Efforts to create a law to regulate the freight forwarding industry is taking final steps with key government agencies giving their inputs on the proposed model bill that will go to the final stakeholders meeting before it is presented to parliament later in the year.
The Kenya International Freight Forwarders Association (KIFWA) and the Federation of East African Freight Forwarders Associations (FEAFFA) in partnership with other relevant industry players unveiled the Kenya Customs Agents and Freight Forwarders Bill 2020 last month.
The two associations have since held consultative meetings with the Kenya Ports Authority (KPA), Kenya Revenue Authority (KRA), KenTrade and Kenya Maritime Authority (KMA). Another meeting with the Kenya Airport Authority (KAA) is planned to take place soon.
“We are meeting these agencies since they will be very strategic players in the ongoing initiative. We have also met other agencies representing relevant stakeholders,” Elias Rwamanyonyi Baluku, the Acting Executive Director of FEAFFA said.
The new law is aimed to enhance professionalism in service delivery and compliance to the existing regulations with the goal of ending the cargo delays at ports, improve cargo flow, improve revenue collection by the revenue authority and lower the cost of doing business.
When the bill was unveiled, FEAFFA President Mr. Fred Seka said the new regulation was meant to streamline cargo clearance by ending the deployment of untrained agents, promoting fair competition, protecting industry players from unfair liability, supplementing existing government regulations and introducing mandatory registration and training of all customs agents and freight forwarders and fines and penalties for non-compliance and misconduct.
“Kenya trades over 30m tonnes of cargo within the East African community and the volumes keep growing, putting more pressure on a system that is inherently inefficient due to the lack of obligatory qualifications,” said Mr. Seka.
The consequent delays are costing shippers as much as KSh25.6bn a year in extra demurrage charges.
The proposed bill will require all customs agents to demonstrate their understanding of the clearance processes, valuations, classification, rules of origin and management, of the changing regional regulatory regime, and of the country’s clearing systems, digital gadgets and portals.
This will make for a step change in cargo efficiency, with 62.5 per cent of Kenya’s customs agents and freight forwarders currently lacking the skills to ably clear goods, according to the International Journal of Supply Chain and Logistics.
The skill gaps have resulted in frequent clearance errors, across the wrong tariff classification and valuation, the wrong duty and tax payments, cargo entry errors in the system, and acquisition of the wrong certificates, all of which frequently add extra delays.
“The result has been spiraling shipping costs, which are now three times higher than in other countries and making nearly all of our goods more expensive to consumers,” said Mr. Roy Mwanthi, National Chairman KIFWA.
For instance, the Embakasi Inland Container Depot receives about 5,600 containers every week, for clearance from Mombasa and the clearance process is supposed to take four days, according to the KPA Tariff Charter. Agents however are only managing to clear 48 per cent of the arriving freight within the four-day timeframe.
To address this, the bill seeks to formalise the East Africa Customs and Freight Forwarders Professional Certification (EACFFPC) exam and make it mandatory in order for customs agents and freight forwarders to get licenses from the revenue authority.
“Of the over 8,000 customs agents operating in the country, only 3,000 have taken the exam over the last decade on a voluntary basis. Mandatory certification and continuing professional development will ensure professionals stay abreast with the necessary skills required in the sector,” said Mr. Mwanthi.
Furthermore, the bill requires every certified customs and freight forwarders agent to be registered to operate and the publishing of the list of all active, registered customs agents.
“We want to eradicate rogue agents and protect industry players from liability. Presently, the general public is not able to distinguish a genuine customs agent from a rogue one,” said Mr. Mwanthi. “Fines and penalties of up to two million shillings and imprisonment of two years or both are also being introduced.” He added.
“To increase logistics investment in the East African region and boost cross border trade we need an industry that is guided by stringent regulatory guidelines that enhance business efficiency, competitiveness and ensure professionalism which is the reason we are supporting adoption of the bill,” said Daniel Kiange, manager trade facilitation at KenTrade.
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