Fear of job losses after rise in import duty at Mombasa port

A duty increase on imported goods has caused a clearance clog at the Port of Mombasa, with more than 1,000 containers piling up uncollected. This is after the Kenya Revenue Authority (KRA) increased tariffs three months ago.

There are fears of job losses as many clearing and forwarding agents say they can no longer afford to release goods at the port, with the delays having a cost impact on importers through demurrage charges, hence lowered income.

According to the Kenya International Freight and Warehousing Association, Mombasa branch secretary, Mr Bernard Simiyu, KRA introduced tariffs in August.

Following this, the duty on imported goods jumped from $200 (Sh20,000) per tonne to $580 (Sh58,000), overburdening many clearing and forwarding agents.

He said the increased tariffs affected commodities such as rice, tyres, batteries, powdered milk and linen.

As a result, clearing and forwarding agents were unable to clear 1,200 containers from the port, said Mr Simiyu. He added that due to the high cost of doing business, some clearing and forwarding firms had laid off 2,000 workers.

The official warned that more 3,000 jobs could be lost if the government does not address the issue of high taxes. He added that efforts to seek audience with KRA commissioner general John Njiraini to discuss the matter had proved futile.

Addressing journalists at the association’s offices in Mombasa, Mr Simiyu asked the government to review the tax increase, noting that clearing and forwarding agents might stop lodging entries to clear cargo at the port.

“The agents can no longer afford to clear imported goods, owing to the high tariffs,” he said.

Mr Simiyu noted that cargo worth millions of shillings was lying at the port and container freight stations while importation of new cargo was on the decline.

“We are not opposed to paying taxes, but we must be involved in decision making with regard to imposition of new tariffs,” he added.

The association’s Mombasa branch chairman, Mr Eric Gitonga, said the agents might paralyse clearing of cargo if their grievances were not addressed.

He appealed to President Uhuru Kenyatta to intervene, saying revenue collection would be affected if the problem was not resolved soon, with some traders opting to dump goods in the local market.

“KRA officials have frustrated us; we want the President to address our grievances to save local businesses from collapse,” he said.

Mombasa MPs Abdulswamad Nassir (Mvita), Badi Twalib (Jomvu) and Omar Mwinyi of Changamwe asked the government to address the agents’ grievances to forestall further job losses.

Mr Nassir said the new tariffs had made clearing of cargo at the port more expensive than at the port of Dar es Salaam, Tanzania.

“This has also affected importers as uncollected containers are incurring demurrage charges,” he added. Mr Mwinyi asked the government to reduce the tariffs.

When reached for comment, KRA regional coordinator, Mr Nicholas Kinoti, said the tariffs used were enshrined in the East African Community common external tariffs. He added that they can be changed only by the East African Council of Ministers following advice by the Ministers of Finance of the East African member countries.

“KRA did not come up with these tariffs. They are enshrined in the EAC common external tariffs,” he said.

He added that KRA would address the other matters raised by the agents in consultation with KIFWA leaders.

“We have had two meetings with KIFWA officials to address these concerns. It is unfair for them to claim that we have not listened to their grievances,” he said.

“After all, KRA signed a memorandum of understanding with KIFWA leaders to address their issues to create an enabling environment for clearing of cargo at the port,” he added.

Other grievances raised include over-valuing of goods, resulting in high duty charges. They claimed cargo was attracting double duty because of this.

The agents also said clearing of cargo was taking up to 14 days, instead of two or three for goods destined to Rwanda and Uganda, because of duplication of services by KRA departments.

The agents said the new tariffs would be passed on to consumers, with a resultant rise in prices of imported goods.