•This, even as Treasury proposes to increase IDF to three per cent of the customs value of a consignment, from 2.5 per cent, under the Finance Bill 2024.
•The Kenya Association of Manufacturers , Shippers Council of East Africa , Kenya Ships Agents Association and clearing agents have all opposed the KenTrade move.
Kenya Trade Network Agency (KenTrade) is under criticism for introducing fresh user fees on its platform, which importers and exporters term an additional cost and "wrong move".
The State agency which runs the National Electronic Single Window System, an automated platform that allows parties in trade and transport to lodge documents and seek clearance, has introduced a number of charges in a move to raise revenue to meet budgetary needs.
This comes amid pressure from the National Treasury where the agency is expected to increase automation of cargo documentation and clearance processes from the current 95 per cent to 99 per cent by 2027-28.
With a budget of Sh948.5 million allocated by the National Treasury, KenTrade whose main mandate is to run the Single Window System is also expected to simplify import and export cargo documentation and clearance processes from the current 18 t0 eight by 2027-28.
It is also tasked with maintaining 95 per cent availability of automated services and 95.5 per cent availability of systems, which has from time to time had downtimes, which affect trade processes.
Its current allocation includes Sh364.4 million meant for recurrent expenditure and Sh558.3 million for development.
While KenTrade’s budget is meant to be funded by collections from the Import Declaration Fee (IDF), which closed half-year to December at Sh23 billion, with an annual average of Sh45 billion, KenTrade has introduced $50 (Sh6,650) user fee for new applications for registration, effective May 20. It will also be charging a similar amount as annual access fee.
Users seeking to apply for lifting of a suspension have to part with $10 (Sh1,330) per request, per user with application for unique consignment reference number on the system also costing them a similar amount.
KenTrade is further charging $80 (Sh10, 640) for a notification of an impending arrival or departure of a consignment, $10 (Sh1,330 ) per transaction on the application of an import and export exemption and $5 (Sh665) for application of a domestic trade permit or licence, according to the notice issued by CEO David Ngarama.
This, even as Treasury proposes to increase IDF to three per cent of the customs value of a consignment, from 2.5 per cent, under the Finance Bill 2024.
The Kenya Association of Manufacturers (KAM), Shippers Council of East Africa (SCEA), Kenya Ships Agents Association (KSAA) and Kenya International Freight and Warehousing Association (KIFWA), have all opposed the decision.
“We had hoped that the government would fully finance the operations of this important platform from the IDF,” SCEA acting chief executive Agayo Ogambi, told the Star.
“We had also proposed that trade facilitation agencies on the platform would pay at least 10 per cent to 20 per cent of their revenues derived from fees and permits costs paid by importers, to KenTrade.”
In a joint communiqué addressed to National Treasury CS Njuguna Ndung’u, the business associations have said they are concerned that the new fees and charges implemented beginning on May 20 were introduced “too quickly” and will burden importers and the industry as a whole.
This will ultimately affect consumers including making Kenyan products uncompetitive in the East African Community region.
The Associations have since called for more stakeholder engagement to develop strategies for maintaining the KenTrade system without overburdening businesses.
They have sighted lack of adequate engagement with feedback and concerns by the industry not adequately addressed.
Additionally, there was no follow-up engagement or review feedback provided to stakeholders and stakeholders were not sensitised or informed adequately about the impending proposed changes, the group says.
“The proposed levies and fees by KenTrade are deemed excessively high for the manufacturing industry. The Importers/exporters already pay permits to the various government agencies for services through the KenTrade platform,” the associations say in the letter copied to CSs Rebecca Miano (Trade), Kipchumba Murkomen (Transport) Salim Mvurya (Blue Economy) and KenTrade CEO Ngarama.
They have warned that the new levies and fees may be counterproductive by watering down gains made in the country in enhancing efficiencies around the trade facilitation processes.
“There is outcry from the industry about the increasing high cost of doing business therefore there is need to review these charges downwards and provide an exemption criterion for exports consignments and for such goods of no economic value, such as samples, personal effects, and donations,” they said.
Implementing fees and charges in US dollar during a period of dollar shortages and a weak shilling also exacerbates financial strains.
“KenTrade's approach of dollarising fees, knowing that most imports are raw materials for value addition, unfairly penalises importers particularly in the manufacturing industry, undermining Kenya’s industrialisation agenda,” the group noted.
The move also contravenes the World Trade Organisation provisions on trade facilitation.
The associations have called for a joint meeting with all stakeholders to discuss and determine the most effective way forward, with the enforcement of the new regulations put on hold until a consensus is reached.