financial institutions. And, last but not least, the importer or exporter itself.

These days it takes two weeks on average to get the goods through

But central to the running of the whole operation is the Customs and Excise Department, which is ultimately responsible for letting cargo in and out of the country and for collecting taxes and duties on all taxable items on behalf of the government.

Ten years ago Customs and Excise was, by anyone's standards, doing a pretty bad job, collecting just less than $300,000 in taxes per year. It presided over what some business people called a "chaotic system" that encouraged corruption, smuggling and thus naturally resulted in low revenue collection rates.

A modernisation programme, which led to the creation of the semi-autonomous Tanzanian Revenue Authority (TRA) under which Customs and Excise falls, radically boosted the government's ability to collect taxes.

"Before the TRA," says customers commissioner George Lauwo, "the department was quite poor in terms of facilities, technology and know-how and it was a big challenge overcoming those problems."

The reform programme targeted the facilitation of trade to speed up imports and exports, as well as enforcing the collection of revenues. It did simple things like computerising the import/export process, a radical move which at the time put the TRA ahead of similar authorities in other developing sub-Saharan countries.

Government revenue

The average length of time it takes to get a container out of port today is around two weeks and is still "too long", according to Sumaria Group's Jayesh Shah, although it can be as little as three to four days.

Significantly, however, the delays are now more often blamed on the myriad of other agencies and companies involved in getting a container through the port rather than the Customs and Excise department itself.

And the department is doing well in terms of bringing in much needed revenue.

Over the last two years, Customs and Excise has boosted its revenue collection to just over $1bn (£500m) a year and contributes almost 50% to the government's overall tax revenue.

More revenue means more money can be spent by the government on pulling Tanzania out of poverty; Tanzanians on average still survive on less than $1 a day.

It also means. according to commissioner George Lauwo, that "Tanzanian businesses are becoming more competitive and the consumer is getting a better deal".

It is, however, not all good news.

Get a random group of business people together and anecdotes of petty corruption at the port in the guise of non-documented "facility fees" will start flowing, although most admit that it is not nearly as bad as it used to be. Perhaps more significantly, traders say there is still a strong sense of suspicion of their activities.

Ravi Chande, a business consultant who specialises in import/export issues," says "there has always been a lot of suspicion of importers because of what happened in the past and while the senior management of Customs and Excise has built a new trust with importers and exporters, that trust is not always matched at an operational level".

Businesses in Tanzania are ultimately hoping for a clearing time for containers of "just a few hours, as is the case in Singapore", Mr Chande says. "If this happens, then business confidence will grow and in the longer term there will be more investment and development."

For the time being importers and exporters rely on Customs and Excise doing its best to ensure the process goes as quickly and smoothly as possible.

As the colourful but tatty container trucks leave the port on their journeys to their final destinations across Tanzania and the neighbouring countries of eastern and central Africa, businesses are hoping that Customs and Excise can provide the drive towards growth.