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TIME RELEASE STUDY REPORT

KENYA

November, 2004

Study Team: Y. Oloo, H. Kimtai, G. Aduwi, I. Kiprop, and W. Ojwang

Table of Contents Page No. Abbreviations and Acronyms ---------------------------------------------- ii Foreword --------------------------------------------------------------------- iii Acknowledgements --------------------------------------------------------- iv Executive Summary ------------------------------------------------------- v 1 Background 1.1 Introduction ------------------------------------------------------------------ 1 1.2 Mandate of Custom and Excise Department ----------------------------- 2 1.3 Customs Reform and Modernisation ------------------------------------- 3 1.4 Objectives of the Study ----------------------------------------------------- 4 1.5 Significance of the Study --------------------------------------------------- 5 2 Study Methodology 2.1 Introduction ------------------------------------------------------------------ 6 2.2 Scope of the Study ---------------------------------------------------------- 6 2.3 Data Collection and Analysis ----------------------------------------------- 7 2.4 Sampling Design ------------------------------------------------------------ 8 2.5 Personnel --------------------------------------------------------------------- 8 2.6 Implementation Matrix ----------------------------------------------------- 8 3 Study Findings 3.1 Release Time between Processes in All Ports --------------------------- 9 3.2 Release Time between Processes in All Stations ----------------------- 13 3.3 Release Times between Processes in Long Room ---------------------- 22 3.4 Release Times between Processes after Long Room Activities ------- 23 3.5 Comparison of Mean Release Time by Import Classes ---------------- 24 3.6 Profile of Sample Entries --------------------------------------------------- 29 3.7 Results of the Interview Survey ------------------------------------------- 35 4 Policy Recommendations and Conclusions 4.1 For Short-term Implementation ------------------------------------------- 37 4.2 For Medium and Long-term Implementation --------------------------- 38 5 Annexes Annex 1 Time Release Project Data Sheet ---------------------------- 41 Annex 2 Terms of Reference for Time Release Study -------------- 42 Annex 3 Time Release Study Working Group ----------------------- 46 Annex 4 Data Form ------------------------------------------------------ 47 Annex 5 Guidelines on Completion of TRS Data Form ------------ 50 Annex 6 Implementation Time Table --------------------------------- 52 Annex 7 Customs Clearance Procedures ------------------------------ 53 Annex 8 Flow Chart for Customs Clearance Procedures ----------- 55 Annex 9 Customs Stations --------------------------------------------- 56

Time Release Study for Kenya, November 2004

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ABBREVIATIONS AND ACRONYMS

BPI Business Process Improvement CCA Customs Clearance Audit CDO Central Documentation Office CG Commissioner General CRF Clean Report of Findings CED Customs and Excise Department C63 Single Entry Document CRM Customs Reform and Modernisation CRMP Customs Reform and Modernisation Programme COMESA Common Market for Eastern and Southern Africa CPC Customs Procedure Code DC Deputy Commissioner DEPT Department DTD Domestic Taxes Department EPZ Export Processing Zone FMV Foreign Motor Vehicle GDP Gross Domestic Product HDO Head of Declaration Officers HQs Headquarters ICD Inland Container Depot IDF Import Declaration Fees ICT Information Communication Technology IT Information Technology JKIA Tomo Kenyatta International Airport KEBS Kenya Bureau of Standards KEPHIS Kenya Plant Health Inspectorate Services KPA Kenya Ports Authority KRA Kenya Revenue Authority LCL Less Container Load MPRO Mombasa Port Release Order PDL Petroleum Development Levy PIN Personal Identification Number MUB Manufacture Under Bond PSI Pre-Shipment Inspection RML Road Maintenance Levy SAC Senior Assistant Commissioner TOR Terms of Reference TRS Time Release Study TREO Tax Remission for Export Office VAT Value Added Tax VATD Value Added Tax Department WCO World Customs Organisation


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FOREWORD

The Kenya Revenue Authority (KRA) is currently implementing an ambitious reform and modernization programme, incorporating various initiatives to enhance revenue collection, enhance the efficiency and effectiveness of internal business processes, promote better relationships with stakeholders and develop a professionally competent and motivated staff. This programme is within the scope of our Corporate Plan 2003/2004 – 2005/2006. The Time Release Study (TRS) is an important and timely contribution to this process, and we are grateful for the financial and technical assistance provided by the World Bank and the World Customs Organization (WCO) in its planning and execution. Indeed, participating in the TRS has enabled us to develop the skills required to periodically measure our performance against global benchmarks. In addition, this study will have a multiplier effect on the manner in which our own customs administration, as well as other Customs administrations in this region, transacts their business. For the first time, we have reliable and validated information on the time taken at various stages in the customs clearance process. Since the study was undertaken with the active participation of key stakeholders, the results have been guaranteed stakeholder buy-in. However, we would not like to stop here, since diagnosing a problem is one stage in the process of finding a remedy for the situation. We do not need to speculate on who is responsible for what delays because this report has laid it all bare for us to see. KRA is ready to work with its development partners and stakeholders to find solutions in the same manner that we worked together in the diagnosis portion of this journey. Our vision is to be the leading revenue authority in the world, respected for professionalism, integrity and fairness. We are fully aware that realization of this vision is impossible without collaboration. Under the professional guidance of Mr. Ray McDonagh of the WCO, the TRS Group has put in many valuable hours of work. We are happy to receive this report, and commit ourselves to systematically forge ahead to improve the process of customs clearance. We would like to thank Mr. Manuel de la Rocha of the World Bank, Mr. Ray McDonagh of WCO, the Project Manager Mr. Y. O. Oloo and the Project Team for the support and professionalism that we have seen throughout the study period.

