Expediting the processing of Certificates of Origin through implementation of an automated system at Kenya National Chamber of Commerce and Industry

May 20, 2019

Expediting the processing of Certificates of Origin through implementation of an automated system at Kenya National Chamber of Commerce and Industry

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1. BACKGROUND

This case study highlights how Kenya National Chamber of Commerce and Industry (KNCCI) a membership based trade support institution has benefited from the TMEA SWIFT projects initiatives. The Kenya National Chamber of Commerce and Industry is registered as a not-for-profit private company limited by guarantee under the Companies Act Chapter 486 of the laws of Kenya with a National Office and County Chamber’s offices in all the 47 counties in Kenya. The core purpose of KNCCI is to promote, protect and develop commercial, industrial and investments interests of its members and the entire business community both locally and internationally. The KNCCI SWIFT project was implemented at an average budget of US$ 120,000 and the project started in 2014 and is expected to be ending in 2017 with the main implementing partner being TMEA. The project targeted beneficiary members of KNCCI who constitute of the small, micro enterprises (MSEs), medium and large enterprises and the expected outcomes of this initiative were to provide support in implementation of an automated system focusing on Trade Facilitation Process and Business Development Process. Molo Greens Limited located in Molo town in Kenya is one of the companies that was identified in this case study using the KNCCI automated system.

2. THE ISSUE

The KNCCI stakeholders highlighted that they were facing challenges in accessing manual certificate of origin which was also causing unnecessary delays and also increasing the cost of doing business. The companies that were involved in exporting had to regularly prepare and submit volumes of manual information and documents to KNCCI so as to get certificates of origin. These requirements by KNCCI, together with their associated compliance costs, were causing a serious burden to both KNCCI and the business community which was also a barrier to the development of international trade. Because of KNNCI operating a manual systems, there was relatively slow information flows between the business community and KNCCI which also greatly affected their efficiency and effectiveness.

3. THE RESPONSE AND APPROACH

Over a period of almost four years, TMEA has been engaging with different partners in the area of trade and transport facilitation to come up with innovative solutions that will enhance the capacity and quality of trade within the East African Community (EAC). One of the means that TMEA and its partners were using to realize these objectives and in particular, enhanced trade environment was to come up with effective trade systems and processes that were anchored in fully automating/computerizing/digitizing the processes and workflow of trade agencies or organizations within the region. The outcomes of this endeavour were the development and implementation of Information Portals (IP) and Management Information Systems (MIS) for smaller agencies and organizations that would ultimately link/interface to the National Electronic Single Windows. This programme known as Single Window Information for Trade (SWIFT) was working with import/export agencies as well as the private sector to automate their trade facilitation business processes and set up trading regulations information portals, thus enabling easier access to information and online forms for the trading community.

3.1 PROJECT GOALS

The TMEA SWIFT projects interventions aimed at achieving the following:

  1. a) Enhancing availability and handling of information.
  2. b) Simplifying and expediting information flows between traders and government.
  3. c) Achieving greater harmonization and better sharing of relevant trade data across governmental systems and
  4. d) Bringing meaningful gains to all parties involved in cross-border trade and ultimately resulting in improved efficiency and effectiveness in the administration of regulatory trade documents and reduce costs both for Governments and for traders due to better use of resources.

3.2 INNOVATIONS IN THE PROJECT

In an endeavor to assist KNCCI achieve its vision, TMEA came up with an innovative ideal of providing support in developing and implementing an automated system which focused on Trade Facilitation Process and Business Development Process.

The Trade Facilitation Process involved implementation of an automated process of issuance of Certificate of Origin (CoO), online application of CoO by stakeholders, automated verification and invoicing, online payment for stakeholders, processing (Approval and Rejection) and issuance of CoO.

The Business Development Process involved automation of membership profile management which can be breakdown into online registration for stakeholders, automated verification and processing of registration, online payment for registration and automated issuance of registration (membership certificate).The business development process also focused on promoting business interests through advocacy and holding trade and exhibitions.

3.3 STAKEHOLDERS

The envisioned stakeholders for this initiative were: KNCCI and its stakeholders/beneficiaries of the system, TMEA team and the software developers of the automated system.

