The Kenya Revenue Authority is counting on the Regional Electronic Cargo Tracking System to mitigate transit cargo diversion and seal tax leakages. The taxman launched the RECTS in Nairobi yesterday in the latest push to digitise its customs operations, connecting with Uganda and Rwanda in the new system aimed at streamlining operations along the Northern Corridor. The system replaces the Electronic Cargo Tracking System where monitoring was done independently by each country through stand-alone platforms. The RECTS now allows centralised monitoring of trucks from the port of entry (Mombasa) to Kampala, Kigali and other destinations in the three countries. “By having customs administrations in three countries tracking the same cargo on virtually the same platform, the opportunities for collusion between importers and staff will be substantially diminished,” KRA commissioner general John Njiraini said. “The sum total of these developments is to make cross-border EAC trade smoother besides minimizing opportunities for tax evasion.” The system comes three years after a July 3, 2014, Heads of States Summit in Kigali, which directed the three members states to adopt e-monitoring for seamless flow of goods. Uganda launched its system last Friday. It involves fitting of an e-seal with a 60-day power capacity, monitored under the GPRS platform. “A Geo-fence of the route has been set up. We have five check points, and a rapid response unit of 200 police officers is in place. Any violation is immediately detected,” customs and border control commissioner Julius Musyoki said. He said challenges such as revenue leakages,...

Kenya has joined East African neighbours Uganda and Rwanda to launch a common cargo tracking system intended to reduce the cost of trade and check tax evasion. The Kenya Revenue Authority (KRA) on Wednesday launched the Regional Electronic Cargo Tracking System, which enables real time tracking of transit cargo from Mombasa port to its destination through an online platform monitored in the three countries. KRA commissioner general John Njiraini said the new system would be operational by the end of the month to replace the current tamper-prone Electronic Cargo Tracking System. “Unlike the current system where we use multiple vendors to install the tracking and which we can only trace up to the border point, this one allows three countries to monitor the cargo in real time hence limiting the opportunity for any collusion to evade tax. It is a game changer in the cross border trade and will go a long way to safeguard Kenya as a major transit point for cargo in this region,” said Mr Njiraini. Kenya began piloting the system with 1,500 gadgets so far. Uganda and Rwanda, which have both launched the system have the same number of devices although it requires at least 7,000 such gadgets to fully monitor cross-border business. There are also plans to roll out the system in South Sudan, Tanzania and ultimately to destinations outside the EAC bloc, including DRC in a bid to eliminate customs border checks and deal with cargo diversion that existed due to border changeover processes....

Insurance companies have been warned against price undercutting as the battle for market share in the lucrative marine cargo policies heats up. Price undercutting or predatory pricing is a dubious strategy where a product or service is set very low, with an intention to drive competitors out of the market, or create barriers for potential new competitors. Principal Secretary for Maritime Affairs Nancy Karigithu says price wars amongst insurers will hurt the business. “The rates are falling and it is not good for business,” she said in Mombasa during a Marine Cargo Sensitization Workshop at Bandari College on Monday organised by the Insurance Regulatory Authority. “We must guard against the repeat of what happened in the motor vehicle third-party insurance.” She attributed the practice to a cutthroat competition which if not addressed, she said, could result in piling of unpaid claims as has been the case in the motor vehicle third-party insurance segment. The inability to pay claimants has largely been linked to undercutting of premiums. “We want professionalism; we want realistic premiums that will be able to support claims in marine cargo insurance," Karigithu said, urging the IRA to ensure proper pricing is done. “If you (insurance firms) collect so little that does not match the exposure that you have, then what will happen?” she said. But IRA acting chief executive Godfrey Kiptum said the agency cannot determine the insurers' rates “since it is a business decision done internally”. “However, as a regulator, we have to ensure that once...