M. G. Waweru

COMMISSIONER GENERAL


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ACKNOWLEDGEMENTS

In the endeavour to determine the time it takes to clear goods in Kenya, the Time Release Study Team acknowledges most gratefully the Commissioner General of the Kenya Revenue Authority, Mr. M.G Waweru and the Commissioner of Customs, Mr. Francis Thuranira first for entrusting the team with this most important task and secondly for their support and encouragement. Special thanks go to Mr. Gabriel Kitenga for his very enthusiastic support for the project and the project team, and the Heads of regions where the surveyed stations are located for their cooperation. We are grateful too to the World Customs Organization for technical advice provided through Mr. Ray McDonagh and to the World Bank for funding the project. Special thanks also go to Mr. Creck Buyonge, (SAC, Operations), the regional liaison officers; Mr. Simon Mwangi, Mr. Njuguna, Mr. Joram Njamiu, Mr. George Muia, Mr. .A.Y.B Katsenga, Mr. Kariuki Githigi, R. Mwamburi and Mr. Ben Masira for their enthusiastic participation in various aspects of the survey. We are indebted to all stakeholders who participated in the study and especially to the Kenya Ports Authority, KEPHIS, Kenya Bureau of Standards, KIFWA and Port Health. Thanks for the thoughtful comments on earlier drafts of this report from Research and Corporate Planning Department, in particular, Mr. Zachary Chebii especially for his painstaking work of quality control. There are so many who have been helpful in so many ways that it is difficult to mention all of them and to them we say thank you.


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EXECUTIVE SUMMARY �

International trade is a vital driver of wealth creation and consequently economic growth and development. Increasing volumes of trade, the fall in tariff levels, the availability of modern technology to significantly improve the management of cross-border trade and business just in time production delivery requirements have all combined to create a strong interest in trade facilitation. Customs administrations are a critical component in the efficiency of international trade as they process every consignment to ensure compliance with national and regulatory requirements as well as international trading rules. Customs have the responsibility of revenue collection, protection of society and safeguarding the supply chain besides enhancing trade facilitation to promote investment and reduce poverty. Modern customs administrations have recognised that streamlining and simplifying clearance procedures is beneficial to their importers, their exporters and their national economies. One of the methods used for the review of clearance procedures is to measure the average time taken between the arrival of goods and their release. This facilitates Customs to identify both the problem areas and potential corrective actions to increase efficiency. It is for these reasons that KRA decided to carry out a study of the time taken from the arrival of goods until their release. The component parts of the clearance procedures were also identified and measured so as to identify where improvements could be effected. The main objectives of the study are; to access existing procedures and identify constraints affecting their implementation, and propose measures to reduce the time required for the release of goods. This study estimates the mean time difference between the arrival and release of imported goods. It also measures the time required for the key intervening processes in the clearance process e.g. lodgment of import declaration, assessment of duty payable and physical examination of the goods. Not only did the study involve KRA but also other agencies (see annex iv) that are also involved in the import clearance procedure. The study was carried out at sea-ports, land border posts, an inland container depot and international airports. Findings of the Study The time taken to clear goods has to be improved to meet the highest international standards. The time taken in Kenya is 20 hours 18 minutes at land border posts, 10 days, 7 hours and 53 minutes at seaports and 5 days, 11 hours and 26 minutes at airports. There is limited scope for improvement for what is largely a manual system. However, current procedures should be reviewed as a matter of urgency to avoid duplication and


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unnecessary actions. Some minor improvements can be effected immediately to improve the situation pending transition to a fully electronic declaration system. Principal Recommendations An electronic declaration system incorporating direct trader input needs to be introduced. In an electronic environment the introduction of a single window – a system that allows traders to lodge information with a single body to fulfill all import or export related regulatory requirements – should be given priority. The following current procedures should be reviewed with a view to reduction or elimination as appropriate;

a) introduce random quality control provisions on receipt of declaration, b) issue of a single entry identification number as opposed to current multiple

numbering, c) abolish the multiple manual registers and replace with an electronic system, d) assess the requirement for Customs Clearance Audit function, e) assess the requirement for centralization of declaration in the Central

Documentation Office, and f) improve co-ordination of Customs and other agency controls.

Introduction of enhanced Risk Analysis techniques by all agencies involved to better identify those declarations that require detailed examination. KRA should continue to develop dialogue with the business community and jointly discuss improvement and promotion of procedures. An example would be the promotion of pre-lodgment declarations. Consider the introduction of an authorised trader scheme to allow traders meeting certain criteria to benefit from simplified procedures such as direct release, prior release, simplified declaration, etc. This could be implemented within the current system without necessarily having to wait for automation. KRA should introduction of post clearance audits to ensure better compliance as it would allow KRA to have a more complete overview of trader’s activities. It also allows better allocation of resources. It is also recommended that Kenya accedes to the International Convention on the simplification and harmonization of Customs procedures (as amended) (Revised Kyoto Convention). Finally, it is recognised that KRA has already embarked on a major Customs Reform and Modernization Programme (CRMP). This study was conducted independently of the modernisation plan. The study findings should, however, be taken into account in future discussions on the implementation of the CRMP.


