Ralph W. Emerson an American poet once said, Trust men and they will be true
to you; treat them greatly, and they will show themselves great.
Customs has a tradition of performing controls on shipment of goods, usually
all goods declared are still subjected to 100% verification by a customs officer.
However, due to the immense flow of goods and globalization customs administrations
the world over are facing a continuously changing role, it is no longer practical,
necessary or desirable to check every declaration due to lack of capacity and
subsequent costs that accrue to legitimate businesses. Various customs authorities
have adopted modern risk analysis methods and audit based controls; thereby
reducing storage costs and production delays for compliant traders.
Towards this end, the World Customs Organisation (WCO) adopted international
guidelines for what is called Authorised Economic Operators (AEOs). AEOs are
traders who are considered complaint in terms of risk management within the
context of appropriate record of compliance with customs requirements, a good
system of managing commercial records that allow appropriate customs controls,
proven financial solvency, and appropriate security and safety standards. This
form the basic criteria to be satisfied by applicants, in addition with a transparent
well-publicized criterion feelings of discrimination are averted. Such a criteria
means that all businesses whether multinationals or small and medium sized enterprises
(SME’s) are eligible. It is also open to all links in the supply chain,
that is, manufacturers, exporters, freight forwarders, clearing agents, warehouse
keepers, carriers and importers.
How does it Work?
An AEO ought to be subject to less invasive treatment by having pre-clearance
of shipments and release upon arrival, replacement of inspection and verification
of repeat cargo with onsite audit checks, and valuation and coding queries being
resolved after release of goods.
This system offers faster and more focused customs control by allowing for
exchange of information between customs administrations, rationalizing customs
controls, by concentrating those relating to safety and security alone at the
place of entry or exit while transferring those relating to taxes to the place
where the trader is based; provides reliable traders with special, user-friendly
options.
In Africa, there has been a strong sense of injustice, businesses that have
a good history of good corporate citizenship and compliance with all taxes and
regulations should continue to be treated with suspicion by the customs authorities.
Kenyan businesses will very much welcome such an initiative in Kenya and indeed
in East Africa, as experience has been that the turnaround clearance time at
importation can be painfully slow. Businesses perceive the impact of customs
as unfavourable due to the elongated clearance processing times and tying up
of goods needed for trade at the ports. Modern management advocates for manufacturing
concerns to develop and operate systems that eliminate waste. Equipment, resources
and labor should be made available only in the amount required and at the time
required to do the job. In short, this means that new stock is ordered when
stock drops to the re-order level, thus saving on warehouse space and costs.
However, based on experiences local manufacturers have faced undue delays which
in some instances have lead to halting of production lines due to lack of raw
materials.
The scheme accrues numerous benefits to both Customs and the traders, examples
include customs are better placed to focus on high-risk traders or imports;
reduced theft and losses at the port, fewer delayed shipments, improved planning
and reduced security and safety incidents.
However, for the scheme to be effective there is need to draw the participation
of other government agencies that are known to contribute significantly to the
bureaucratic processes, for example, standards authorities, police, ports authorities,
health authorities, etc. Though “one stop shops” like the one in
Mombasa have served to reduce the lead-time, more still needs to be done to
avoid duplication and pointless bureaucracies; by the government, having a cross-departmental
oversight of requirements placed on businesses by the same government could
easily achieve this.
An East African approach to this ideal would in addition serve to protect the
much needed government revenues; considering Kenya is principally the gateway
for supply of goods to the landlocked countries in the region which include
Uganda, Rwanda, Burundi, Eastern Democratic Republic of Congo and South Sudan;
the Kenyan port also serves Northern Tanzania. Due to the economic recoveries
witnessed in these countries, their combined demand for goods means that volumes
of transit goods have risen significantly. Consequently, this increases the
risk of dumping of transit goods into the country, however, with the identification
of compliant traders in the various countries Kenyan customs authorities are
better placed to focus on high-risk transit cargo.
We trust that the three East African governments in this year’s budget
will seek to relieve compliant businesses from the onerous clearance regime
that is becoming a painful burden to bear in the current global economy; in
addition to rendering the region an uncompetitive investment destination.
