Clearing agents fight to defend their turf

By Benard Sanga

 KENYA: Clearing agents, aggrieved by the proposed Single Customs Territory (SCT) tax regime, have resolved to go to court to challenge its implementation.

The Kenya International Freight and Warehousing Association (Kifwa) says implementation of the SCT between Kenya, Uganda and Rwanda will destroy the limping clearing and forwarding sector, which is currently trying to re-invent itself to remain relevant in the shipping logistics supply chain.

Under the SCT tax regime arrangement taxes for transit cargo from foreign countries will be collected by their agents in Mombasa. Kifwa is unhappy with this, saying it will render Kenyan clearing firms redundant.

Job losses

“It was unanimously agreed through a special resolution that every member (of Kifwa) contributes Sh10,000 towards meeting legal fees for the case to be filed at the High Court aimed at stopping implementation of the new presidential directive, which to the opinion of members will adversely affect their business and cause massive loss of jobs if not carefully addressed,” stated a letter signed by Kifwa Executive Officer, Dennis Ombok.

Mr Ombok said Kifwa had opted to move to court to protect over 700 agents who would be affected once the system is implemented.

Clearing agents are also facing stiff competition from an increased number of one-stop multinational freight logistics providers (FLP) in the local market.  FLPs provide importers with other services such as transportation, labelling, re-packaging and inventory management, edging out the locals.

By providing these services, the FLPs provide a one-stop-shop for shippers hence reducing the cost and limiting geographic constriction hence reduced turn around and transport times.

Recent statistics from Kenya Revenue Authority indicate that the number of the local agents has shrunk from 1,500 in 2004 to below 700.

“Stiff competition from multinationals has elbowed locals out of this business. This trade is not lucrative anymore because even the fee charged by agents has come down to about Sh3,000 from the Sh50,000 we used to charge in 1990s,” said Peter Otieno, a customs agent.