Proposed law to eliminate losses at Kenya’s port, improve services

East Africa’s quest to improve service delivery at the ports of entry has gone a notch higher with Kenya joining Rwanda, Burundi and Tanzania in domesticating a version of the East African Customs Agents and Freight Forwarders Management Model Bill 2017.

Under the proposed Kenya Customs Agents and Freight Forwarders Bill, all agents will have to demonstrate their understanding of the cargo clearance processes, valuations and classification.

The drafting of the Bill started in 2014 and was completed in 2017. It is designed to bring order, efficiency, accountability and professionalism in the sector.

So far, Rwanda, Kenya, Burundi and Tanzania have drafted national Bills; the Rwanda Freight Forwarders Association is getting the draft adopted as a Bill to be presented to parliament.

Customs agents will also be required to be well versed in classification, rules of origin and management, of the changing regional regulatory regime, and of Kenya’s clearing systems, digital gadgets and portals.

Once the Bill is adopted later this year, all clearing and forwarding agents and firms will be vetted afresh. “A person shall not engage in the practice as a Customs clearing and freight forwarder unless that person has been issued with a practicing licence and has complied with the requirements of this Act,” the Bill says. Anyone who contravenes the law will be liable to a fine not exceeding $10,000 for an individual or $20,000 for a legal person or imprisonment for a term not exceeding one year or to both.

The proposed law is pushing for the mandate of licensing of clearing agents to be transferred from the Customs departments of the Kenya Revenue Authority to what will be known as the Kenya Customs Agents and Freight Forwarders Registration Board.

“We know the industry is infested with briefcase agents and we want to get rid of them,” said Roy Mwanthi, chair of the Kenya International Freight Forwarders Association (Kifwa).

The new law is also expected to reduce cases of missing cargo. “A Custom agent or freight forwarder who fails to exercise due care and diligence shall be liable to compensate the owner for the loss of or damage to the goods as well as for direct loss resulting from breach of the duty of care,” reads a section of the Bill.

According to the International Journal of Supply Chain and Logistics, 62.5 per cent of Kenya’s Customs agents and freight forwarders currently lack the skills to do their jobs.

Once all the countries domesticate the Bill and adopt it into their national laws, and the agents are trained, cargo delays especially at the ports of Mombasa and Dar es Salaam are expected to end.

Kifwa and the Federation of East African Freight Forwarders Associations (Feaffa) in partnership with other industry associations have been at the forefront to have the Bill drafted and presented to parliament.

In a statement, Feaffa president Fred Seka said the new regulations are meant to streamline cargo clearance by ending the deployment of untrained agents, promoting fair competition, protecting industry players from unfair liability and supplementing existing government regulations. It will also introduce mandatory registration and training of all Customs agents and freight forwarders, and fines and penalties for non-compliance and misconduct.

“Kenya trades over 30 million tonnes of cargo in the East African Community and the volumes keep growing with the port of Mombasa projected to handle more than 50 million tonnes in 2030, putting more pressure on a system that is inherently inefficient due to the lack of obligatory qualifications. We would like to improve efficiency as the delays are costing shippers as much as $256 million a year in extra demurrage charges,” said Mr Seka.

According to Feaffa, the lack of required skills has raised shipping costs, which are now three times higher in Kenya than in other countries, making goods more expensive for consumers.

The Inland Container Depot in Nairobi receives about 5,600 containers every week, for clearance from Mombasa. Clearance is supposed to take four days, according to the Kenya Ports Authority (KPA) Tariff Charter, but agents are only clearing 48 per cent of the freight within the four-day timeframe due to lack of proficiency in technology use.

To address this, the Bill seeks to formalise the East Africa Customs and Freight Forwarders Professional Certification exam, and make it mandatory for Customs agents and freight forwarders to get licences from the revenue authority.

“Of the over 8,000 Customs agents operating in the country, only 3,000 have taken the exam over the last decade on a voluntary basis. Mandatory certification and continuing professional development will ensure professionals stay abreast with the necessary skills required in the sector,” said Mr Mwanthi.

The Bill has received support from the Kenya National Trade Network Agency, the Shippers Council of East Africa, the Importers and Small Traders Association of Kenya, the Kenya Ship Agent Association and the Kenya Private Sector Alliance.