- According to a report by the Federation of East African Freight Forwarders Association (FEAFFA), lack of awareness among industry stakeholders and tedious application processes hinder faster implementation.
- Small and medium-sized enterprises (SMEs) are at a cost disadvantage and cannot maintain the high standards and strict measures used by customs to vet AEOs, the study reveals.
Tedious application processes have been cited as the main obstacle to approval for importers in East Africa.
A new report reveals that the implementation of the Authorized Economic Operators (AEO) program under Customs Authorities in East Africa faces a number of obstacles, slowing down the approval of importers and other logistics players in the region.
According to a report by the Federation of the East African Freight Forwarders Association (FEAFFA), lack of awareness among industry stakeholders and tedious application processes hamper faster implementation of the AEO, where only 155 importers have been accredited. in East Africa since 2006.
Small and medium-sized enterprises (SMEs) are at a cost disadvantage and cannot maintain the high standards and strict measures used by customs to vet AEOs, the study reveals.
The AEO aims to improve customs efficiency in the face of increasing trade volumes and the increasing vulnerability of the international trade supply chain to security threats, as well as using the international trade supply chain as a conduit for high security risk materials.
The AEO program addresses these challenges by “changing the perspective, so that instead of focusing on the products themselves, Customs focuses on the traders.”
The study said that there is also a lack of harmony and standard application and accreditation procedures, which affects the acceptance of regional AEOs.
Other factors include fear of exposure and the perception that the process is not transparent.
Approved operators have averaged 27 each year between 2015 and 2019. Most of the operators currently reporting benefits from the AEO program “are by default relatively large operators.”
Smaller operators expressed feelings of exclusion and poor value for money, the study revealed.
Importers and exporters registered under AEO in the region, for example, numbered 155 importers since the program began in 2006, with only 83 registered in the program as clearing agents. However, this number is low considering that the Kenya International Cargo Warehouse Association (Kifwa) has registered more than 560 and 780 clearing agents in Mombasa and Nairobi, respectively.
There are only seven shippers enrolled in the program in Kenya despite the fact that the Kenya Shippers Association (KTA) has more than 200 registered members with a significantly large proportion of shippers, especially those with few trucks, who are not members.
There is only one boat agent enrolled in the program, according to KRA. Therefore, this means that importers cannot enjoy AEO services throughout the entire logistics chain.
Kifwa Chairman Roy Mwanthi said there has been a constant lack of enthusiasm from both the private sector and government regulators.
“There is a clear lack of motivation, since the application process is very complex and AEO programs are not known or recognized by other agencies, except customs. A campaign is needed to encourage importers to obtain accreditation and facilitate the process due to the immense benefits obtained from AEOs, ”said Mr. Mwanthi.
The AEO program was conceived by the Customs Commissioners of the East African countries (EAC) of Burundi, Kenya, Rwanda, Tanzania and Uganda in 2006 after the adoption of the SAFE Regulatory Framework of the World Customs Organization (WCO) by the WCO Council in 2005.
The AEO plan is designed to facilitate and enhance the experience of eligible merchants when undergoing customs clearance processes.
There are both national and regional AEOs. The EAC regional AEO program is applicable in all partner states, namely Burundi, Kenya, Rwanda, Tanzania and Uganda, except the Republic of South Sudan, which was not an EAC partner state at the beginning of the program. .
The OAS regional initiative operates under a common set of criteria, instruments, authorization process, benefits, and a monitoring system in all partner states.
Therefore, an applicant for AEO status, regardless of partner state, is supposed to follow the same set of criteria as their counterparts in other partner states.