3.4 RESULTS ACHIEVED

The TMEA supported automated systems enabled the KNCCI stakeholders apply for certificates of origin, relevant trade information was readily accessible, applications for and renewal of membership and submission of payments were all done online. The automated system further provided online registration, automated verification and processing of registration, online payment for registration and automated issuance of registration. Specifically the TMEA support towards KNCCI produced the following results:

  1. a) Issuance of Certificate of Origin by KNCCI for exports of goods was automated in Kenya.
  2. b) The average processing time for Key trade processes in KNCCI reduced from 48 hours in 2014 to 2 hours in 2016 which was a 96% reduction.
  3. c) The average processing cost for key trade process reduced from US$ 88 in 2014 to US$ 10 in 2016, which was a 89% reduction.
  4. d) The four (4) targeted processes (Membership application processing, Certificate of origin application processing, Customer Relationship Management (CRM) and Reporting) had been automated and system deployed.
  5. e) The KNCCI system was integration to Equity Bank for all channels including mobile and the payment interface.
  6. f) 200 stakeholders were trained.
  7. g) There were 239 approved transactions through the e-portal as at June 2016 (for the initial 2 months).

4. OPPORTUNITIES

The TMEA SWIFT project at KNCCI of automated systems was part of the Kenyan government digitization process, and was also integrated with other government agencies including Kenya Bureau of Standards (KEBS), Kenya Revenue Authority (KRA) via an interface with the Kenya National Single Window. This integration will make the project initiatives, results and skills sustainable beyond the projects life span. The KNCCI stakeholders should position themselves to enjoy the benefits and services offered by the automated system. The ultimate success of the KNCCI automated system will depend critically on the involvement and commitment of the stakeholders in ensuring that the system becomes a regular feature of their business process.

4.1 CHALLENGES

Despite the systems having been put in place to facilitate and ease trade by reducing the time and cost of doing business, KNCCI was not offering the services to its stakeholders on weekends and past official working hours a thing that the business community wanted to be improved. The system also had small icons on the portal that needed to be made bigger for the system to be more user friendly.

4.2 LESSONS LEARNED

  1. a) Implementing this trade facilitation project in close collaboration with the appropriate institution i.e KNCCI to lead the establishment and operation of the automated systems in issuing certificates of origin was very vital for successful project implementation.
  2. b) Commitment and participation by all stakeholders both government and the private sector in the project implementation enabled the project to be manageable and acceptable.
  3. c) Timeliness and predictability of delivery times are critical to the successful management of global value chains as well as to trade in perishable agricultural goods which is one of the key issues that the automated systems addressed.

5 BENEFICIARY PROFILE

One of the beneficiaries of the TMEA supported automated systems at KNCCI featured in this case study is Molo Greens Ltd Farms who grow and export flowers and are located in Molo Constituency in Kenya. Molo Greens is situated approximately 17km from Molo town in Kenya’s scenic Rift Valley. The farms have been in existence for more than 40 years are managed by 200 industry experience staff who maintain the highest standards of quality and customer satisfaction. Molo Greens Ltd Farms produces flowers in green houses to protect them from rain, wind and extreme temperatures. The mature flowers are then harvested, export documentation processed at KNCCI and then transported to the airport in well insulated refrigerated trucks.

Prior to project intervention of the TMEA SWIFT project intervention, Molo Greens Ltd Farms said that they were operating manually with KNCCI when applying for certificates of origin for exporting their flowers. Molo Greens further said that on average it would take 48 hours to submit and process the certificates of Origin and the cost incurred during the processing of the documentation was on average US$ 150. Besides incurring extra costs and also spending time, Molo Greens says that the application process involved a lot of paperwork that needed verification and signatures. Molo Greens thus said that operating a manual system was increasing the cost of doing business and was also reducing their competitiveness on international market because of the costs that were being incurred and also the waiting time. Molo Greens added that being a company that deals in export of fresh flowers, supplying and exporting their flowers in the expected time is very critical for their successes and competitiveness in business.

With the TMEA SWIFT project intervention of automation the key trade processes at KNCCI, the process of issuing certificates of origin more specifically became easier and faster. Greens Ltd Farms appreciated the TMEA initiative at KNCCI because they said that their transport cost to KNCCI for document processing had dropped to almost zero in 2016 from an average of US$60 in 2014 and the time had also reduced on average of 2 days to one (1) hour and also the volumes of paperwork involved reduced. This initiative has enabled Molo Greens get certificates of origin in time and also be able to export in time meeting their customers expected time and also making their products competitive.

Despite the ease of doing business without time delays and no additional costs, Molo Greens says that KNCCI needs to enhance the automated system so that stakeholders can continue getting services even outside normal working hours, public holidays and weekends.

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