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1. BACKGROUND

1.1. Introduction: KRA was established on 1st July 1995 through an Act of Parliament as a central body for the administration and enforcement of all the laws relating to revenue under the general supervision of the Minister for Finance. Its mission is to promote compliance with Kenya’s tax, trade and border legislation and regulation. It administers the Customs and Excise Act, Value Added Tax (VAT) Act, Income Tax Act and the Traffic Act. Specifically, KRA was established to:

1. Improve co-operation and information sharing among revenue departments. 2. Eliminate bureaucratic controls and introduce efficient and effective systems and

procedures. 3. Introduce better working conditions, better remuneration, an optimal compliment

of staff and enhance integrity. The Customs and Excise Department (C&ED) is the largest of the four departments under KRA in terms of revenue collection1, manpower2 as well as countrywide operational network. (See tables 1 and 2, and annex Annex IX for details) Table1: Revenue Collection by KRA for the FY 1999/00 – 2003/04 (Kshs. Millions)

DEPT 1999/99 2000/01 2001/02 2002/03 2003/04 Actual % Actual % Actual % Actual % Actual % C&ED 90,630 54 98,748 54 94,616 52 100,573 50 110,240 48 ITD 53,556 32 56,246 31 60,936 33 71,214 35 82,209 36 VAT 22,404 13 26,575 15 26,729 15 28,499 14 34,667 15 RTD 1,073 1 1,176 1 1,328 1 1,413 1 2,160 1 TOTAL 167,663 100 182,745 100 183,609 100 201,699 100 229,276 100

Source: KRA Revenue Departments 1 From Table 1, C&ED has been collecting over 50% of total revenue except in FY 2003/04. (1USD = appx Kshs 80) 2 From Table 2, C&ED has over 40% of all KRA staff distributed in all gazzetted entry and exit points including several preventive outposts in certain strategic locations within the country.


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Table 2: KRA Staff Distribution as at September 2004

DEPT C&ED DTD RTD HQs TOTAL

No. of Staff 1382 1188 262 480

3312

% of total 41.7 35.8 7.9 14.6

100

Source: KRA Human Resources Department

1.2. Mandate of Customs and Excise Department Primarily, the department administers the Customs and Excise Act (CAP 472) of the Laws of Kenya). The core business of C&ED broadly involves enforcement of prohibitions and restrictions, collection and accounting of revenue, security and trade facilitation3, and compilation of trade statistics for economic planning. 1.2.1. Revenue Collection and Accounting The department collects the following types of duties:

a) Import duties - on imported goods. b) Export duties - on certain exports e.g. hides and skins, and scrap metals. c) Excise duties – on locally manufactured goods e.g. beer, cigarettes, spirits,

mineral water, etc. The department also collects the following fees and levies on agency basis:

a) Air Passenger Service Charge – on departing passengers. b) Aviation fee – on aircraft flying into the country. c) IDF fee – on import permit. d) RML – on certain petroleum products. e) PDL – on petroleum products. f) FMV permit fee – on foreign motor vehicles. g) Transit Road Toll – on foreign motor vehicles. h) Sugar Levy – on sugar imports. i) Revenue Stamps - for certain transaction documents which, by law, require

affixing of stamps. 3 The United Nations Economic Commission for Europe defines Trade Facilitation as ‘‘a comprehensive and integrated approach to reducing the complexity and cost of trade transaction process, and ensuring that all these activities can take place in an efficient, transparent and predictable manner, based on internationally accepted norms, standards and best practices.’’


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1.2.2. Trade Facilitation The department is charged with the responsibility of facilitating international trade which it does by providing expedited clearance of goods through simplified and harmonized Customs procedures as envisaged under the Revised Kyoto Convention. Customs administrations all over the world apply almost the same procedures and processes, speed of clearance depending largely on what controls are required by local legislation and the degree to which information and communication technology is applied. 1.2.3. Compilation of Trade Statistics The department collects and collates trade data on all imports and exports that the government uses for planning purposes. 1.2.4. Enforcement of prohibitions and restrictions The department is the only Government agency mandated to take full control of imports and exports, and in doing so it:

a) Protects public safety, health and morality by barring international trade in illegal substances and materials e.g. narcotic substances, arms and ammunitions, endangered animal species, hazardous wastes, pornographic materials, and expired, counterfeit or sub-standard goods.

b) Liaison with other law enforcement agencies nationally and internationally to

prevent trans-border crimes e.g. movement of drugs, stolen motor vehicles, smuggled goods, etc.

1.3. Customs Reform and Modernization (CRM) An open economy like Kenya exerts a heavy demand for trade facilitation on the part of Customs administration and other government agencies with border responsibilities. Modern Customs administrations have recognized that streamlining and simplifying clearance procedures is beneficial to their importers, exporters and national economies. This is so because it has a bearing on the efficiency of traders in meeting the challenges for better product quality, lower costs and faster delivery. In addition, trade-related transaction costs such as freight charges and other logistical expenses are a crucial determinant of Kenya’s ability to participate competitively in a global economy. Some problems that add to the costs of trade are:

a) Port congestion that affects turn-around time for feeder vessels and railway wagons.

b) Complicated Customs procedures. c) Complex and non-transparent administrative requirements, often pertaining to

documentation. d) High costs for processing information resulting from limited automation.


