Electronic cargo clearance to ease congestion at port

Kenyan companies are set to benefit from central clearance of cargo at Mombasa port using a new electronic system, a move that will reduce delays and costs in international trade.

The Kenya International Trade Freight & Warehousing Association said it was working with the government to introduce the National Electronic Single Window System from October.

The system will bring together all parties involved in international trade including exporters, importers, and government agencies like Kenya Revenue Authority and Kenya Bureau of Standards.

It will also allow companies to pay taxes and lodge trade documents for processing and clearance by the authorities.

READ: Electronic cargo clearance set to start in October

Finance minister Njeru Githae said recently that government agencies had not been collaborating to clear goods at the port, leading to prolonged delays as companies dealt with each institution separately.

“The implementation of the project is expected to result in reduction of dwell time of cargo at the port and improve the ease of doing business in the country,” the association said in a statement.

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The new system is also expected to cut delays and costs of importing or exporting goods, a move that would help raise the country’s competitiveness in the region.

Delays in cross-border trade was one of the major factors that saw Kenya drop 12 places in the latest edition of the World Bank’ Ease of Doing Business survey.

The country was ranked as the world’s 121st most competitive country this year down from position 109 last year.

It now takes an average of 26 days to import a container compared to 24 days a year earlier — a development that pushed Kenya’s cross-border trade ranking down to 148 from 141 a year earlier.

The cost of importing a container also rose by 7.3 per cent to $2,350 (Sh199,750) from $2,190 (Sh186,150) in the same period a year earlier.

Kenyan exporters were not spared the deterioration of the business environment as the cost of shipping out a container rose by 9.7 per cent to $2,255 (Sh191,675) from $2,055 (Sh174,675) the previous year.

The high costs and delays have raised the cost of doing business, eating into margins of companies which sometimes pass the additional costs to consumers in terms of higher prices.

Industry insiders say the delays and rise in costs of international trade are linked to bureaucracy and inadequate capacity at the Mombasa port to handle fast-growing cargo volumes.

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The port, which was designed to handle an equivalent of 250,000 20-foot containers annually, currently handles more than 700,000 20-foot containers per year.

Port authorities expect demand for cargo handling to reach 960,000 20-foot containers equivalent by 2015.

The proposed electronic clearance system, together with the planned expansion of the port, will see congestion at the facility ease significantly and boost service delivery.

The government has started the building of a second container terminal at Kilindini harbour creating space for an additional 1.2 million containers.