Regional red tape blamed for slow licensing of importers

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Tedious application processes have been cited as the major obstacle in approval of importers in East Africa. FILE PHOTO | NMG

Tedious application processes have been cited as the major obstacle in approval of importers in East Africa.

A new report reveals that implementation of the Authorised Economic Operators (AEO) programme under the Customs Authorities in East Africa faces a number of obstacles, slowing down approval of importers and other logistics players in the region.

According to a report by the Federation of the East African Freight Forwarders Association (FEAFFA), lack of awareness among industry stakeholders and tedious application processes stand in the way of faster implementation of AEO where only 155 importers have been accredited in East Africa since 2006.

Small and Medium Micro Enterprises (SMME) are cost-disadvantaged and are not able to keep the high standards and stringent measures used by customs in vetting the AEOs, the study reveals.

The AEO aims to enhance customs efficiency in the face of increasing volumes of trade and the rising vulnerability of the international trade supply chain to security threats as well as use of the international trade supply chain as a conduit for high security risk materials.

The AEO programme tackles these challenges “by shifting the perspective, so that instead of focusing on the goods themselves, customs focuses on the traders”.

The study said there is also the lack of harmony and standard application and accreditation procedures, which affects the regional AEOs uptake.

Other factors include fear of exposure and a perception that the process is not transparent.

Approved operators have been averaging 27 each year between 2015 and 2019. Majority of the operators currently reporting benefits from the AEO programme “are by default relatively large operators”.

Smaller operators expressed feelings of exclusion and low value for money, the study revealed.

Importers and exporters registered under AEO in the region, for instance, stood at 155 importers since the programme started in 2006, with only 83 registered in the programme being clearing agents. However, this number is low considering that the Kenya International Freight Warehousing Association (Kifwa) has registered over 560 and 780 clearing agents in Mombasa and Nairobi respectively.

There are only seven transporters enrolled in the programme in Kenya despite the Kenya Transporters Association (KTA) having over 200 registered members with a significantly huge proportion of transporters, especially those with few trucks, not being members.

There is only one ship agent enrolled in the programme, according to KRA. Therefore, this means that importers cannot enjoy services by AEOs in the entire logistics chain.

Kifwa Chairman Roy Mwanthi, said there has been a consistent lack of enthusiasm by both the private sector and government regulators.

“There is a clear lack of motivation as the application process is very complex and the AEOs programmes are not known or recognised by other agencies save for customs. There is need to have a campaign to encourage importers to be accredited and the process made easier due to immense benefits accrued from AEOs,” said Mr Mwanthi.

The AEO programme was conceived by the Commissioners of Customs of the East African (EAC) countries of Burundi, Kenya, Rwanda, Tanzania and Uganda in 2006 after the adoption of the World Customs Organization (WCO) SAFE Framework of Standards by the WCO Council in 2005.

The AEO plan is designed to facilitate and enhance the experience of compliant trader when undergoing customs clearance processes.

There are both the national and regional AEOs. The EAC regional AEO programme is applicable in all the partner states namely Burundi, Kenya, Rwanda, Tanzania and Uganda save for the Republic of South Sudan which was not a partner state of EAC at the commencement of the programme.

The regional AEO initiative operates under a common set of criteria, instruments, authorisation process, benefits and monitoring system in all the partner states.

An applicant for AEO status, irrespective of the partner state, therefore is supposed to go through the same set of criteria like counterparts in other partner states.