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CRM is expected to enhance the capability of Customs to perform its core functions by carrying out a comprehensive Business Process Improvement (BPI) and implement full automation. A critical area that BPI will address is the time it takes to clear cargo through various Customs stations. Given the foregoing, it is indeed the right time for Kenya Customs to take a measurement of its release times. 1.3.1. Time Release Study (TRS) TRS is one of WCO’s most important trade facilitation instrument, based on similar initiatives in the USA and Japan where it was developed and adopted by the Permanent Technical Committee (PTC) of the WCO in 1994. It is one of the methods used to review clearance procedures by measuring the average time taken between the arrival of goods and their release. This enables customs to identify problem areas in the clearance process and potential corrective action to increase efficiency. Modern Customs administrations have recognized that streamlining and simplifying clearance procedures is important in order to meet facilitation expectations of the modern business environment of just in time production. Business benefits a great deal from predictable release of goods. The WCO’s TRS is primarily designed to measure the time required to clear goods for home use. This may strictly be from the time of arrival of goods in the Customs territory until their release to the importer or a third party on behalf, or until the full clearance has been granted by Customs after payment of duties and taxes. 1.3.2. Challenges facing Kenya Customs The customs department is faced with extremely unique challenges. There is increasing volume of trade which it has to control within the mandate given by the government and to the expectation of society. There is also increased demand by traders for faster clearance of cargo and the government’s ever increasing revenue expectations. The Customs department therefore has to meet these challenges and expectations against the background of human and financial resource constraints. It is therefore imperative that Customs uses its resources more efficiently by embracing modern technology and working methods.

1.4. Objectives of the Study The purpose of this study is twin fold; first, to determine the problems that exist in the Customs clearance process, the nature of these problems and the reasons for these problems. Secondly, it will serve as a useful tool to measure the impact and progress of the Customs Reform and Modernisation Programme that the department is about to undertake. The overall objective of the study is to address the problems identified, remove bottlenecks and improve on clearance procedures. In particular, the study seeks to:


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a) Measure the time taken between arrival of goods until they are released by

Customs. b) Calculate the average time required for the clearance of goods by Customs

clearance point, type of traffic, Customs office and Customs regime. c) Determine the percentage of imports requiring the intervention of other official

bodies. d) Determine the average time required for the release of goods requiring the

intervention of other bodies. e) Determine the average time required for the release of goods not requiring the

intervention of other bodies. f) Determine where in the procedure the problems exist and the nature of such

problems. g) Provide a precise picture of the way the Customs clearance procedure functions. h) Consider possible corrective action and make recommendations.

1.5. Significance of the Study The fact that this is the first time the study is being conducted in Kenya, the findings of the study will not only be useful to the Customs administration but also traders and institutions that are involved in the Customs clearance process in one way or another. In particular, the results of the study should be invaluable in any endeavour:

a) To take structural reform measures within Customs administration, specifically to automate and modernize the Customs processes.

b) To modify Customs and other related Tax legislation. c) To simplify and harmonise Customs processes. d) To reallocate staff and other resources for optimal utilisation. e) To train staff. f) To support requests for human, financial or technical resources. g) To resolve difficulties with trade entities and other public institutions involved in

the Customs clearance process by way of authorisations, inspection or verification of goods and documents.

h) To take necessary measures to improve compliance and enforcement. i) For use in public relations and improving Customs transparency.


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2. STUDY METHODOLOGY 2.1. Introduction This study being the first of measuring the time taken to clear goods through Customs in an African country, the team kept in view the need for a careful design and execution in order to provide objective and reliable information. The outcome of this study should also offer an opportunity to record information which will be of use to future studies. The WCO Guide4 provided the framework for this study. The scope of the study includes measuring the time from arrival of goods at a port, airport or land border station until they are released and physically removed from Customs control. Participation of Customs brokers and other institutions that in one way or another intervene in the Customs clearance process through authorizations, inspections or checking of goods and documents was taken into account. The study was undertaken in three phases: The preparation of the study phase, the collection and recording of data phase and the analysis of data and report writing phase. (See annex ii) 2.2. Scope of the Study 2.2.1. Type of Goods The study covered all commercial goods declared in the single entry document (C63) during the period specified. The type of goods surveyed includes all import and transit goods entering the country during the period of study. 2.2.2. Geographical Scope Since this is the first time such a study is being conducted in Kenya, the busiest Customs Stations in terms of traffic, including ports, airports and land border crossings, were chosen for the study. The following stations were covered: Group A a) Inland Container Depot (ICD) at Embakasi b) Jomo Kenyatta International Airport (JKIA) c) Namanga Group B d) Eldoret Airport e) Kilindini Port in Mombasa f) Kisumu Pier g) Malaba 4 The WCO Guide to measure the time required for the release of goods (2002).


