MOMBASA, KENYA: The East Africa Community directorate of customs is calling on more private companies in the region to join the Authorized Economic Operator (AEO) programme to take advantage of the benefits that come with it.
The program was rolled out in 2015 to promote regulatory compliance, enhance trade facilitation and improve border security.
“The program emphasises partnerships based on trust between businesses and government regulatory bodies,” Head of compliance and enforcement department at the directorate, Flavia Busingye said.
Busingye spoke at the Mombasa Continental Hotel on the sidelines of a one week training of regional experts drawn from the member states revenue authorities and the private sector.
So far, there are 73 companies across the region which has been accredited as AEO, up from 13 in 2015.
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The EAC directorate further stated that as of February 2018, 55 applicants were in the pipeline.
The value of goods traded by AEO is about USD1.5 billion (about Sh150 billion per year).
“10 per cent of the customs duties is collected from regional AEOs,” she said.
She added that the programme has not only enhanced partnership between the private sector and the Revenues Authorities but also secured the supply chain along the corridors.
German Government Development Corporation (GIZ), which supports implementation of the EAC AEO program, said the program has reduced the cost of doing business in the region and improved lives of the EAC citizens.
“The financial impact of the full implementation of the EAC AEO programme will be felt by many citizens through access to cheaper products as distribution costs are reduced in East Africa in the next two to three years,” Kirsten Focken, the GIZ programme manager, said.
Kenya has 14 companies enrolled in the program in the regional platform.
Rwanda has the highest number of companies in the program at 25, while Tanzania has the least at two only.
Burundi and Uganda have nine and 25 company each.
Busigye said the region intends to undertake a major expansion of the program and have at least 500 companies in the next five years.
AEO accredited companies have preferential treatment in the management of customs operations.
These include automatic passing of declarations, no physical examination of goods, except for random or risk based interventions, guaranteed renewal of Customs license, Priority treatment in cargo clearance chain, Waiver of movement bond requirements for AEO, among others.
Kilifi based Umoja Rubber Products and Mzuri Sweets Limited Managing director, Mr Dilip Shah said their revenues have picked up by upto 20 per cent since they joined the program two years ago.
The firm manufacturers footwear and confectionary for the local, regional and international market employing about 2500 locals.
“Our cargo has been cleared faster and our demurrage costs have reduced by about 70 per cent. This means we save more and consequently the revenue increases,” Shah said.
Shah said that prior to joining the programme, they would be forced to make orders for imported raw materials three months in advance but soon after they joined, they make orders only a month in advance.