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COMESA to adopt common export insurance scheme
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08:24, August 20, 2009

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Members of the Common Market for Eastern and Southern Africa (COMESA) are meeting in the Zimbabwean capital of Harare to discuss the adoption of the Regional Customs Transit Guarantee (RCTG) system aimed at smoothening the movement of goods in the region, Zimbabwean local media New Ziana reported.

The scheme will result in a single bond recognizable in the region being issued to exporters from the country of origin.

Under the proposed scheme, insurance companies and banks will issue bonds that cover the rest of the COMESA region as opposed to the current regime where bonds for goods are paid in each and every country that the goods pass through.

Officially opening the meeting, director of international trade in the Ministry of Industry and Commerce Beatrice Mtetwa said all means of facilitating trade were critical to the economic development of the region.

"The issue of trade facilitation is an important tool of economic development for developing countries," she said.

Insurance expert and managing director of Credsure Lovemore Madavo told the same meeting that bonds were a measure to protect a country and not prejudice it in terms of revenue collection.

"If someone is transporting goods from Zimbabwe through Zambia, the revenue authority in Zambia would like to be assured that it would be paid if the goods are diverted sold in that country," he said.

Goods in transit do not pay duty, which would prejudice the country if they do not leave the country through which they pass, he added.

The scheme, he said, would make life easier for exporters who would no longer have to carry out too much paperwork and incur numerous costs.

Mtetwa said the adoption of a single bond recognizable in the region would improve business margins. "The current practice of raising cash or bank guarantee or insurance bond in each and every country of transit is costly, cumbersome and time-consuming," she said.

The commencement of RCTG scheme is expected to reduce costs of freight and accelerate regional economic development through the expansion of trade.

The current system of national bonds was impacting on the viability of businesses in the region as it had tied up colossal sums of money belonging to importers, clearing and forwarding agents and transporters, said Mtetwa.

She added that if that money was released from the current system, it would be used for productive purposes.

Road transit fees, combined with national bonds, had resulted in the transportation costs rising in Africa, taking up 14 to 17 percent of the value of exports compared to 8.6 percent for developed countries.

Transportation costs are even higher in many COMESA members. The northern corridor countries in the COMESA region that include Kenya, Uganda, Rwanda and Burundi have already finalized the preparations for the scheme and would fully implement the scheme by September.

Zimbabwe, Djibouti, Ethiopia, Malawi and Sudan would after the three-day meeting come up with a date by which they would also implement it.

Source:Xinhua



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