Puzzle of imported goods that no one is laying claim to

Several containers of cargo are still stuck at Nairobi’s Inland Container Depot more than a month after President Uhuru Kenyatta ordered for their clearance, amid claims that some large traders tried to ride on the reprieve.

Small traders who had claimed to have at least 1,000 containers with consolidated goods had asked for intervention from the President after they ran into clearance headwinds at the port in May.

Sources within the port intimated that about 99 containers had no owners claiming them, while a few others had pending tax bills, keeping them longer at the facility where they are likely to be auctioned.

Traders, who have since held two meetings with the Kenya Revenue Authority, were given up to August 2 to clear them or they be auctioned, according to some of them, who did not want to speak on record for fear of reprisal.

“We met on Tuesday and Friday and it looks like the agreement is that the process be concluded.

“Some large importers tried to take advantage of the presidential directive, especially in Mombasa, and this made things a bit more complicated.

“Those whose containers remain unattended may lose them through auction as the mystery of who they are and whatever they had imported lingers on,” the source said.

On Friday, KRA indicated in a media invite that it had agreed with the Kenya Bureau of Standards and the Small Scale Traders to “sign off the process”.

The mystery of who imported the uncleared cargo became even deeper following earlier claims that some of the traders had declared the cargo as destined for Uganda in a possible tax evasion camouflage under cargo consolidation.

Last month, Trade and Industrialisation Cabinet Secretary Peter Munya said about 300 containers had been cleared by the agencies, with some 125 containers still having unknown owners.

The slow progress of the exercise whose three weeks’ timeline given by the President expired a month ago is said to have been complicated by the informal nature of the import chain the small traders use, with some said to be unaware of even whether their cargo had arrived at the Embakasi ICD.

While some go all the way to China to buy goods, they reportedly use proxies who pose as clearing agents (some fake) who either swindle them or take long before paying the requisite fees to clear cargo.

Others import then look for financing to clear the goods, plans that many times fail and sink them deeper into crisis as demurrage charges pile up while they struggle to clear the cargo from the ports.

The containers carrying an assortment of items also needed approval from the CS since they had not undergone the pre-export verification from their source countries.

In January, CS Munya announced that all importers would be required to subject their cargo to an inspection from the country of origin without which they would be required to return them to their ports of origin.

“All importers are notified that with effect from January 23, 2019, no requests for destination inspection will be received by the minister,” Mr Munya said in January.

Assessment
The conformity assessment programme, started in September 2005, applies to products at the respective exporting countries to ensure their compliance with the applicable Kenyan standards.

There has been extra vigilance with consolidated cargo as it presents a massive inspection challenge to port authorities who have blamed them for mis-declaring cargo, tax evasion and smuggling of counterfeits.

Last week, the government introduced strict regulations to guide cargo consolidation in shared containers to curb tax evasion and ease clearance of goods at the ports.

The regulations contained in the Finance Bill 2019 allow the Kenya Bureau of Standards and the Kenya Revenue Authority to vet and register all consolidations of air and sea cargo before importation of cargo into the country by a consolidator.

According to the proposals, companies that want to be cargo consolidators will need to be certified as tax compliant and be “in good standing with a recognised association for consolidators” before being qualified to be consolidators.

The consolidators will also be required to own a warehouse in the country of origin and of destination, creating an extra investment need for potential consolidators.

Cargo consolidation has been a major headache for port agencies as traders mix several items in small quantities and make verification hard, with increased potential for tax evasion.