Importers paid Sh3.22 billion in cargo storage charges at Kenya Ports Authority(KPA) facilities in 2017-18,data by the Shippers Council of Eastern Africa(SCEA) shows.
This is despite the much publicized ‘improved cost of doing business’ pegged on investments in infrastructure, automation of systems and digitization of government services, improved cargo handling and speedy evacuation of cargo from Mombasa.
KPA prides itself of year-on-year improvement in cargo handling capacity, ship-turn-around time and dwell time at the port.
The Standard Gauge Railway(SGR) has also been lauded as a game changer in the country’s logistics space, while Kenya Revenue Authority(KRA) and other state agencies have continued to invest heavily in systems to improve the business environment.
In the latest World Bank Ease of Doing Business-2020, released last October, Kenya was ranked 56 globally on attractiveness to investors, having improved five positions.
“Kenya is among top reformists in Africa and the World. This takes good leadership and coordination between agencies,” said Augustine Langyintuo of World Bank finance competitiveness and innovation regional focal point.
“I encourage Kenya to continue with these reforms,” he added.
However, the logistical space requires more attention to support growth of the GDP, according to industry players, as numerous challenges continue to affect international trade.
Cargo clearance is one of the biggest challenges that needs to be addressed to spur trade, according to traders.
While cargo dwell (time taken to clear) at the Port of Mombasa has reduced from an average 4.2 days in 2018, to 3.9 in 2019, and eight days from 12 days at the Inland Container Deport Nairobi (ICDN), importers continue to pay storage.
“Over 50 per cent of cargo at the ICDN pay storage because it is not cleared within free period,” SCEA head of advocacy and membership development Agayo Ogambi noted.
At Mombasa, KPA gives a four-day free storage period after which, containers with domestic imports attract a fee of between $30(Sh3,025) and $90$(Sh9,076) per day, depending on the size.
Domestic exports have nine consecutive free days before they start paying between Sh2,000 and Sh3,000 per day, upto when the vessel is berthed.
At the ICDN, containers attract a fee of between Sh1,600 and Sh2,400 per day depending on the size. This is after the four days free period. KPA charges however vary from exports, imports to empty containers.
The authority has however defended delays at the port saying most are caused by clearing agents and consignees, who fail to start the clearing process on time.
According to World Bank, 54 per cent of clearance time is spent on securing permits.
“We have instances where an importer is not aware that the ship has arrived and the cargo has been discharged, by the time they trigger the administrative process and appoint a customs agent for clearing, cargo has already overstayed the grace period,” explains Benjamin Mwandawiro, a senior operations officer at KPA.
In June last year, KRA commenced the implementation of the Integrated Customs Management System (iCMS) as it moves to replace the old Simba System.
iCMS has streamlined customs operations as well as automated manual operations in clearing of goods.
However,the system which is being implemented in phases has faced its fair share of challenges with frequent break downs.
This, together with downtimes on the KPA’s Kilindini Waterfront Automated Terminal Operating System (KWATOS) have proved to be a headache for importers, whom have called for improvement.
Manufacturers have decried rejection of airfreight iCMS system exemptions on Import Declaration Fee and Railway Development Levy which has seen them pay fully duty of 5.5 per cent(IDF 3.5% and RDL 2%).
This is on imported raw materials and intermediate goods for approved manufacturers who should be enjoying a 1.5 per cent rate.
“The current time taken to process each manual consignment based application takes longer than the service level agreement of three days for sea freight and two days for airfreight,”Kenya Association of Manufacturers CEO Phyllis Wakiaga noted in a recent letter to Treasury.
This, she says is “forcing importers to accept higher rates in fear of incurring punitive storage and demurrage charges.”
KRA has hence agreed to be facing challenges on iCMS with assurance of a more robust system.
“Yes there has been challenges, sometimes the challenges are external systems in terms of the infrastructure. Sometimes they are internal but we have stepped in to make sure that we address the challenges,” Kevin Safari , Commissioner Customs and Border Control said at a forum in Nairobi on Friday.
The high number of state agencies at the port also remains a major hindrance to speedy evacuation.
Though the government moved to kick-out at least 24 agencies from the ports of entry in June last year, some have defied the orders and stayed on.
Government’s target was to have only four agencies intervening and handling cargo. These are
Kenya Revenue Authority (KRA)and Kenya Bureau of Standards (Kebs) for cargo intervention while KPA remains the principal handler.
“There has been a stand-off between government agencies. Some agencies have refused to move saying they operate as an Act of Parliament,” Kifwa national chairman Roy Mwanthi told journalists in Nairobi last week.
A survey by the shippers council conclusively reveals that government procedures account for 31 per cent of lead factor for port dwell time.
Network and ICT problems account for 25 per cent of delays, insufficient or faulty port infrastructure(13%),multi-agencies( 13%), freight forwarders challenges(6%), shipping procedures(6%) while rent seeking accounts for six per cent of cargo delays.
To escape the delays, a section of importers have chosen to pay more in the use of Through Bill of Lading(TBL), where they pay $1000 ( about Sh100,854) more to shipping lines, which guarantees them faster clearance at the port.
A through bill of lading is a legal document that allows for the transportation of goods both within domestic borders and through international shipment.
In the most recent World Bank-Logistic Performance Index(2018), the biennial report ranks Kenya 68 globally out of 160. This is a drop from position 42 in the preceding report (2016).
The index looks at customs procedures (efficiency of the clearance),quality of trade and transport-related infrastructure.
It also dives into international shipment(ease of arranging competitively priced shipments), tracking and tracing (ability to track and trace consignments) and timelines (of shipments in reaching destination).
“Despite efforts to modernize services, developing countries face many remaining challenges. This explains a persistent gap between high and low income countries in terms of logistics performance,” explains Jean Francois-Arvis, Senior Transport Economist at the World Bank Group.
The government has been investing heavily to improve trade along the Northern Corridor which runs from Mombasa into Uganda, Burundi, South Sudan and DR Congo, key users of the Port of Mombasa.
The SGR, Nairobi ICD and the newly unveiled Naivasha ICD remain key infrastructure in boosting trade along the corridor, according to the Transport ministry.
“Unless we dress challenges in logistics, we are heading the wrong direction,” Ogambi noted.
Source: The Star
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