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2.2.3. Duration and Timing of the Study The timing of the study was made to coincide with the period of normal traffic. This is because the volume of traffic tends to be low or high during seasonally fluctuating periods such as before and after holidays. For this reason, the TRS Core Team decided that the study should take place within the time period from 16th August to 7th September, 2004. According to the WCO Guide, the study was to cover declarations processed in a period of 7 consecutive days in each station. However, due to the nature of operations at the respective stations, except for Namanga, stations falling within the central region (Group A) were surveyed simultaneously from 16th – 24th August, 2004 excluding weekends. Similarly, except for Malaba and Kisumu Pier, stations falling within the Western and Southern (Group B) were surveyed simultaneously from 30th – August -7th September, 2004 excluding weekends. 2.3. Data Collection and Analysis Although the Customs clearance process in Kenya is partly automated, it has not been possible to extract information required for the study from the computer system. Therefore, data collection for this study was based on manual customs procedures. 2.3.1. Research Instrument Considering that the study involves capturing of a fairly large amount of data and the fact that Customs procedures are still manual, a questionnaire (data form) was used for the purpose of collecting the relevant data. (See annex iv) The questionnaire was attached to the entries selected for the purpose of the survey from the point of lodgment until final release of goods from Customs control. Customs staff and staff of other agencies involved in the Customs clearance process were given a briefing on the guidelines in filling up the relevant information on the survey questionnaire. (See annex v) 2.3.2 Questionnaire Design In conducting the survey, a detailed questionnaire (data form) was developed in line with the WCO Guide. A single data form containing information to be entered by all relevant agencies participating in the study was designed to capture all the data required for the study. This single form is preferable since it was agreed to by all the agencies and was convenient because all the data was captured in a chronological sequence5. 5 A pre-survey was conducted at Nairobi long room and ICD Embakasi with pre-test questionnaires. On the basis of the pre-survey findings, the questionnaire was amended then finalized.


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2.3.3 Data Analysis The Statistical Package for Social Scientist propgramme was used for data analysis. The results are presented in cross-tabulations. 2.4. Sampling Design Considering the volume of consignments and time constraints, it was not possible to capture all the transactions selected during the period of study. This called for a sampling strategy that took into account the relative ease or difficulty in the mechanics of drawing a representative sample whilst ensuring validity and reliability of the data. Therefore, for stations with fairly large volumes of transactions, a systematic random sampling method was adopted. This ensured that samples were selected randomly with some known selection probability. The sampling design used here deviates somewhat from the WCO Guide that suggests drawing a sample from a set of entries that were lodged for seven consecutive days. From this group a subset of entries whose cargoes have been released two weeks after the week of lodgment is to be drawn. This subset will comprise the ‘‘target population’’ from where the sample will be drawn randomly. One limitation of the WCO sampling design is that entries for cargoes that are not released after two weeks from the time of lodgment are excluded from the target population. But a more fundamental reason for deviating from the WCO Guide methodology is that it will not generate enough entries with complete processing time to satisfy all the required sample size. Every fifth import entries lodged was selected for the survey at the busy JKIA and Kilindini stations, while for transit entries, all entries lodged were captured for the purposes of the study. For Namanga, Malaba, Eldoret, JKIA and Kisumu stations, all entries relating to both imports and transit were surveyed. 2.5. Personnel KRA management set up a TRS Study Team in order to steer and supervise implementation and follow up of the study to its conclusion (See annex iii). The kind of grouping and assigning of specific responsibilities to TRS Team members was found necessary in order to make it efficient in the successful implementation of the study. 2.6. Implementation Matrix After the TRS Core Team deliberated on the terms of reference for Kenya Time Release Study (see annex ii), a strategy for conducting the study was put in place. The TRS Core Team set out the time-frame for completion of the study (See Annex vi) running from 26th July, to 2nd October, 2004. However, due to unforeseen circumstances during the data collection phase, the finalization of the report was extended to 15th October, 2004.


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3. STUDY FINDINGS 3.1. RELEASE TIMES BETWEEN PROCESSES IN ALL PORTS Table 3 summarizes the time differences between arrival and removal of goods and between intervening processes for the sample entries. Comparatively across all the ports6, the mean time is 6 days, 12 hours and 2 minutes between arrival and removal of goods. It is longer at the seaports 10 days, 7 hours and 53 minutes. It is relatively shorter at the airports and land border posts, 5 days 11 hours 26 minutes and 20 hours 18 minutes respectively. Across airports and land border posts, Customs clearance for post-lodged declarations take a shorter time than time taken by agents to lodge their declarations except for seaports where the mean time difference is 1 day. On average, lodgment to release takes almost half the time it takes to remove goods from Customs control. This is due to the fact that agents take almost the same time it takes Customs to process the entries. The standard deviation of processing times suggests that the time differences across strata in the sample may be statistically significant. It is possible that the calculated differences do not represent real differences between strata but merely reflects wide variation of observations within each stratum. Thus it is important to consider the impact of variances on the calculated mean times and to consider only those differences that are statistically significant when comparing mean times across the ports. The following are the results of mean release times between processes in all ports surveyed as depicted in Table 3. 3.1.1. Seaports This analysis summarizes the weighted mean release time for Mombasa, Nairobi and Kisumu stations. The mean time taken by Customs to release goods at seaports is 6 days, 12 hours and 2 minutes. The mean time from arrival to removal of goods under Customs control is 10 days, 7 hours and 53 minutes. The mean time taken to lodge documents is 3 days, 20 hours and 1 minute after arrival of goods.

