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Shipping & Logistics

More import firms sign up to regional cargo clearance deal

Inland Container Depot
Containers at the Inland Container Depot in Embakasi, Nairobi. FILE PHOTO | NMG 

A regional initiative aimed at easing cargo clearance in ports is gaining traction as more companies sign up to it.

The implementation of the regional Authorised Economic Operators (AEO) programme conceived by the Commissioners of Customs of the East African (EAC) countries in 2016 gives preferential treatment to affiliated companies after meeting certain conditions.

Last year, 43 more companies across the East Africa were accredited to AEO, bringing the number the total to 116, up from 73 in 2018.

PN Mashru was one of the Kenyan companies that joined the group last year, and is banking on the move for growth.

"The company applied through the Kenya Revenue Authority (KRA) and with slow transport business because of SGR, we expect to attract more business since AEO accredited companies have more advantages," said PN Mashru declaration officer Reuben Mwaluma.

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He said AEO accredited companies have preferential treatment in the management of customs operations which include automatic passing of declarations with no physical examination of goods. This reduces time taken to transport cargo.

Such companies also have guaranteed renewal of customs licence, priority treatment in cargo clearance chain, and waiver of movement bond requirements.

EAC commissioners of customs have been advocating for more companies, especially in transport sector, to join the programme with a target of 500 by 2022.

“On AEO programme, the region has also been exploring the possibility of entering into Mutual Recognition Agreements (MRA) with the rest of the world to allow our traders enjoy benefits when trading with other regions of the world,” reads the EAC Single Custom Territory Monitoring and Evaluation Committee joint communique.

In 2018, the EAC directorate recorded more than Sh150 billion worth of goods traded by AEOs, representing 10 percent of the customs duties collected from regional AEOs that period.

For a company to attain AEO status, it has to undergo four-stage process which include lodging application with the national customs administration, which takes it through the authorisation process.

Once satisfied that the applicant is qualified, the national administration checks compliance records with the customs administrations in the other partner States before approving the applicant's application.

The applicant is then invited to sign a Memorandum of Understanding (MoU) which is done by the customs administration on behalf of EAC before the trading bloc’s secretariat issues a certificate to the applicant. For a company to get AEO certificate, it must “be a reliable, trusted customer that is fully compliant, have adequate traceable documentation and follow due standard operation procedures and be financially solvent”.

The regional AEO programme was conceived by Burundi, Kenya, Rwanda, Tanzania and Uganda in 2006 after the adoption of the World Customs Organization’s (WCO) Safe Framework of Standards in 2005.

The commissioners' decision was in line with the EAC protocol that requires the community to set up a customs union as one of the building blocks for regional integration.

The decision was also prompted by the consideration that since the AEO program is about trade facilitation and the security of the supply chain, traders and customs stood to gain more if the whole supply chain in the region is covered under one programme.

The AEO plan is a WCO programme that is being implemented worldwide.

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

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