The East African Community (EAC) Directorate of Customs is reviewing ways of categorizing the Small, Medium, and Micro Enterprises (SMME) as independent units in the Authorized Economic Operators (AEO) program to address the underlying complexities that have contributed to its low uptake by these traders.
Once this is done, SMMEs will be grouped into different categories such as importers, exporters, clearing agents, and transporters, and are assessed independently before joining the AEOs program. This is expected to position SMMEs strategically as the East Africa region leads the continent in the rollout of the Africa Continental Free Trade Area (AfCFTA).
Three East African countries were among the seven under the Guided Trade Initiative (GTI) that was launched in October last year, which is meant to facilitate trade under AfCFTA through matchmaking businesses and products for export and import between these interested state parties.
Those countries are Ghana, Kenya, Rwanda, Tanzania, Egypt, Mauritius, Cameroon, and Tunisia. Low awareness, according to the Federation of East African Freight Forwarders Associations (FEAFFA) acting Executive Director, Mr. Elias Baluku, has been one of the major contributing factors to the low uptake.
Adoption of the Authorized Economic Operators (AEO) customs clearing program in the country has been slow over the past years. Since its launch in 2007 with only 11 companies, it had 325 accredited companies in Kenya and 202 within the East African region in March this year.
Kenya Revenue Authority (KRA) has seen potential in growing the numbers further as it plans to launch the national AEO framework later this year. There are other stakeholders that are putting in place efforts to upscale the uptake of the program. GIZ Kenya has supported the FEAFFA and Kenya International Freight Forwarders Associations (KIFWA) in creating awareness to bring more actors into the AEO program.
In a recent meeting held between FEAFFA and East African Community (EAC) in the latter’s headquarters, the two agencies agreed to fast-track the development and implementation of a regional SMEs AEO scheme to facilitate trade. FEAFFA is also seeking support from the GIZ’s regional office in Arusha to sensitize AEO in Tanzania, where the uptake has been lowest in the East African region.
Tedious application processes that take long without a sufficient guarantee that a company will be accredited have also been cited as one of the major obstacles in the implementation of the AEO program that is run by the customs authorities in East Africa according to a study done for FEAFFA.
SMMEs have over the years complained of being cost-disadvantaged and have not been able to keep up with the high standards and stringent measures adopted by customs in vetting the companies for AEOs accreditation.
AEOs are compliant and trusted traders who are allowed to operate with minimal customs controls. The scheme significantly reduces the physical and document-based controls, offers priority treatment in customs, and guarantees easy access to customs by businesses, among other benefits.
KIFWA chairman Roy Mwanthi, in an earlier interview, said there is “a clear lack of motivation” and the application process is very complex with the AEO program not recognized by other Partner Government Agencies (PGAs) save for customs and the Kenya Bureau of Standards.
Focusing AEOs on small and medium businesses by revenue authorities is in line with the resolutions of the 39th meeting of the East Africa Community Sectoral Council on Trade, Industry, Finance, and Investment (SCTIFI) that adopted the simplified AEO accreditation criteria to suit SMEs to enhance the program’s uptake.
In 2005, the World Customs Organization (WCO) Council adopted the SAFE Framework of Standards to secure and facilitate global trade.
The AEO program 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 program in 2006.
“FEAFFA’s intention is, therefore, to supplement the efforts of the EAC and the Revenue authorities in strengthening the capacity of the private sector players, especially the SMEs, to meet the threshold for AEO accreditation so that the number of AEOs can increase and have much more cargo moving across borders with minimal customs intervention,” FEAFFA first Vice President Mr. Edward Urio said.
This article was published by an editorial consultant and can be reached via githua.kihara@gmail.com
