Kenyan clearing agents are opposed to a new deal by South Sudan that seeks to introduce a service charge on cargoes to be collected locally.
The landlocked country plans to implement a cargo tracking system for its imports and exports through the Port of Mombasa, where it accounts for up to 10 per cent of transit business, second after Uganda.
Under a new directive, Juba has introduced a mandatory Electronic Cargo Tracking Note (ECTN) for all imports and export goods to and from South Sudan.
This is through a partnership with Uganda, with the electronic cargo tracking system expected to curb diversions, dumping and theft of goods destined for Juba from the ports of Mombasa and Dar es Salaam.
The ECTN is to be implemented by the South Sudan Revenue Authority’s Customs Revenue Division and Invesco Uganda Limited as the legally contracted agency.
Invesco is to provide real-time valuation of goods, expected to save money Juba has been losing in false estimations of taxes.
Other partners such as Panda Clearing Company and Crawford Capital are expected to integrate. The two are heavily involved in the country’s logistics industry.
Importers and exporters are required to pay an agent’s service charge of $350 (Sh46,462) per consignment, monies to be collected in the Kenyan jurisdiction on behalf of the South Sudan’s customs authority.
Clearing agents have also in the past been involved in processing payments for imports and exports for government entities.
“All must comply and pay the agent’s service charge as required by the memorandum of understanding for the smooth facilitation of all goods without any delays and without hurdles caused by cross-border bureaucracies, ” South Sudan’s Finance and Planning minister, Bak Barnaba Chol, says in a ministerial order.
According to Chol, the sole purpose of the ECTN is to help the government to maximise its revenue collection by addressing the challenges of underestimation, undervaluation, diversion of cargo and roundtripping – a method of structuring to evade taxes and to launder money.
The Kenya International Freight and Warehousing Association (KIFWA) has however opposed the involvement of Kenyan agents in the collection of the service charge.
According to the umbrella body of clearing agents in Kenya, the move will lead to “massive delays” in clearance of South Sudan cargo, leading to high demurrage and trucks detention charges, which at the end will be borne by Kenyans agents.
“While we acknowledged that it was the prerogative of the government of South Sudan to introduce any new process and, or levies for their cargo, what we are against is using Kenyan agents for collection of their levies,” Kifwa national chairman Roy Mwanthi said.
Kifwa hence wants processing and collection of the ECTN service charge to be done by South Sudan agents and within the country’s customs areas.
“We are of the opinion that each of the EAC partner states have competent customs agents, licensed by their respective commissioners of customs, to undertake cargo clearance and collection of respective taxes and levies due to each partner state,”Mwanthi said.
“Kenyan agents should therefore not be used for collection of taxes and levies due to another partner state.”
The South Sudan Revenue Authority (SSRA) Commissioner General Africano Mande has however said he was implementing his government’s directive, “must be adhered to.”
A delegation from South Sudan visited the Port of Mombasa last week, where it also held stakeholders’ meetings as part of the implementation of the directive.
“In our efforts to try and pre-empt the foreseen challenges and eventual increase of the cost of clearance, we call upon all Agents to advise their South Sudan clients that they must put in place proper arrangements on how the mandatory ECTN directive will be implemented within their country,"Mwanthi said.