PUBLISHED ON November 19th, 2014

Banks ’rivalry slows down electronic cargo clearance

Banks have ignored calls to connect their payment structures to the national electronic window systems, slowing Kenya’s bid to eliminate the time-consuming paperwork from cross-border trade.

The Kenya Trade Networks Agency (KenTrade), an agency that is developing the digital platform also called Kenya TradeNet, says only the National Bank of Kenya, Kenya Commercial Bank and Citibank — out of the 43— have come on board.

The transactional phase of the platform, which is fully operational, integrates information systems of agencies like Kenya Revenue Authority, Kenya Bureau of Standards, Kenya Plant Health Inspectorate Service and Kenya Ports Authority, enabling traders to obtain regulatory approvals at a single point.

This phase (transactional) is supposed to be linked with the National Payments Gateway, hosted by the Postal Corporation of Kenya, to allow seamless electronic payment of taxes and other regulatory fees. TradeNet wants all transactions —from filling regulatory documents to paying for them — done electronically.

The rivalry among banks has, however delayed full implementation of the Kenya TradeNet that President Uhuru Kenyatta and his counterparts from Rwanda and Uganda launched in May to ease cross-border trade. The agency has since sought the intervention of Central Bank of Kenya (CBK), hoping its regulatory hand could compel banks to share a digital platform for processing payment of taxes on imports and exports.

“Competition among banks is delaying the process of successfully implementing the system, but we have notified the CBK to help us deal with the situation,” KenTrade’s chief executive Alex Kabuga told a Shippers’ Open Day held in Nairobi last week.

Way forward

“We have planned a meeting with all the banks to see how best we can all work together without delaying the process anymore,” he said, adding that the agency expects more banks to join the bandwagon after the meeting.

Apart from banks, PCK system dubbed Posta Pesa, has links with other modes of payments such as M-Pesa, Nation Hela, Tangaza and Airtel Money to collect payments on real time basis.

Any money paid through the system has to pass through KCB which acts as the official clearing house that eventually channels the payments to respective government accounts.

In an ideal situation, the regulatory fees collected from the traders should immediately trigger an electronic confirmation of payments which will be received by the Kenya TradeNet System once the government account is credited.

The rollout of Kenya TradeNet is one of the reforms being implementing to ease clearance of goods and cut congestion at the seaports, airports and on roads.

KenTrade officials say banks have refused to share platform with clearing agents and traders as each one of them demand independent module, thwarting the agency’s goal of creating a seamless payment platform. Stakeholders attending last week’s Open Day suggested that KenTrade should only work with the few institutions that are willing to share the digital system.

The Kenya TradeNet went live on November 1 but only 15 out of its 24 modules are running. The system is expected to cut the current delays that stretch the cargo approval time at the moment. It is projected that on average, ship, air and road transit cargo will take three days, one day and one hour respectively to get cleared.

“For Kenya to be competitive, it is a prerogative that we meet international standards,” Mr Kabuga said.

Currently, the procedures of acquiring import and export permits and licences are lengthy and slow due to numerous paper works involved.

However, the electronic platform will reduce cargo dwell time and cost involved in clearance besides curbing revenue leakages. Mr Kenyatta said the automated system will save Kenya between Sh13 billion and Sh22 billion per annum in the first three years and between Sh27 billion and Sh40 billion per annum.

Source: Business Daily

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.