Kenya is set to expedite cargo clearance processes through a collaboration among key partner government agencies involved in international movement of goods, that will be implemented under the Authorized Economic Operator (AEO) programme. This move comes following a one-day forum organized by the Kenya Revenue Authority (KRA) with support from the German Government, which saw the Chief Executives of Partner Government Agencies (PGAs) convene to agree on a harmonized framework for implementation of the AEO programme. This framework is expected to have a positive impact on businesses in Kenya by providing them with a more efficient and effective customs clearance process.
Speaking during the forum, the Director General for Accounting Services at the National Treasury Mr. Benard Ndungu observed that Programmes such as the AEO have enabled the Government to secure and facilitate legitimate trade. “The AEO programme has allowed Customs administrations to enter into strategic agreements with operators who meet certain supply chain security standards and best practices, including compliance to Customs laws and regulations. The simplified procedures for AEOs has had tremendous effect with regard to reducing the cost associated with the movement and clearance of goods,” he said.
KRA’s Ag. Commissioner for Customs & Border Control Ms. Pamela Ahago noted that the AEO programme had made significant contribution to customs revenue and the move was aimed at ensuring an integrated approach towards implementation of the AEO programme.
“It is significant to note that approximately 30% of customs revenue is paid by AEO importers and exporters. I applaud the AEO importers and exporters for growing the country’s economy through their taxes. KRA intends to leverage the relationship created with AEOs to grow their revenue contribution by enhancing trade facilitation and expanding the program to compliant taxpayers in other categories, especially those in warehousing and MSMEs,’ She said. The AEO programme was launched in 2007 with 11 companies and has grown to 325 accredited companies in Kenya and 202 within the EAC Region. KRA plans to launch a National AEO framework later on this year.
While lauding KRA for collaborating with Chief Executives of PGAs, Capt. William Ruto, Managing Director for Kenya Ports Authority mentioned that the Authorized Economic Operator program has been one of the KRA initiatives that has enhanced faster and efficient cargo clearance at the Port of Mombasa. He reiterated KPA’s support for the success of the AEO program.
‘KPA is implementing various initiatives to promote movement of goods at the Ports Mombasa, Lamu and Kisumu. The Port of Mombasa now has a capacity of 2.1 million TEUs annually against the current usage of 1.43 million TEUs annually. The construction of the second commercial Port in Lamu now has three complete berths opened. KPA has upgraded the infrastructure and dredged the channel to improve facilities at the Port of Kisumu. We will continue collaborating with all other government agencies and stakeholders to find solutions and streamline the industry for better service delivery,’ said Captain Ruto.
The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH that implements programmes on behalf of the German government has been supporting KRA in implementing the AEO programme.
The Country Director for GIZ Kenya Mr Bodo Immink reiterated GIZ’s commitment to collaboration with KRA for sustained development. “This strategic partnership between GIZ and the Kenya Revenue Authority (KRA) creates a reliable pathway through which effective trade facilitation can be achieved, ultimately contributing to sustainable development in Kenya,”, he said.
Businesses operating under the AEO programme had observed the absence of an integrated approach to implementation of the programme by KRA and PGAs. This made it difficult for businesses to reap the benefits of being an AEO as agencies applied varied regulations for clearing AEOs. The essence of bringing CEOs of PGAs together was to get convergence on modalities of implementing the AEO program in order to realize benefits for participating businesses.
The implementation of the AEO programme is expected to promote commodity exports and act as a catalyst for Kenya’s economic growth and youth employment. It is also anticipated to contribute to the positive profile of Kenya as a preferred investment destination.
- In June 2022 KRA engaged PGAs and other members of the National Trade Facilitation Committee (NTFC) by forming working groups with a view to develop a common framework for joint recognition of AEOs.
- The AEO programme aims to expedite cargo clearance, reduce costs associated with importing or exporting cargo, and guarantee safe, secure, and legitimate trade. It creates a partnership between customs and businesses where mutual trust is established, and businesses enlisted in the programme are scrutinized significantly less at the borders compared to other regular cross border traders.
- On 9th December 2022, an analytical report on implementation of the AEO program was launched at the Nairobi Serena Hotel with the support of GIZ. The report outlines the status of implementation of the AEO program, implementation challenges and recommendations for improvement of the programme. This report was developed in collaboration with the Shippers Council of East Africa (SCEA), with input from KRA and other Partner Government Agencies involved in implementation of the AEO program. Part of the recommendations touched on certification of AEOs as a mechanism for recognition of registered AEOs.
- On 15th December 2022, KRA with the support of GIZ, issued certificates to eligible AEOs in order to create a formal recognition document that was previously non-existent. This replaced the confidential letters issued by the customs authority as a way of identifying the AEOs.
- In February 2023, a Technical Working Group comprising of senior officers in the PGAs were trained in Machakos on development of a framework for recognition of AEOs.
- This programme is implemented under the World Trade Organization (WTO) SAFE framework which aims at facilitating the smooth clearance of cargo while at the same time not impeding international trade. AEOs include manufacturers, importers, exporters, brokers, carriers, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses, and distributors among other business entities.