About one year ago, Rwanda submitted a detailed plan to the World Trade Organisation (WTO) outlining how it intended to ease cross-border trade. By so doing, the East African nation was simply trying to position itself ahead of peers as the global community haggled over a pact to ease customs procedures around the world. The deal, dubbed Trade Facilitation Agreement (TFA) had been lined up among the low-hanging fruits of the Nairobi Ministerial Forum, the first such sessions to be held by WTO in Africa. Nairobi, however, failed to rally the requisite number of signatories for the deal initially brokered in Bali. Almost one year later, the TFA took effect last week, on February 22, after two thirds of the WTO’s 164 members ratified it, promising a significant drop in cost of executing exports and imports around the world. Rwanda was the first East African nation to sign the TFA followed by Kenya which endorsed it shortly after it hosted the ministerial conference on December 2015. “By bringing the deal into force, we can now begin the work of turning its benefits into reality.” WTO director-general Roberto Azevêdo said in a statement distributed on February 27. Countries such as Rwanda, which prepared themselves ahead of the pack are set to benefit immensely as the TFA contains provisions that allows developing states to receive technical assistance from rich countries. Kenya and Rwanda are already ahead of the pack in the region, having invested heavily in ICT upgrade of their customs systems...

Kenya, Uganda and Rwanda have unveiled a Regional Electronic Cargo Tracking System (RECTs) in a bid to curb lose of cargo in transit. Speaking in Kampala, where the Sh440 million system was launched, customs officials said the system would reduce transit time from Mombasa to two days from the current seven. The system will enable revenue authorities jointly track movement of goods from port to destination electronically. The service will be free as revenue authorities will meet all operational costs. Uganda Revenue Authority Commissioner General Doris Akol said the system will reduce cost of doing business, enhancing cargo safety and helping traders predict arrival of goods. “The partnership helps us monitor goods, ease cargo handling, improving revenue collection and reducing diversion of untaxed goods. This will benefit traders and assure potential investors of level playing field in our region,” she said. The United Kingdom Department for International Development has supported the project with Sh457.6 million grant. RECTs comprises satellites, central command centres in each of the revenue authorities headquarters, smart gates and rapid response units. An electronic seal is attached on transit cargo vehicles and communicates with the command centres giving real time updates. Rapid response units are stationed along sections of the Northern Corridor identified as notorious for diversion of goods. Source: Media Max

Arusha. The postponed summit of the East African Community (EAC) leaders will be held early next month as the region continues to be divided over the Economic Partnership Agreement with the European Union. The meeting of the heads of state, which was initially scheduled for Dar es Salaam yesterday, will be held in Arusha on April 6 following consultations between EAC secretary-general Liberat Mfumukeko with the leaders of the partner states. “The upcoming 18th summit is scheduled for Arusha on April 6,” affirmed the EAC boss in Nairobi on Friday last week after holding talks with Kenyan President Uhuru Kenyatta. During the 17th Extra-Ordinary Summit of the regional organisation held in Dar es Salaam last September, it was agreed that the EPA stalemate be tabled again during the meeting of the regional presidents early this year. Tanzania, which has spearheaded its rejection against the EAC-AU trade arrangement deal, was given until the following meeting of the EAC heads of state to decide whether to ratify the pact or reasons for the delay. EAC-EU-EPA negotiations started in 2002. It was not until 2007 that the framework agreement on tariff was finalised. The East African countries had committed to liberalise up to 82.6 per cent of imports from the EU by value. But the process was interrupted in July last year, when Tanzania, Burundi and Uganda declined to ratify the deal, preferring further consultations on economic implications. Officials of Customs and Trade Directorate at the EAC secretariat could not be reached to...

The population of Africa is presently 1.2 billion and growing at a rate of 2.5% a year, more than twice that of any other continent. In two years’ time, it will gain the population of the UK; in 12 years of compounded growth it will gain the population of China. All these extra people may add dynamism to economies, but only if the increase in labour supply can be matched by an equivalent increase in economic activity; otherwise, rising population density may destabilise social and political systems – an effect already seen in Rwanda and the Democratic Republic of Congo (DRC). This challenge has led to a different pattern of development for ports on Africa’s east coast, compared to the west coast. In the west, the centres served by these ports are close by, sometimes right outside the port gate. In east Africa, by contrast, they are between 500km and 1,000km away, and most of the infrastructure needed to reach them has not yet been built. In the case of the Doraleh container terminal at Djibouti, the goal is the Ethiopian highlands and the valley of the White Nile at Khartoum, a cluster roughly equivalent to the population of Japan. In East Africa, a similar-sized population is grouped in the Great Lakes states, South Sudan and the DRC. All of these centres, with the marginal exception of the DRC, are landlocked. Their ability to attract investment and benefit from globalisation depends, among other things, on having efficient rail, road and...

