Authorised Economic Operators (AEO)
Introduction
The Authorized Economic Operator (AEO) Programme, anchored in the World Customs Organization's SAFE Framework of Standards, aims to secure the global supply chain while facilitating legitimate trade. Administered by the Kenya Revenue Authority (KRA) through its Customs and Border Control Department, this program is essential for ensuring the secure and efficient movement of legitimate goods across borders.
It benefits businesses—including importers, exporters, manufacturers, clearing agents, bonded warehouses, and transporters—that consistently comply with customs regulations by offering faster and more streamlined customs processes.
Importance and Relevance to KRA,Stakeholder and Government
- Efficiency: Enhances customs operations and reduces port congestion.
- Compliance: Builds partnerships with reliable and trusted traders, ensuring regulatory adherence.
- Cost Reduction: Lowers operational costs for KRA through improved process efficiency.
Benefits to Stakeholders:
- Faster Customs Clearance: Provides priority processing and reduced wait times.
- Cost Savings: Reduces service point costs and accelerates goods access.
- Priority Services: Offers access to dedicated relationship managers and pre-arrival clearance.
- Regional Advantage: The East African Regional AEO Programme facilitates mutual recognition across the East African Community, streamlining regional trade.
Key Facts & Figures about AEO
• AEO Programme was piloted in Kenya (13 companies) in 2008 and fully rolled out in 2010.
• Program Participation: As at June 2024, Kenya had a total of 382 AEO companies, the highest number in the East African Community (EAC) including importers, exporters, transporters, clearing agents, and shipping lines.
• Efficiency Improvement: AEO-certified businesses are cleared on average within 6 hours compared to non-AEO certified companies, significantly speeding up trade processes.
• Cost Savings: Businesses in the AEO program save an estimated 20-30% in transaction costs due to faster clearance and reduced delays at customs.
• Regional Integration: The East African Community (EAC) Regional AEO Programme allows for mutual recognition of AEO status across member states, promoting smoother and faster trade within the region.
Misinformation and Clarifications about AEO
- AEO is Only for Large Companies: Many think that the AEO program is only for big multinational companies. In reality, AEO is available to all businesses, including small and medium enterprises (SMEs), as long as they meet the compliance requirements.
- AEO Ensures No Inspections: Some people believe that with AEO status, their goods will never be inspected by customs. However, while AEO members do get faster clearance, inspections can still happen as part of regular risk management initiatives.
- AEO Certification is Forever: There's a misconception that once a company is AEO certified, it stays that way permanently. In fact, AEO status is valid for a period of three (3) years, after which the AEO Company is subjected to a compliance check to ascertain its compliance.
- AEO Automatically Applies Across the Region: Some assume that getting AEO status in Kenya automatically means recognition across the East African Community (EAC). However, an existing AEO needs to express interest to join the Regional AEO Programme and the applicant needs to comply with the stipulated obligations of an AEO.
- AEO is a Complicated Process: Many believe that obtaining AEO status is overly difficult and time-consuming. While the process is thorough, it is meant to ensure that only compliant businesses are certified, and KRA provides support throughout the entire process.
Official Position:
- KRA’s View on AEO: The Kenya Revenue Authority (KRA) fully supports the AEO Programme as a vital tool for improving trade facilitation and securing the global supply chain. The AEO Programme recognizes and rewards businesses that consistently comply with customs laws. KRA highlights that AEO certification is open to all eligible businesses, regardless of size, and offers benefits like faster customs clearance, lower costs, and greater trust in the trading process. KRA is committed to educating stakeholders about the AEO program and ensuring the certification process is clear, efficient, and aligned with Kenya's economic goals.
Step by Step Guide on AEO Ceritication Process
How to Join the Authorized Economic Operator (AEO) Program
To apply, complete the AEO Application form and ensure the following documents are attached:
-Company Details and Contact Persons
-Managing Director and Alternative Contact Person
-Human Resources Policy Document
-Organizational Structure
-Code of Conduct
-Company Contracts (Between the Service provider and Contractors)
-Import/export Section Employees list
-Customs Agents License (where applicable)
-Certificate of Incorporation
-Company Pin Certificate
-Memorandum and Article of Association
-Financial Statement of the Company over the Last 3 years
-Documented procedure
-Safety and Security measures
-Procedures for Recording and reporting incidents
-Procedure for dealing with staff, visitors and deliverers
-Internal control system procedures
-Fully filled, stamped and signed application form.
-The AEO Programme operators involved in international trade are approved by Customs administration.
-The applicants should have been in operation for a period of three (3) years
Guidelines:
To Achieve AEO Certification, You Must:
- Demonstrate Compliance: Ensure that your business meets all legal and regulatory requirements.
- Reliability: Be recognized as a trustworthy and fully compliant operator.
- Maintain Adequate Documentation: Ensure all documentation is traceable and aligns with standard operating procedures.
- Financial Solvency: Maintain a strong financial standing to fulfill your commitments.
- Collaborate with Customs: Develop a mutual working relationship with customs authorities.
- Keep Staff Informed: Regularly update your staff on changes in legislation, customs procedures, and other regulations.
- Manage Commercial Records: Maintain timely, accurate, complete, and verifiable records.
- Ensure Security: Protect your networks and premises with adequate security measures.
Frequently Asked Questions about the Regional Authorized Economic Operator (AEO) Program
Any AEO-certified company registered in an East African Community (EAC) Partner State, with at least one year in the international trade supply chain, is eligible for the Regional AEO Program.
2. Application Process
You can obtain application forms from the Customs Office in your business’s registered Partner State. For example, companies registered with the Kenya Revenue Authority (KRA) can find these forms on the KRA website.
3. Processing Time
The processing of an AEO application typically takes between 90 and 120 working days. This timeframe allows Customs to work with other KRA departments to verify the applicant’s compliance status.
4. Benefits of Becoming an AEO
Becoming an AEO offers several advantages, including:
- Enhanced business reputation as a low-risk and dependable entity
- Faster customs clearance
- Reduced costs
- Higher turnover and profitability
5. Application Fee
Applying for AEO status is voluntary and completely free of charge.
6. Validity of AEO Certification
An AEO certificate is valid for three years. Afterward, compliance is reviewed. If your business continues to meet the requirements, the certificate can be renewed. Non-compliance may result in suspension or revocation of the AEO status.
7. Opting Out of the AEO Program
You can opt out of the AEO program at any time by notifying the Commissioner of Customs and Border Control.
8. Why Become a Regional AEO?
The East African Community (EAC) has a market of over 300 million people, offering a significant opportunity for businesses. The Regional AEO Program helps you tap into this growing market by simplifying trade across EAC Partner States.