Stakeholders validating a report on the impact of transit bond penalties on customs agents and freight forwarders in East Africa have called on the Kenyan government to reconsider its approach to enforcing these penalties and to enhance the competitiveness of cross-border trade.
The Federation of East African Freight Forwarders Associations (FEAFFA), in collaboration with the Kenya International Freight and Warehousing Association (KIFWA), partnered with the GIZ Alliance for Trade to conduct the study. The report’s findings highlight the status of transit bond implementation in Kenya and its implications for businesses involved in cross-border trade.
The validation took place on Thursday, September 26, 2024, during a virtual meeting moderated by FEAFFA. Logistics sector representatives from Kenya and the region provided their inputs, a crucial step toward ensuring ownership of the study’s findings by industry stakeholders before finalizing the report.
Mr. Elias Baluku, Executive Director of FEAFFA, encouraged participants to engage fully in validating the report’s findings. “We expect that the findings of this study will be thoroughly examined in this meeting, and where necessary, proposed amendments will be considered for inclusion in the final report,” he stated.
KIFWA National Chairperson, Mr. Roy Mwanthi, similarly encouraged stakeholders to share their insights and help the government and private sector address trade-related challenges. “We need your agreement and ownership of this study before proceeding with further engagements, including its implementation,” he added.
Mr. John Muchina, Trade Policy Advisor for the Global Alliance for Trade Facilitation, GIZ Trade Kenya, emphasized that the government’s involvement at the research stage was important as it demonstrated its commitment to addressing transit bond-related challenges. He urged continued government support for future engagements during the report’s implementation phase, once it is finalized and launched.
During the meeting, several participants contributed feedback. Some raised concerns about various taxation measures imposed by the Kenya Revenue Authority (KRA) on transit bonds and suggested the government implement mechanisms that allow for the automatic cancellation of bonds once goods cross borders.
Other stakeholders called for the harmonization of legislation governing the transit business under the East African Community Customs Management Act (EACCMA 2004), to ensure uniformity across the region.
KRA was represented by Ms. Christine Nango from the Trade Facilitation Division—Bonds Management Unit. She praised the private sector, led by FEAFFA and KIFWA, for championing improvements in cross-border trade through research, advocacy, and other interventions.
The study, conducted between January and September 2024, focused on evaluating the implications of transit bond penalties on the profitability and competitiveness of customs agents, freight forwarders, and businesses engaged in cross-border trade. It also analyzed the financial burden imposed on operators due to penalty payments and associated costs, including legal fees, administrative expenses, and potential penalties for non-compliance. Additionally, the study examined the operational challenges faced by customs agents and freight forwarders as a result of KRA’s penalty enforcement.
Data for the study was collected through both virtual and physical engagements at key border posts, including Busia, Malaba, Namanga, Mombasa, and Lunga Lunga, to establish a baseline for operations related to transit bond execution.
Other organizations represented during the validation included the Shippers Council of East Africa (SCEA), Kenya Ports Authority (KPA), Kuhne Foundation, Insurance Regulatory Authority (IRA), TradeMark Africa (TMA), and KIFWA members, among others.
The report is scheduled for an official launch in October 2024.
The article was published by Andrew Onionga and can be reached at oniongaam@gmail.com Tel: +254733780240