Trade between East Africa and the United States is set to increase after the latter’s Federal Aviation Administration granted Kenya’s Jomo Kenyatta International Airport a Category One status, finalising a pact that heralds the beginning of direct flights to America from Nairobi. By attaining the highest International Aviation Safety Assessment status, Nairobi can now cement its position as the region’s aviation hub for both passengers and cargo. Kenya’s Transport Cabinet Secretary James Macharia said national carrier Kenya Airways and other interested local operators will fly directly from Kenya to the US once the necessary approvals and last point of departure (LPD) rights are granted. RwandAir, the other major airline in the EAC says going through Kenya is also an opportunity the airline can explore. Jimmy Musoni, the head of commercial planning at RwandAir, however noted that they were yet to undertake a study to weigh their options. Direct flights to the US will significantly reduce the time taken to move cargo between the US and East Africa — from seven days to as little as a day. Burundi’s Minister of Transport and Public Works Jean Bosco Ntunzenimana welcomed the news, saying it would help to cut costs and time for the country’s fruit and fish exporters. In 2015, the US imported goods worth $8 million from Burundi — mainly coffee, tea, spices fish, seafood, art and antiques, wood and wood products. Convenience versus cost Passengers will also save on the time it takes transiting through Europe or the Middle East. Currently, due to JKIA’s second-class status, travellers between East Africa and the US have to...

Customs officials intercepted containers with concealed cargo worth Sh75 million last December. The officers discovered some 24, 40-foot, containers of concealed new garments and milk powder at the Port of Mombasa in the largest single seizure by the Kenya Revenue Authority (KRA). Out of the 24 containers, 21 had new garments and shoes disguised as cold rooms being imported by horticultural farms. Three containers had a consignment of milk powder disguised as flasks and sewing machines. The detection was due to the KRA’s increased collaboration with other state agencies in combating smuggling syndicates. The KRA used special non-intrusive scanners to detect the real contents in the consignments. Major ports of entry in Kenya now have the non-intrusive scanners that can detect and identify pre-cursor chemicals, strategic trade commodities as well as a special category goods. Smart gadgets have made it easier for Customs officials to detect imported illegal goods. However, it is important to note that maintaining the delicate balance between facilitating legitimate trade flows while deterring illicit business is a complex operational task for any Customs and border control agency. The trafficking of endangered species and animal parts such as ivory, tiger skins, and rhino horns, is estimated to be a $19 billion a year trade. DEVASTATING LOSS Due to the secretive nature and lack of verifiable data on illicit trade, it is difficult to calculate with absolute precision the market size. However, most Customs, border and law enforcement officials, policymakers, and academicians agree that the illicit trade results...

Building of the first three berths in Lamu port has started. Transport Principal Secretary Irungu Nyakera said 20 per cent of the work has been done and the government will allocate Sh10 billion to the port project in the next financial year. He said the government has already paid Sh4.6 billion to the contractor while another Sh2.9 billion would be paid before the end of this year. The PS said the project would cost the exchequer a total of Sh48 billion. “We expect the construction of the first berth of the Lamu port to be completed by June 2018,” he said. In an interview with the Nation in Mombasa, Mr Nyakera said building of the second and third berths are expected to be completed in 2019 and 2020 respectively. “The government is determined to complete the construction of a second port in Lamu to supplement the port of Mombasa,” he said. Apart from the construction of the three berths, other work going on concurrently include dredging of the channel, land reclamation, the building of a cofferdam and a causeway. He noted that the Lamu Port South Sudan Ethiopia Transport (Lapsset) is one of the key projects the government was implementing to boost trade between Kenya and neighbouring countries of Ethiopia and South Sudan. “Lamu port, will not only offer services to the country but also to landlocked countries of Ethiopia and South Sudan,” he said. Mr Nyakera said the government has also set aside Sh10 billion for the construction of...