In May 2021, Uganda signed an Authorized Economic Operator (AEO) agreement to improve the country’s trade share in Africa borrowing from the good trade practices of China as a major global player in the trade.
The Mutual Recognition Arrangement (MRA) was signed during the 5th AEO Global Conference held in Dubai could, however, be hardly implemented due to Covid-19 disruptions until 1 June 2023 when it was hurled in Kampala.
Uganda is the first country in Africa to implement the agreement with China and the business communities in both countries will benefit from this trade facilitation.
However, the traders that will benefit from this program are those that are certified as AEOS.
Mr. John Musinguzi Rujoki, the Commissioner General at URA noted that the agreement will present a number of other benefits, both short and long-term, to the two Governments and traders including;
To Governments
It will provide a platform for sharing information on traded cargo for faster and more efficient risk assessment and hence faster clearance of cargo,
Provide a basis for more effective controls leading to more secure and safer supply chain,
Offer a base for efficiency and effectiveness in revenue Mobilisation, and as a result, more revenue will be realized, and
Increase the competitiveness of Uganda products
To Traders
It will recognize Uganda and China as reliable and trusted trade partners,
Fasten clearance as goods consigned by AEOS in Uganda will be facilitated to clear faster in China,
Reduce cost of business for the AEO trader since there will be facilitation on both ends of the supply chain, and
Provide better capacity to compete and attract more and bigger business.
Rujoki said that in order to case trade operation, each AEO in Uganda has been assigned a unique identifier just like AEOs in China. The identifier is to help distinguish consignments received and also allow Customs and other Agencies involved to quicken the clearance processes.
Represented by Ms. Patience Rubagumya, the Commissioner for Legal Services and Board Affairs, Rujoki noted that the MRA implementation comes at a time when they have repositioned themselves to make sure that they improve revenue collections.
“We have said it is not enough to simply be collecting taxes, these taxes must lead to economic development. You must get to a level where the government is able to fund its budget from internal resources,” he said.
He noted they are looking at all means and ways how they can change the way they do business so that they can enhance the cooperation with the various stakeholders in order to penetrate different areas.
“We are saying let’s improve facilitation of trade because then we are looking at domestic taxes because once these goods come in and we are facilitating the manufacturers, there is a faster clearance of these goods. It means that the person who is now manufacturing will be able to give both direct and indirect taxes.”
He revealed that the country’s tax-to-GDP ratio is not growing, noting that the only way to grow is by tapping into the spaces where they are not.
Chinese Ambassador to Uganda, Zhang Lizhong noted that the agreement will aid the associated companies to grow bigger.
“That means the more people are involved in these trade investment programs so the trade companies between the two countries can become large in the future.”
According to him, after gaining visa certificates, traders will be able to enjoy a wide range of convenience custom clearance measures which involves customs clearance as paid by 60% from the previous time and saves about 10% the logistical costs.
“Now industrial parks is a great point in the domestic cooperation between China and Uganda we hope this practical pragmatic cooperation will continue in the future,” said Ambassador Zhang.
He revealed that many Chinese traders in Uganda have told him that they chose here because of the country’s long-term stability and very stable policies.
