Customs favours richer firms, small traders say

Cargo clearance operations in progress at the Lamu Port. [Maarufu Mohamed, Standard].

A few companies that have the corporate and financial muscle to convince customs bodies of their ability to develop strong logistical systems are able to get favours when clearing their goods, disgruntled businesses in the import-export sector say.

Interviews with some of the traders say there is no robust legal framework in any of the East African countries that guides how a company can attain Authorised Economic Operators (AEOs) status.

Lack of special recognition of the AEO programme by customs laws in all the East Africa Community (EAC) member states discourages small firms from joining the scheme.

Companies that have achieved AEO status are given first priority by customs officials when their goods are leaving or arriving at the port.

This means their documents are checked and cleared fast without much scrutiny, and they are given access to priority service channels such as telephone lines at contact centres and special corners at release points.

While it can take a week for a company that is yet to achieve that coveted status to clear its cargo, it can take as few as two days for an entity certified as an AEO to have its goods cleared. 

Kenya International Forwarding and Warehousing Association (Kifwa) Chairman Roy Mwanthi said in an interview that there are no clear laws guiding companies on their path to becoming AEOs.

Small and medium enterprises are especially locked out, while big corporate entities easily sail through. 

“The application process is very complex and the AEO programme is not recognised by other partner government agencies (PGAs) save for customs and bureau of standards,” said Mr Mwathi.

There is a conspicuous absence of SMEs in the scheme. They are said to lack awareness and financial capacity to meet AEO eligibility requirements.

A study by the Federation of East African Freight Forwarders Association (FEAFFA) reveals that only 99 cargo agents are registered in the programme.

This number is low considering Kenya has over 1,000 clearing agents registered with Kifwa.

There are only eight transporters enrolled in the programme. Kenya Transporters Association has more than 200 registered members. A measly 182 Kenyan companies involved in export-import of goods are registered.

There is only one ship agent enrolled in the programme that came into effect in 2015.

FEAFFA Vice President Edward Urio said despite being in existence for over 10 years, the AEO uptake remains too low to positively impact trade.

“Only a handful of SMEs have survived that journey,” said Mr Urio. “This means the benefits of the AEO programme are being enjoyed by only large and more established operators with financial muscle.”

Lawrence Othieno, a trade adviser at the Commonwealth, said in an interview that the AEO scheme builds trust between the customs administrators and traders through compliance.

“It also enhances the safety and security of traded goods among consumers from different geographical locations,” Mr Othieno said.

Stephen Analo, the principal customs officer for capacity building at the Directorate of Customs at EAC said the 39th meeting of the EAC’s Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) is mooting plans for a regional legal framework to support SMEs in their efforts to achieve AEO status.

“SCTIFI has directed the EAC secretariat to develop a harmonised framework for accrediting regional AEOs,” said Mr Analo.

In 2005, the World Customs Organisation Council adopted the SAFE Framework of Standards to secure and facilitate global trade.

The AEO programme was among the protocols that were borne out of this decision, and, as a result, the EAC revenue administrations, through their respective commissioners of customs, conceived the regional AEO programme in 2006.

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