Kenya: Clearing Agents Go-Slow Cripples Port Activities

Members of Clearing and Forwarding agencies Protest delays in licensing by KRA Customs department [Image: sideman.com]

On Monday, February 2017, a section of the Kenya International Freight and Warehousing Association (KIFWA) held a press conference to announce an intended halt to collection of taxes on behalf of importers and exporters as well as registration of any new custom entries.

In addition, the Association members announced their intention to desist from clearing any cargo from any customs frontier.

 

Members of Clearing and Forwarding agencies Protest delays in licensing by KRA Customs department [Image: sideman.com]
Members of Clearing and Forwarding agencies Protest delays in licensing by KRA Customs department [Image: sidoman.com]

This drastic decision has been arrived at following acts by the Kenya Revenue Authority (KRA) that clearly hamper the operations of certain players in the clearing and forwarding industry in Kenya through delays in the issuance and renewal of operating licenses.

As of today, not a single customs agent has had their licenses renewed by the commissioner General of KRA, despite applications  having been finalized by end of September last year. However, passwords are still on and running. The delay scared the agents upfront. 

This move effectively paralyses import and export activities at the JKIA; at port of Mombasa; at border towns of Namanga, Busia and Malaba; and inland Container Freight Stations (CFS).

It is general consensus among members of KIFWA that the Kenya Revenue Authority is mismanaging affairs.

KIFWA contends that the Customs & Border Control department, and by extension the Commissioner General of the KRA are deliberately making a hash of affairs in their jurisdiction.

On their part, the Kenya Revenue Authority on Tuesday issued a swift rejoinder to counter these claims.

A press release by the KRA states that the ongoing initiative is aimed at evaluating applicant suitability prior to renewal of licenses. The KRA contends that clearing and forwarding service providers in Kenya are entrusted with a critical role of safeguarding national security and collection of revenue, and so this process must be thorough.

Nothing could be further from the truth. Clearing and Forwarding agents in Kenya’s neighbours such as Tanzania and Uganda have three-year running licenses. Why can’t the same be applied in Kenya?

It seems the move by the Customs department to deny operators their licenses is informed by the notion that too many clearing agents gunning for the same customer base will create loopholes for tax evasion.

Locking out the SME Clearing agents is not a solution. Perhaps a temporary halt on the issuance of new licenses will bring some of the needed order. This can be coupled with putting in place more stringent measures for renewal of existing members licenses.

Many people depend on the existing clearing and forwarding agents. Through the creation of jobs and opportunities, the clearing and forwarding industry in Kenya supports some 200,000 families directly and indirectly. These firms also aid in the collection of tax revenues for the KRA, amounting to an estimated KES 3 billion daily.

The move by KRA has got some operators reallu angry [Photo: Sidoman.com]
The move by KRA has got some operators reallu angry [Photo: Sidoman.com]

The apparent refusal to calls for dialogue between the agents and the Commission is definitely not good for the economy. Subsequent clogging at the ports will definitely result in loss of revenue, tax and duties.

We already have enough strikes and demonstration in the public service in Kenya (the doctors’ strike and the lecturers’ strikes are not resolved yet). We could certainly do with one less demonstration.  

The planned demonstration by members of the Kenya International Freight and Warehousing Association will certainly be averted if the licenses for all agents are renewed as a matter of urgency.

Top clearing agents in Kenya like Sidoman are well on the path of international status given the proper environment coupled with its mission, vision and manpower. The move by revenue authorities to choke small and medium enterprises is quite retrogressive.

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Wednesday 15th Feb 2017

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