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January 18, 2019

JULIUS MUSYOKI: Facilitation of SMEs is key to unlocking economic development

Jua Kali artisans at work. /FILE
Jua Kali artisans at work. /FILE

In recent years, economic studies have placed small- and medium-scaled enterprises right at the heart of economic development in Kenya. The 2017 National Economic Survey released by the Central Bank of Kenya (CBK) reveals that small-scale traders account for about 98 per cent of all businesses.

The report states that SMEs account for about 30 per cent of jobs created annually and command a three per cent share in the gross domestic product (GDP).

However, unscrupulous traders and importers bring in substandard and contraband goods at the expense of importers of genuine products. Substandard and contraband products do not only cheat the government of revenue due, but also pose serious health hazards.

To facilitate trade, KRA has been in the frontline in the fight against illicit trade and contraband goods. Apart from revenue collection, the mandate of Customs and Border Control extends to trade facilitation, border control, enforcement of restriction and prohibitions, among other functions.

The authority has put in place strategic measures, including leveraging on modern technology, to ensure a level playing field for traders.

Early last year, KRA launched an ambitious cargo tracking technology to mitigate against diversion and dumping of transit cargo in the country. The regional electronic cargo tracking system was conceptualised to deal with the then-rampant vice of goods destined for neighbouring countries finding their way into the local market.

Cargo dumping had been a major pain, denying the government its rightful share of revenue and bringing unfair competition for local traders.

Since November 2015 KRA, in conjunction with Kebs, have leveraged on an extensive trade facilitation programme — Pre-export Verification of Conformity to Standards (PVoC) — which ensures that goods are inspected at the country of origin before they are shipped to Kenya.

To bring on board small-scale traders, who in most cases import their goods in consolidation, the two agencies have developed a framework to ensure that even consolidated goods are inspected at the countries of origin and issued with certificates of inspection (CoI). The beauty in this programme is that it substantively reduces the amount of time taken to clear goods at the port. In turn, the traders are able to take their goods to the market in good time.

The programme is further designed to alleviate inconvenience to importers and traders as far as conformity of their goods to set standards is concerned. Imagine going through all the trouble of importing your goods, only to learn long after they have arrived that they do not conform to the country’s standards.

The programme therefore serves as a guarantee to importers that once their goods are given a clean bill of health at the country of origin, chances of non-conformity issues arising on shipment are minimal.

KRA now has a firm grip on weeding out falsified documents previously issued by unscrupulous importers and traders. The programme has also led to a significant improvement in revenue collection as it has enabled KRA to obtain quality transaction documents provided by suppliers and exporters during pre-shipment inspection.

Given the requisite support in trade facilitation, the small-scale trading cadre has a much higher potential to catapult the country’s economic and development agenda to the forecast levels.

Commissioner for Customs and Border Control, KRA

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