When tax compliance drives a better customer experience and lower cost of doing business⏤ The case of CFAO Motors Uganda CEO East Africa Magazine regularly recognises businesses and business leaders who go out of their way, to walk paths less trodden and in the process inspire their peers to greatness. This week, we would like to recognise CFAO Motors Uganda (formerly Toyota Uganda) for not only being Uganda’s leading automotive company but also for leveraging this industry leadership with a purpose⏤ showing other automotive companies that you can be tax-compliant, and still be able to cut your costs as well as deliver a superior customer experience and be a great corporate citizen.

The company was recently recognised and awarded by the Uganda Revenue Authority (URA) with the “AEO CircleofExcellenceAward 2021/2022” for being one of the first 10 companies to pilot the Authorised Economic Operator (AEO) program. CFAO Motors’ recognition occurred during the 10th-anniversary celebrations of the AEO program at the Sheraton Hotel Kampala this October 2023. CFAO Motors was recognised along with 9 other pioneer companies.  

The AEO program is a trade facilitation initiative derived from the World Customs Organization Safe Framework of Standards. URA Customs Department implemented it to enhance trade, strengthen Customs-to-Business partnerships, and secure the international trade supply chain. The AEO program aims to increase revenue performance, facilitate trade, and secure the regional and global supply chain. It focuses on fostering positive relationships between customs and businesses.

Over 35% of the revenue collected by URA today comes from members of the AEO program, highlighting its significant contribution to the revenue collection process.

Currently, there are 131 AEOs of which 39, including CFAO Motors, are also accredited as the East African Community(EAC) Regional AEOs. 

CFAO Motors Uganda, formerly Toyota Uganda, is a leading automotive company in Uganda. The company is a subsidiary of CFAO Group, owned by Toyota Tsusho Corporation. Headquartered in Kampala Industrial and Business Park Namanve, CFAO Motors Uganda is the exclusive manufacturer and authorised distributor of brand-new Toyota vehicles and genuine parts in Uganda as well as authorised to offer Toyota manufacturer’s warranty. The company has a network of four (4) branches and three (3) authorised service centres across the country. CFAO Motors Uganda is also the official distributor of Suzuki vehicles, Yamaha Motorcycles, Hino Trucks, Toyota forklifts, and SINOTRUK. The company also offers innovative leasing, rental, and fleet management mobility solutions under its Loxea division. 

As of 1^st November 2023, the company had a headcount of 238 employees.

CFAO Motors has been present in Uganda since 2005 under the name of Toyota Uganda Limited. In 2010 it participated in the pilot of the AEO Program. In 2011, it applied for an AEO National Program License and in 2012 obtained an AEO License as a Pioneer Member of The AEO Program. In 2013, it was accredited amongst the first ten AEOs in 2013. In 2014, it obtained a Self-management Benefit but under an administrative arrangement with Cadam Enterprises. In 2015  it applied for and obtained a Customs Agent License and in 2016 it applied for a Regional AEO License which it obtained in 2017 as an importer, exporter and clearing agent. In 2017 CFAO Motors also applied for and obtained a Customs Bonded Warehouse License Under the Administration and in 2022 piloted the Bonded Warehouse Information Management System, leading to the URA AEO Circle of Excellence Award 2011/2022.

“CFAO has continued to operate as a leading automotive company in Uganda and has consistently been associated with excellent,   modern and user-friendly operating environment for client’s goods and staff in a modern state-of-the-art and best Self-Managed Bonded Warehouse. CFAO was also among the first operators to join the Bonded Warehouse Information Management System (BWIMS) program where they emerged as the best and has continued to be supportive of the program,” reads a citation to the award by URA.

Improved trust by URA and improved turnaround times ⏤ tax compliance is good business

As an AEO program member, CFAO Motors manages its bonded warehouse, providing flexibility in cargo entry and exit. The company receives premium treatment during goods clearance and has experienced an improved relationship with URA. 

Commenting about the significance of AEO status, James Malinzi, the Assistant Commissioner, Customs Audit in an interview with The Taxman, an internal publication of the tax authority, said “The AEO status bestows trust. An AEO is considered a trusted and reliable partner of URA and for that matter, URA provides several benefits that allow the AEO to conduct his/her business faster without hustles”.

“This is mainly because URA subjects such an operator to fewer checks and there are some privileges that accompany the status. When doing business with other operators within the country or internationally, other business partners will look at the AEO as a trusted and reliable partner. In case the AEO is doing business outside Uganda but in a country where we have a Mutual Recognition Arrangement for example; China or South Africa, the AEO will be accorded some benefits by those Customs Administration to facilitate his/her business,” adds Mr. Malinzi. 

Thomas Pelletier, the Managing Director, CFAO Motors Uganda also testifies to these benefits. 

He says that “before joining the program, vehicle clearance lead time was 14 – 18 days but after joining, the lead time fell to 7 – 10 days meaning that customer vehicle orders are served faster”.

This he attributed to the “ability to manage our own Customs Bonded Warehouse and therefore have access to our goods at any time of the day”.

“We also enjoy expedited renewal of our Customs Agency and Bonded Warehouse Licenses, which promotes business continuity. We also have a dedicated team of URA AEO experts who look after our business and are always available to support us by accessing any office at URA for real-time solutions to any business challenges we may face. The growing recognition of our AEO status in all sections and departments of URA, right from the Security Gate to all offices, has greatly improved our turnaround time in all our interactions with URA and/or supported by the URA processes,” he testifies.

“The introduction of the Bonded Warehouse Information Management System (BWIMS) has improved tracking of the goods destined in our bond. We can track how many vehicles or containers have departed in Malaba customs and therefore allow us time to prepare to receive the cargo,” Mr. Pelletier adds.

Anita Asaba Akishure, CPA, FCCA, the CFAO Motors Finance Director says that the efficiencies that accrue from being an AEO company also translate into cost savings for the business. The company on average used to spend USD194,400 annually on vehicle storage in 2016, but after gaining self-administration in 2016, this has reduced to about USD101,7000. Processing lead time on vehicles was also reduced from 1 day to half a day. 

“The recognition of CFAO Motors underscores our commitment to trade facilitation, security, and positive relationships within the customs and business community. The company not only benefits from the AEO program but actively contributes to its enhancement,” says Akishure adding: “CFAO Motors actively collaborates with URA to make AEO program membership smoother for new members. This collaboration includes providing feedback on processes and suggesting ideas for digitisation and automation.”

A Carbon-Neutral Agenda: Green Energy And Environmental Restoration

Apart from being a responsible and tax-compliant company, CFAO Motors’ sustainability agenda also encompasses the adoption of green energy as well as environmental restoration. 

For example, in March 2022, the company installed two solar plants at its Namanve and Kampala branches as part of CFAO Group’s carbon-neutral initiatives. The plants are synchronised to work seamlessly with the main power supply (national grid). The two solar plants can power approximately 2,200 households and will contribute to the reduction of 300 tons of carbon emissions during the 25-year useful period. Following installation, CFAO Motors is enjoying over 30% reduction in its annual energy bills.

CFAO Motors says that it is committed to being energy self-sufficient and reducing our ecological footprint in Uganda. Our goal is to hit our Greenhouse gas Emission Target of 50% by 2030.

In October 2021, CFAO partnered with the National Forest Authority to restore over 30 hectares of forest cover. This partnership is aimed at securing Uganda’s heritage by conserving forests and restoring degraded areas caused by unsustainable human activities. This action is also crucial in mitigating climate change.