Uhuru cargo order signals single EAC customs body

Government agencies are balking at implementing a presidential directive requiring all cargo clearance agencies to operate under the command of the Kenya Ports Authority in Mombasa.

The directive issued last week by President Uhuru Kenyatta has been welcomed by traders who hope it will achieve the intended efficiency along the Northern Corridor linking the port to the landlocked Great Lakes region.

The agencies, however, say implementing the ten-point plan would entail high costs in relocating staff and other logistics.

“The directive came as a shock. I don’t think anybody can say when the commissioner (for customs) will be ready to relocate to Mombasa,” a source at KRA said on condition of anonymity.

He said the changes may not be effected this year because of the costs and the planning required even as tea traders voiced their concerns over the impact on trade with neighbouring countries.

President Kenyatta directed the Kenya Revenue Authority’s commissioner of customs to relocate from Times Tower in Nairobi to the Customs Long Room in Mombasa.

KRA is potentially a key loser of the decree with the move to put the customs department, which contributes 36 per cent of its collections, being seen as testing the waters for the establishment of an independent East African Customs body.

The five East African Community members - Uganda, Tanzania, Rwanda and Burundi - have resolved to merge their customs departments into one regional body.

The regional customs collector would only have operations at key entry points of the region such as Mombasa, Dar es Salaam and international airports which would be linked by IT infrastructure to track revenues for individual member states.

“Once the efficiency is improved, everyone is going to appreciate that the best model for collecting custom taxes would be at the port of call,” Rift Valley Railways executive vice chairman Brown Ondego told a meeting of port stakeholders in April.

(Read: Uhuru moves to enhance efficiency at Mombasa port)

Agencies such as Kenya Bureau of Standards (Kebs), Kenya Plant Health Inspectorate (Kephis), Kenya Wildlife Service (KWS), Kenya Police Service and Kenya National Highways Authority were also ordered to increase their staffing and facilities at the port.

All managers heading operations of the agencies’s operations at the port will now directly take orders from the Kenya Ports Authority managing director, presently Gichiri Ndua. Previously, they used to take orders from chief executives of the respective agencies.

This means, for instance, that the commissioner of customs Beatrice Memo will be taking orders from Mr Ndua, allowing her to finalise all custom-related decisions at the port without reference to KRA Commissioner-General John Njiraini.

The changes announced by Mr Kenyatta also give the KPA boss the power to take disciplinary measures against managers who do not adhere to his instructions.

Government officials who did not want to be seen as questioning the directive said the building of a testing facility in Mombasa would take long because of the huge amount of resources required.

But exporters have welcomed the directive, saying that putting the port operations under a single command would end the blame games that ensues when there is a cargo pile-up.

“This is a major step towards the one-stop- shop operations that traders have been pushing for,” said Peter Kimanga, director at the Mombasa-based Global Tea & Commodities (K) Ltd.

Exporters also expect the removal of Clearing and Forwarding Service companies and transit sheds from the Mombasa Port to ease congestion besides reducing corruption and tax evasion. Commercial banks operating in the clearing area were also ordered to be open for 24 hours or have their licences cancelled.

But tea exporters warned that abolishing the Transshipment Bond could escalate trade disputes with Uganda, Rwanda and Burundi which are already protesting plant import permit (PIP) charges levied by KEPHIS for tea destined for the Mombasa auction.

The countries have accused KEPHIS of disregarding safety certificates issued by their national regulators to accompany tea destined for Mombasa auction.

“If transshipment bond is abolished, most blenders will find it difficult to access teas from outside Kenya,” Mr Kimanga said, adding that the directive would reduce travel to Nairobi to have bonds cancelled.

Tea from the three countries comprises a quarter of the commodity used by blenders. Under the changes, pre-certified goods with conformity permits from the port of origin will be given preferential treatment.

Mr Kenyatta also ordered the digitisation of clearing services and modernisation of cargo weighing machines at the port and weighbridges. This will see KRA upgrade its Simba system and launch the single window system that automates clearing of goods.

Under the regional customs interconnectivity project financed by African Development Bank and advised by Ernst and Young, the EAC Secretariat has begun expanding Revenue Authorities Digital Data Exchange (RADDEx) system.

The new data exchange platform will add customs valuation data, transit bond management, risk management, cargo monitoring and sharing of trade documentation which are currently not on RADDEx.

The Secretariat has invited for expressions of interest in the consultancy services for design and configuration of Customs Information systems.