6 The term Port means any entry or exit point and includes land border posts


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The mean time taken to remove goods from Customs control after release is 19 hours and 42 minutes. Comparison of Mean Release Time by Timing of Lodgment (a) Pre-Lodgment The mean time taken by Customs to release goods whose entries are lodged before arrival of vessel is 4 days, 22 hours and 10 minutes. The mean time from arrival to removal of goods from Customs control is 5 days, 4 hours and 50 minutes. (b) Post-Lodgment The mean time taken by Customs to release goods whose entries are lodged after arrival of vessel is 8 days and 25 minutes. The mean time from arrival to removal of goods from Customs control is 15 days, 23 hours and 33 minutes. 3.1.2. Land Border Posts This analysis summarizes the weighted mean release time for all border posts surveyed, that is, Namanga and Malaba stations. The mean time taken by Customs to release goods at land border posts is 11 hours. The mean time from arrival to removal of goods from Customs control is 20 hours, 18 minutes. The mean time taken to lodge documents is 6 hours, 40 minutes after arrival of goods. The mean time taken to remove goods after release is 2 hours, 43minutes. Comparison of Mean Release Time by Timing of Lodgment (a) Pre-Lodgment The mean time taken by Customs to release goods whose entries are lodged before arrival of vessel is 8 hours, 15 minutes. The mean time from arrival to removal of goods under Customs control is 12 hours, 1 minute.


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(b) Post-Lodgment The total mean time taken by Customs to release the goods whose entries are lodged after arrival of vessel is 11hours and 27 minutes. The mean time from arrival to removal of goods under Customs control is 21 hours and 41 minutes. 3.1.3. Airports This analysis summarizes weighted mean release time for all airports covered by TRS survey. These include JKIA and Eldoret stations. The mean time taken by Customs to release goods at airports is 2 days, 6 hours and 18 minutes. The mean time from arrival to removal of goods from Customs control is 5 days, 11 hours and 26 minutes. The total mean time taken to lodge documents is 2 days, 22 hours and 21 minutes after arrival of goods. The total mean time taken to remove the goods after release is 7 hours and 37 minutes. Comparison of Mean Release Time by Timing of Lodgment (a) Pre-Lodgment The mean time taken by Customs to release goods whose entries are lodged before arrival of vessel is 2 days, 14 hours and 2 minutes. The mean time from arrival to removal of goods under Customs control is 2 days, 10 hours and 3 minutes. (b) Post-Lodgment The mean time taken by Customs to release goods whose entries are lodged after arrival of vessel is 2 days, 5 hours and 57 minutes. The mean time from arrival to removal of goods from Customs control is 5 days, 14 hours and 29 minutes.


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Table 3: Descriptive statistics on time between processes in all ports (dd hh:mm)

Procedure Airports Land Border Posts Seaports N Mean Std Dev N Mean Std Dev N Mean Std Dev Arrival to removal 612 5 11:26 2 20:38 224 0 20:18 1 21:23 654 10 07:53 8 01:28 Arrival to lodgment 612 2 22:21 2 08:05 224 0 06:40 1 10:17 654 3 20:01 6 10:43 Lodgment to release 612 2 06:18 1 14:57 224 0 11:00 0 22:55 654 6 12:02 3 17:33 Release to removal 612 0 07:37 0 15:47 224 0 02:43 0 16:40 654 0 19:42 1 11:13 Pre-lodgment Arrival to removal 25 2 10:03 1 23:32 32 0 12:01 0 16:01 324 5 04:50 3 02:16 Arrival to lodgment 25 0 00:00 0 00:00 32 0 00:00 0 00:00 324 0 00:00 0 00:00 Lodgment to release 25 2 14:02 2 12:25 32 0 08:15 0 11:54 324 4 22:10 2 23:01 Release to removal 25 0 03:45 0 05:55 321 0 04:05 0 07:26 324 0 13:56 1 05:09 Post-lodgment Arrival to removal 587 5 14:29 2 19:42 192 0 21:41 2 00:29 330 15 23:33 8 01:45 Arrival to lodgment 587 3 01:21 2 07:19 192 0 077: 1 12:56 330 7 14:22 7 08:02 Lodgment to release 587 2 05:57 1 13:47 192 0 11:27 1 00:13 330 8 00:25 3 18:31 Release to removal 587 0 07:47 0 16:03 192 0 02:30 0 17:44 330 1 02:01 1 15:57


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3.2. DURATION OF INTERVENING PROCESSES AT ALL PORTS Below is the analysis of mean release times between processes in all stations surveyed as depicted in Table 4. 3.2.1. Mombasa Station Mombasa is the busiest and most strategic of all Customs stations in Kenya. This is because the Kilindini Port located in Mombasa handles all importations by sea, both for home use and transit to the neighbouring countries in East and Central Africa region. The documents are lodged at Mombasa long room for processing and collection of the relevant taxes before being dispatched to Central Documentation Office (CDO) at the Kenya Ports Authority (KPA) offices located within Kilindini Port. From CDO, the documents are dispatched to the various sheds within the port of Kilindini for verification and release of goods. Mombasa long room also processes entries for private Container Freight Stations (CFSs) that are located in Mombasa. From Mombasa long room to Kilindini is approximately four Kilometers while some of the CFSs are located approximately ten Kilometers from long room Mombasa. Lodgment of declarations is done after Customs clearing agents make payments of the self-assessed taxes in the bank. TRS was conducted in Mombasa long room and Kilindini from 30th August to 7th September, 2004 as follows:

