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KENYA: New Bill to Improve Customs Clearance and Freight Forwarding

All customs agents and freight forwarders working in Kenya will be required to register and undergo professional training, following the introduction of new legislation.

The Kenya International Freight Forwarders Association (KIFWA) and the Federation of East African Freight Forwarders Associations (FEAFFA), in partnership with other relevant industry associations, officially unveiled the Kenya Customs Agents and Freight Forwarders Bill 2020, in Nairobi on 21 January 2020. The bill is intended to improve professionalism in the industry, improve compliance with existing regulations, reduce cargo delays at ports, improve revenue collection by the revenue authorities, and lower the cost of doing business. The bill is a localised version of the East African Model Customs Agents and Freight Forwarders Management Bill 2017, and is likely to become law before the end of the year. Rwanda, Burundi and Tanzania are also in various stages of introducing similar legislation.

The proposed regulations will end untrained agents operating in the sector by introducing mandatory registration and training of all customs agents and freight forwarders, according to FEAFFA President, Fred Seka. It also imposes specific fines and penalties for non-compliance and misconduct.

Under current legislation, the only legally defined penalty is for agents operating without licences, and the fine amount is not specified. The new bill proposes that a: “…person who contravenes any provision of this Act to which no penalty has been prescribed commits an offence and shall on conviction, be liable to a fine not exceeding one million shillings (US$10,000) for an individual or two million shillings for a legal person, or imprisonment for a term not exceeding one year or to both”.

Lack of expertise in customs clearance and its impact on costs has become a growing problem for the country. It takes Kenya an average of 39 days to export and clear goods, compared with global averages of 15 to 26 days, according to the World Bank. Furthermore, 62% of Kenya’s customs agents and freight forwarders currently lack the skills to properly clear goods, according to the International Journal of Supply Chain and Logistics. The consequent delays are costing shippers as much as KES25.6 billion (US$254 million) annually in extra demurrage charges. KIFWA national Chairman, Roy Mwanthi, said: “The result has been spiralling shipping costs, which are now three times higher than that in other countries, making nearly all of our goods more expensive to consumers.”

To address the problem, the bill requires all customs agents fully understand the clearance processes, valuations, classification, rules of origin, and management under the changing regional regulatory regime. To achieve this, they must have East Africa Customs and Freight Forwarders Professional Certification (EACFFPC), which will become mandatory for all customs agents and freight forwarders before they can get licences from the Kenyan revenue authority. Currently, only 3,000 out of more than 8,000 customs agents operating in the country have taken the EACFFPC exam over the past decade.

Content provided by Picture: HKTDC Research
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