16 March 2020
KENYA: Penalty Fees for Non-Compliance of Import Rule Slashed
The Kenyan government has reduced the penalty for importers that break the rule requiring imported goods to undergo its standard inspection regime in their origin countries.
On 7 February 2020, Kenya’s industrialisation cabinet secretary, Peter Munya, ordered the Kenya Bureau of Standards (KEBS) to reduce the penalty levied on importers for non-compliance with pre-inspection from 20% to 5% of the value of the goods in question. According to Bernard Njiraini, KEBS Managing Director, the directive took effect immediately from that date, rather than from its official publication date in the Kenya Gazette.
Kenya made it illegal for importers to ship goods into the country without prior inspection in their countries of origin under its Pre-verification of Conformity (PVoC) inspection regime, introduced by the KEBS in 2005. Initially, the penalty for non-compliance was 15%, increased to 20% in December 2019.
The PVoC inspection and penalty regime has generally been viewed by those in the industry as a successful initiative in speeding up the clearance of goods at ports, and in reducing the entry of substandard and fake goods. Industry players have so far reacted with some scepticism to the new, substantially lower rate. The Kenya Association of Manufacturers (KAM) has argued that lowering the penalty will adversely affect the gains that have been made by the previous higher penalty in deterring the illegal importation of counterfeit and substandard goods. Moreover, the government will also lose out, because the taxes that manufacturers and legitimate importers are currently paying on their sales are likely to be reduced, as cheaper counterfeit products become more available and eat into the market, according to Phyllis Wakiaga, KAM’s Chief Executive. She said: “The move also runs counter to one of the key PVoC guidelines objectives, which is to prevent unfair competition from substandard products.”
For importers, there is also concern that the lower fines will result in many more goods coming in without having prior inspection at source countries. This will lead to a backlog of goods awaiting inspection and valuation at Mombasa Port, which will significantly increase clearance times, and subsequently costs. As a result, the KAM has called on the government to restore the previous more stringent penalty.