• Selection of every 5th entry lodged (imports and transit), warehousing, MUB and EPZ (100%) from 30th August to 3rd September, 2004 = 521

• Selection of all entries lodged from 6th – 7th September, 2004 = 546 • Total number of entries selected = 1067 • Total number of TRS forms returned by 06/10/04 = 711 • Total number non-valid TRS forms = 67 • Total number of valid TRS Forms = 644 • Total number of forms not returned by 06/10/04 = 356

The mean time taken by Customs to release goods is 6 days, 16 hours and 32 minutes. The mean time from arrival to removal of goods from Customs control is 10 days, 14 hours and 28 minutes. The mean time taken to lodge documents is 3 days, 20 hours and 29 minutes after arrival of goods. The mean time taken to remove goods after release is 22 hours, 2 minutes.


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Comparison of Mean Release Time by Timing of Lodgment (a) Pre-Lodgment The mean time taken by Customs to release goods whose entries are lodged before arrival of vessel is 5 days, 3 hours and 17 minutes. The mean time from arrival to removal of goods from Customs control is 5 days, 13 hours and 18 minutes. (b) Post-Lodgment The mean time taken by Customs to release goods whose entries are lodged after arrival of vessel is 8 days, 2 hours and 30 minutes. The mean time from arrival to removal of goods from Customs control is 15 days, 19 hours and 54 minutes. 3.2.2. Nairobi Station Nairobi long room is located in Nairobi (Capital City of Kenya) and is housed at the Times Tower (KRA Headquarters). The station handles all importations that are discharged in Mombasa and transported by railway to the Inland Container Depot (ICD) at Embakasi. The documents are lodged at Times Tower long room for processing and collection of the relevant taxes before being dispatched to ICD Embakasi for verification and release. From Times Tower long room to ICD Embakasi is approximately 15 Kilometers. Lodgment of declarations is done after Customs clearing agents make payments of the self-assessed taxes in the bank. TRS was conducted in Nairobi Long Room and ICD Embakasi from 16th August to 22nd August, 2004 as follows:

• Total number of entries selected ( all entries lodged) = 110 • Total number of forms returned by 06/10/04 = 80 • Total number of forms not returned by 06/10/04 = 30

The mean time taken by Customs to release goods is 5 days, 13 hours and 38 minutes. The mean time from arrival to removal of goods from Customs control is 8 days, 21 hours and 40 minutes. The mean time taken to lodge documents is 3 days, 5 hours and 23 minutes after arrival of goods. The mean time taken to remove the goods after release is 9 hours, 41minutes.


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Comparison of Mean Release Time by Timing of Lodgment (a) Pre-Lodgment The mean time taken by Customs to release goods whose entries are lodged before arrival of vessel is 4 days, 7 minutes. The mean time from arrival to removal of goods from Customs control is 4 days, 1 hour and 33 minutes. (b) Post-Lodgment The mean time taken by Customs to release goods whose entries are lodged after arrival of vessel is 7 days, 20 hours and 40 minutes. The mean time from arrival to removal of goods under Customs control is 16 days, 15 hours and 26 minutes. 3.2.3. Kisumu Station Kisumu station has an ICD and a lake port on the shores of Lake Victoria that handles importations of goods within the East Africa Region. This station is located in Kisumu City approximately 350 Kilometers west of Nairobi. The station handles importations that are discharged in Mombasa and transported by railway to the ICD at Kisumu. The documents are lodged at Kisumu long room for processing and collection of the relevant taxes before being dispatched to ICD Kisumu and Kisumu Pier for verification and release. Lodgment of declarations is done after Customs clearing agents make payments of the self-assessed taxes in the bank. TRS was conducted in Kisumu long loom from 30thAugust to 10th September, 2004. However, during the period of the survey there was a derailment of the railway wagons ferrying goods from Mombasa to Kisumu. The survey was conducted as follows:


The mean time taken by Customs to release the goods is 2 days, 10 hours and 25 minutes. The mean time from arrival to removal of goods from Customs control is 10 days, 8 hours and 3 minutes.


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The mean time taken to lodge documents is 7 days, 21 hours and 4 minutes after arrival of goods. The mean time taken to remove goods after release is 33 minutes. Comparison of Mean Release Time by Timing of Lodgment (a) Pre-Lodgment The mean time taken by Customs to release goods whose entries are lodged before arrival of vessel is 16 hours, 15 minutes. The mean time from arrival to removal of goods under Customs control is 16 hours, 15 minutes. (b) Post-Lodgment The mean time taken by Customs to release goods whose entries are lodged after arrival of vessel is 3 days, 20 hours and 10 minutes. The mean time from arrival to removal of goods from Customs control is 18 days, 1 hour and 30 minutes. 3.2.4. Namanga Station Namanga is a land border post located between the Kenya/Tanzania border which lies approximately 150 Kms South-East of Nairobi. Unlike other stations surveyed, Namanga lags behind in computerization. This is attributable to the fact that there is no electricity in the vicinity. In this station, entries are lodged and processed manually. Assessment and collection of the relevant taxes together with verification and release is done within the station. However, due to lack of verification bays and lifting equipment most of the goods are examined and released without being off-loaded from the importing/exporting truck. TRS was conducted in Namanga from 16th August to 22nd August, 2004 as follows:


The mean time taken by Customs to release the goods is 17 hours and 16 minutes. The mean time from arrival to removal of goods from Customs control is 2 days, 21 hours and 48 minutes.


