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EAC set for major trade boost in new cargo system

The Star, Kenya

EAC set for major trade boost in new cargo system

By Martin Mwita

2 January 2016

Trade within East Africa Trade will receive a boost this year with the implementation of the cargo pre-clearance system at the port of Mombasa by the Kenya Revenue Authority.

The system which came in place yesterday allows importers to clear goods before they arrive in the country, a move expected to improve port efficiency and delivery of imports in the region.

Under the system, importers can now lodge clearing documents and process them up to seven days before arrival of a vessel.

It is expected to reduce container dwell time currently averaged at 5.1 days against 3.6 days in 2014.

Kenya Ports Authority managing director Gichiri Ndua last month attributed the change to the introduction of the Single Customs Territory, which provides for assessment and collection of taxes for goods at the port of entry.

"The Single Customs Territory has had issues of continued human intervention resulting in slow down of documentation processes,” Ndua said at a stakeholders forum.

It has however reduced the cost of clearing cargo and of transport along the Northern Corridor by 30 per cent, according to KRA’s commissioner general, John Njiraini.

KRA is now pushing the pre-clearance system after it failed to take off in 2014, blamed on “importers’ failure to embrace the system,”

Importers must however comply with the new import standard rules under the Pre-Export Verification of Conformity to Standards programme.

This include a certificate of conformity issued by Kenya Bureau of Standards appointed inspection agents, prior to loading, failure to which they will have their cargo shipped back to country of origin.

The move is aimed at curbing sub-standard goods and tax leakages as the tax man seeks to meet a revenue target of Sh1.253 trillion this financial.

Pre-clearance is expected to save importers from demurrage charges, incurred after cargo overstays at the port.

Under the Kenya Ports Authority tariffs, domestic and transit cargo are awarded four and nine free storage days respectively.

A 20-foot container then attracts a charge of $3 (Sh306) per day for the first three days after expiry of the free storage. Four to 14 days attract a charge of $35(Sh3,579) which then increases to $40(4,091). The cost is double for a 40-foot container.

Intra-EAC trade is currently estimated at around $6 billion (Sh.613.7 billion).