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.”