Clearing agents push for law to weed out rogue players

Clearing agents now want Parliament to consider passing into law a Bill that will help the sector self-regulate, weed out rogue players and support the government’s efforts to grow revenues.

This is in the wake of an increase in middlemen and brokers in an unregulated industry, that has seen unsuspecting importers and exporters lose billions to rogue individuals and companies.

The Kenya International Freight and Warehousing Association (KIFWA), with support from other private sector bodies, and in collaboration with Kenya Revenue Authority, has come up with the Kenya Customs Agents and Freight Forwarders Bill (Draft self-regulation bill) 2020.

It is backed by the Federation of East African Freight Forwarders Association (FEAFFA).

Once enacted into law, it will create a predictable revenue collection environment by KRA, KIFWA said, mainly on VAT and income taxes payable by customs agents per shipment handled.

Customs agents and freight forwarders form a critical link in the logistics chain as intermediaries between the customs authority, importers, exporters, shipping companies, warehouse operators and transporters, as they handle all goods entering or leaving an international space.

They also play a role in collecting and remitting taxes for some state agencies.

The clearing and forwarding industry has however seen a rise in unqualified and unscrupulous individuals who have been swindling the public their hard-earned money in pretence of clearing their cargoes.

“It will eradicate unscrupulous brokers and middlemen from the industry, who have been known to swindle importers and exporters without accountability,” KIFWA chairman Roy Mwanthi said.

“The Act will ensure that only qualified, eligible and registered personnel are employed by recognised customs agents,” he added.

It will see a central coordination of activities of customs agents, freight forwarder, warehouse operators and the entire logistics industry in Kenya.

The Bill contains an elaborate disciplinary mechanism to ensure high ethical standards and integrity as well as measures to protect the public and stakeholders involved in international trade and business.

This is from among others, liabilities arising from failure to exercise due diligence in the clearance process and entire supply chain activities.

The Bill, if enacted into law, will also help transform KIFWA into a professional society managed by a Council with relevant technical committees, key among them a professional registration board.

This will be responsible for registration and examination of industry professionals and whose membership is drawn from both private and public sectors.

The Bill has undergone public participation as stipulated in the constitution and is pending the National Assembly process.

In a letter to Majority Leader National Assembly Kimani Ichung'wah, dated August 28, Mwanthi has affirmed the need to professionalise the clearing and forwarding industry.

KIFWA is working closely with KRA on continuous professional development programmes and capacity building of customs agents and freight forwarders, with training being offered by KRA’s school of revenue.

According to KRA, the country has in the past years lost more than Sh125 billion annually in taxes to shrewd traders who falsify the value of goods and services, with rouge clearing agents playing a role in facilitating the vice.

KRA data indicates fraudulent schemes by domestic firms and multinationals could be depriving Kenya as much as 8.3 per cent of government revenue, which amounts to nearly Sh1.51 trillion.

“This clearly hampers economic growth and results in huge loss in tax revenue,” the tax man noted.

The Bill to self-regulate comes by comes after the recent Presidential visit to the Port of Mombasa, on July 2023, where the association presented a number of proposal to the government to better the industry.

During the engagement with stakeholders, President William Ruto banned multinationals from engaging in clearing and forwarding business,and directed state agencies at the port to operate on a 24-hour basis.

According to Ruto, major shipping lines operating land-based logistics services were denying small firms in Kenya an opportunity to conduct business due to their huge capacity and financial muscles.

The ban is intended to support growth of local firms and job creation for the youth.

KIFWA) is the umbrella body of customs agents and freight forwarders in Kenya, with a membership of about 1,200, licensed by the KRA’s commissioner of customs and border control, under the East African Community Customs Management Act.

The proposed Bill has been crafted from the Model Customs Agents and Freight Forwarders Management Bill 2017, following the recommendation of the EAC Sectoral Council on Trade, Industry, Finance and Investment of EAC member states.

This is to develope national laws to provide a framework for accreditation and self-regulation of customs clearing and forwarding agents.

 The region is also keen to develop associations.

“The Customs clearing and freight forwarding industry in Kenya is fully committed to promoting professionalism in the freight logistics sector in Kenya,” the Bill reads in part.

KIFWA in partnership with FEAFFA, the Kenya Revenue Authority (KRA) and other industry stakeholders in Kenya and the EAC region have been equipping customs agents and freight forwarders with knowledge necessary for improved service delivery.

“We want to appeal to the government, through Parliament, to support the self-regulation which will see increased revenue for the country and do away with rogue players swindling the public,” Mwanthi told the Star yesterday.

The lobby has affirmed its support for the continued government efforts to facilitate import-export trade.

This is through improvement of platforms such as single window system by KenTrade, migration from Simba system to the Integrated Customs Management System (iCMS) by KRA and reduction in the number of agencies at the ports, which has ensured faster movement of goods to and from the ports.

“However, KIFWA believes that there is need for the industry itself to clean up in order to take advantage of these developments. It is for this reason that the association with support from FEAFFA and other stakeholders are pushing for the self-regulation of customs agents and freight forwarders in Kenya,” Mwanthi said.

The idea is to streamline all the operations of the customs agents and freight forwarders in the country by enacting a legislation.

“It is KIFWA’s belief that this bill will entrench professionalism in service delivery through introduction of the Continuing Professional Development (CPD), handle member disputes, formation of a database of professionals among others,” it said.

 The bill also intends to protect consumers, shippers, government agencies and clearing and forwarding agents.