Small Traders Association of Kenya (ISTA) the traders’ umbrella body which has more than 10,000 members say their goods are causing them to incur demurrage charges that are slapped on goods housed at the port.
What government officials had to say about the goods stuck at the port of Mombasa
In February, for instance, investigators from the Kenya Revenue Agency (KRA) and the Directorate of Criminal Investigations (DCI) seized around 21 million counterfeit excise stamps and 312,000 litres of suspected illicit ethanol with an estimated tax potential of Sh.1.2 billion at Africa Spirits Factory in Thika. The counterfeit stamps were valued at over Sh59 million.
Government agencies and state departments also recently seized brown sugar in Eastleigh—clearly labelled ‘Not fit for human consumption’—and captured Chinese nationals openly selling counterfeit electric cables.
In his State of the Nation address last May, Kenya’s President Uhuru Kenyatta said that the country was losing more than Sh30 billion annually to counterfeiting, tax evasion, and unlicensed products such as alcoholic and illicit brews. He stressed that the government was focused on attacking the problem.
Government officials say they stick to a strict inspection process for incoming goods, which sometimes means products are held at the port for as long as 90 days.
Members of ISTA held a series of consultative meetings in 2018 with various government agencies to establish the cause of the delays.
The Exchange could not get the exact dates of these meetings as by the time of finishing this report, the official spokesperson of ISTA was not available for comment.
Speaking to The Exchange, the Anti-Counterfeit Authority (ACA) Chief Public Communications Officer, Tom Muteti said that ACA has had engagement meetings with these traders.
“There are goods that are in containers and there are goods that are consolidated; when there are goods that our intelligence have profiled and found to be suspicious, we detain them. We do this for as long as investigations are ongoing. The law allows us to detain the goods up to 90 days,” Mr Muteti said.
“When we find that the goods are counterfeit, the complaint procedure must be followed. So there must be a complainant,” he said. “Sometimes we have complainants that have intelligence that a certain container in the high seas contains goods that have infringed on their intellectual property,” he explained.
The ACA screens the goods to see whether allegations are correct. The Agency nabs these goods at the port, even if they have been grouped with genuine goods. At times many traders are not present to voice any complaints.
“In such cases, we then get in touch with the owner of the intellectual property to make an official complaint,” Mr. Muteti said. “That is the reason why we may delay the goods awaiting further investigation. We may take the goods to our counterfeit depot or the customs warehouse.”
Various government bodies are therefore working in tandem in the war against illicit trade. To date there are several ongoing cases in which government officials are keeping goods from entering the commercial marketplace.
“The cases that we may be holding up now are for counterfeit goods and the procedure is followed. We take the perpetrators to court, but there are people who bring their consignment and then disappear because they know their goods are counterfeit. We normally go to court and seek orders to destroy the goods,” Mr. Muteti said.
“So what happens is if one does not declare ownership, and does not appear in court for three consecutive times one is summoned, we have to apply for destruction of the goods,” he adds.
ACA destroys goods impounded in such cases, on a quarterly basis.
Other government agencies also play a role in battling illicit goods. Recently, both the Kenya Bureau of Standards (KEBS) and the KRA notified all importers and the general public on a new procedure (“Route D”) for inspection and certification of consolidated cargo under the Pre-Export of Conformity (PVOC) programme.
All consolidators for both air and sea cargo now must register with KEBS to have their goods inspected under this route. All consolidated cargo must also be inspected in the country of supply by KEBS-appointed inspection agents and issued with a Certificate of Inspection (CoI) before shipment to Kenya.
In addition, registered consolidators who bring together separate items from different individuals or sources into one consignment for importation must apply for certification and submit the packing list and commercial invoice to PVOC at least forty-eight (48) hours before inspection.
Dissatisfaction and Kenya’s fight toward counterfeit goods
Traders say they understand that the government is fighting against counterfeit goods. Those who have had their wares stuck at the Mombasa Port have held a couple of meetings with officials in an attempt to break their logjam.
Their efforts seemed to pay off when, in a meeting last October 3rd 2018, State House Chief of Staff, Nzioka Waita informed them that the government had decided to waive storage costs on the 217 containers that had been identified for the amnesty. The rest remained detained.
KRA Commissioner for Customs and Border Control, Julius Musyoki also dispatched a letter to the shipping lines confirming the government’s commitment to take care of the costs arising from the delay.
The Shippers Council of Eastern Africa (SCEA), a private-sector advocacy and policy group, says that shippers face a myriad of obstacles shipping goods into the country. Some of those challenges involve compliance with standards, procedures and requirements, while others are operational.
Sometimes the discharge of cargo at the Port of Discharge by KPA, clearance of cargo by KRA and interveners, both government and private, may cause delay. The transfer of cargo for valuation, loading and gate out of cargo and delivery to the users may also be delayed because of operational delays at the port.
SCEA CEO Gilbert Langat said some of the bottlenecks on the corridor include delays due to truck operations, related to driver rests, congestion on the corridor, delays in offloading of cargo at the importer’s premises and border crossings.
Others causes include challenges around the submission of documents by the importer and agents, disputes in valuations, verification of cargo by agencies, tests and conformity processes and delays in collection of cleared cargo, he adds.
Mr. Langat says importers need to better understand the processes and requirements in terms of timelines –free period, return of empties, demurrage and document requirements. Shippers should also plan their shipments adequately in order to avoid cases where goods arrive but are delayed due to lack of documentation, he says.
He adds that there is an urgent need for importers to procure professional services of clearing agents and transporters with clear contacts and obligations about responsibilities.
But the CEO also notes that currently the efficiency of cargo clearance is still a challenge at the Inland Container Depot Nairobi (ICDN), compromising on the effectiveness of the use of the Standard Gauge Railway (SGR) and Inland Container Depot (ICD) infrastructure.
He says that cargo typically spends 12 days at ICDN, and that over 85 per cent of the cargo that lands at ICDN is charged for at least eight days storage plus additional detention charges by shipping lines.
In addition, he notes that the KPA reports that 58 per cent of the delays are attributed to government agency intervention, with the rest blamed on the private sector. Of these, submission of documents by agents accounts for a big part of the private sector delays. Another problem is cargo that is cleared but uncollected.
“Ultimately there has to be a concerted effort by all players to work towards playing their part and not blame each other or operate in silos. This will be the game changer in turning around the fortunes of ICDN,” Mr. Langat concludes.
The Exchange will run a three- part series on this investigative piece…Part 2 of 3.
The development of this report was made possible due to a grant provided by the Aga Khan University’s Graduate School of Media and Communications. The report remains to answer where the goods stand at the moment as the spokesperson of ISTA Mr. Kapai, the only person authorised to speak on the subject matter, has been on travels since January.