Move to single transit bond gains momentum

One of the most significant
cross-border issues of the
moment is the move towards
a regional transit bond.
Welcomed by all as an essential
ingredient in streamlining trade, it’s
been several years in the planning
and is likely to take some time to
reach fruition. But countries in the
region are increasingly realising that
it’s an economic imperative.
“There are 13 countries involved
– and it’s largely related to road
bonds,” says Lombard Insurance’s
Francis Kingston.
“The idea is to have one road
bond issued in the country of origin,
allowing the haulier to transit within
each of those countries instead of
requiring a separate bond for each.
“All countries realise it needs
to be done to promote trade in the
region and at the moment the biggest
beneficiary would be the DRC which
sends big volumes into South Africa
that have to transit through Zambia
and Zimbabwe to reach the port of
exit,” said Kingston.
There are several stakeholders
involved – from the customs unions
in the different countries to freight
forwarding associations. Lombard
is involved on the insurance side as
one of the key players in terms
of guarantees.
For the single bond to operate, you
need a guarantee. “If goods are lost
along the way customs wants their
VAT and duty and that’s the aspect
of the guarantee that we look after,”
says Lombard’s Dean Burscough.
But while everyone accepts the
significant benefits of a single bond,
there are huge implications.
“There are different duties and
VAT rates for various countries – and
the question is how to reduce this to
one form to cover duty and VAT in
South Africa and everywhere else.
“Another obstacle is language,”
says Kingston. “The three languages
are English, French and Portuguese
which means you would have to
have all information in triplicate.”
There are huge obstacles, he
says, but a pilot project undertaken
recently worked very successfully
– although it did involve very small
volumes.
The objective is to implement a
full test run in the next two years
– although all concede that there is
still a lot to be done.
In the pilot run, the typical border
waiting time of three days was
reduced to two hours.
“Clearly the time-saving is huge,”
says Burscough.
“The point of the regional
bond is to promote trade and by
making trade easier we will
increase volumes.”