Mystery of Sh223 bilion Chinese imports that didn’t reach Kenya

Kenya might have lost hugely in tax revenues, with an analysis of official data showing imports valued at more than Sh222.7 billion from China were either under-declared or diverted.

Data from China’s General Administration of Customs show that the Asian country exported to Kenya goods valued at Sh575.7 billion ($5.4 billion using the 2020 exchange rate), in the 12 months to December last year.

However, this is a substantial variance compared to the goods worth Sh353 billion captured by the Kenya Revenue Authority (KRA) report on imports from China during the same period.

This massive discrepancy has baffled analysts, with some fearing that one of the data sets might be wrong. KRA had not responded to our query by the time of going to press.

“That is a big difference… I have a feeling that somebody’s data is wrong. Whose it is, I don’t know,” said Nikhil Hira, a tax expert and director at law Bowmans.

Nonetheless, Nikhil explained that while the Chinese government records exports that leave China, they might not necessarily arrive in Kenya. He, however, insisted that such might only account for a “tiny difference.”

“The only other reason is that the stuff that is coming in from China isn’t going through the correct channels,” he added.

KRA has insisted before that there has been a lot of under-declaration of imported cargo and has in the past launched a crackdown on consolidated cargo, triggering an outcry from small traders.

This comes at a time KRA has been tasked to cast its net wider to collect as much taxes from the public as possible. Between January and December last year the country collected about Sh88.04 billion in import duty, official data shows.

Assuming that all these products attracted the lowest import duty of 10 per cent, the country would have gained Sh25 billion.

This is enough to pay for the supply of vaccine and cash transfers to the elderly.

China is Kenya's leading trading partner, with the country importing almost everything from the world’s second-largest economy after the US. The goods Kenya imports from China range from electronics, motor parts, shoes, garments, tyres and second-hand clothes.

In 2019, small traders from Kamukunji and Eastleigh protested what they described as punitive taxation by KRA, after a multi-task agency launched an all-out war against contraband goods.

The taxman has since launched non-intrusive scanners at key border points to help detect suspicious items.

An electronic cargo tracking system that monitors transit cargo from the point of entry to the exit is also expected to cut offloading of undeclared goods in the local market.

FASTER CLEARANCE

Recently, the government, in a bid to facilitate easy and faster clearance of Cargo, gazetted various facilities to be used for deconsolidation and clearance of cargo by small-scale traders.

“All cargo consolidated at the countries of export will, upon importation, be deconsolidated at facilities designated for that purpose,” said KRA.

This took effect early last month, with all consolidated cargo imported by sea and transported to Nairobi through rail being opened, cleared.

It is then collected by the owners at the Kenya Railways Corporation (Boma Line) Transit Shed, in Nairobi.