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The mean time taken to lodge documents is 2 days, 1 hour and 12 minutes after arrival of goods. The total mean time taken to remove the goods after release is 5 hours and 25 minutes. Comparison of Mean Release Time by Timing of Lodgment (a) Pre-Lodgment The mean time taken by Customs to release goods whose entries lodged before arrival of vessel is 19 hours and 8 minutes. The mean time from arrival to removal of goods under Customs control is 1 day, 2 hours and 39 minutes. (b) Post-Lodgment The mean time taken by Customs to release the goods whose entries are lodged after arrival of vessel is 15 hours and 24 minutes. The mean time from arrival to removal of goods under Customs control is 4 days, 16 hours and 58 minutes. 3.2.5. Malaba Station Malaba is a land border post located on the Kenya/Uganda border and lies approximately 600 Kilometers west of Nairobi. In this station, entries are lodged for assessment and collection of the relevant taxes. Verification and release of the goods is done within the station. This station normally handles goods on transit to and/or from the Great Lakes Region comprising of Uganda, Congo DRC, Rwanda and Burundi. TRS was conducted in Malaba from 30th August to 5th September, 2004 as follows:


The mean time taken by Customs to release the goods is 10 hours and 27 minutes. The mean time from arrival to removal of goods from Customs control is 15 hours and 26 minutes. The mean time taken to lodge documents is 2 hours and 30 minutes after arrival of goods.


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The total mean time taken to remove the goods after release is 2 hours and 29 minutes. Comparison of Mean Release Time by Timing of Lodgment (a) Pre-Lodgment The mean time taken by Customs to release goods whose entries are lodged before arrival of vessel is 3 hours and 47 minutes. The mean time from arrival to removal of goods from Customs control is 5 hours and 22 minutes. (b) Post-Lodgment The mean time taken by Customs to release the goods whose entries are lodged after arrival of vessel is 11 hours and 15 minutes. The mean time from arrival to removal of goods from Customs control is 16 hours and 40 minutes. 3.2.6. JKIA Station JKIA is the first international airport and the busiest of all the airports in the country. The station is located in Nairobi, the capital city of Kenya. In this station, entries are lodged for assessment and collection of the relevant taxes in long room (Forodha House) located within the airport. Verification and release of goods is done at the various sheds within the airport. The station normally handles international flights and cargo planes that carry goods to and from all over the world. Due to the nature of some of the goods imported by airfreight, a special Customs procedure of release of goods prior to lodgment of declaration is permitted in this station. However, this special arrangement is granted to particular goods e.g. perishable commodities, magazines and newsprint, etc. TRS was conducted at JKIA from 19th – 25th August, 2004 as follows:

• Selection of all entries lodged from 19th – 25th August = 1048 • Total number of TRS forms returned by 06/10/04 = 1048 • Total number TRS forms returned but are for prior release entries = 113 • Total number of valid TRS Forms=- 935

The mean time taken by Customs to release the goods is 2 days, 5 hours and 56 minutes.


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The mean time from arrival to removal of goods from Customs control is 5 days, 11 hours and 32 minutes. The total mean time taken to lodge documents is 2 days, 22 hours and 47 minutes after arrival of goods. The total mean time taken to remove the goods after release is 7 hours and 41 minutes. Comparison of Mean Release Time by Timing of Lodgment (a) Pre-Lodgment The mean time taken by Customs to release goods whose entries are lodged before arrival of aircraft is 2 days, 14 hours and 2 minutes. The mean time from arrival to removal of goods under Customs control is 2 days, 10 hours and 3 minutes. (b) Post-Lodgment The mean time taken by Customs to release goods whose entries are lodged after arrival of aircraft is 2 days, 5 hours and 34 minutes. The mean time from arrival to removal of goods under Customs control is 5 days, 14 hours and 37 minutes. 3.2.7. Eldoret Station Eldoret airport is the third international airport in the country. It is located in the expansive Rift Valley Province approximately 300 Kilometers North-West of Nairobi. The airport mainly handles chartered cargo flights from the Middle East. During the period of study, it was reported that the importers did not lodge their documents because of a dispute relating to cargo manifest. TRS was conducted in Malaba from 30th August to 7th September, 2004 as follows:


The mean time taken by Customs to release goods is 4 days, 1 hour and 54 minutes. The mean time from arrival to removal of goods from Customs control is 4 days, 22 hours and 31 minutes.


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In this station, all declarations are post-lodged. The total mean time taken to lodge documents is 19 hours and 14 minutes after arrival of goods. The total mean time taken to remove the goods after release is 1 hour and 23 minutes.


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Table 4: Descriptive statistics on time between processes in all stations (dd hh:mm) Stations NRB JKIA NAM MBA ELD KSM MAL Procedure Mean Mean Mean Mean Mean Mean Mean Arrival to removal 8 21:40 5 11:32 2 21:48 10 14:28 4 22:31 10 08:03 0 15:26 Arrival to lodgment 3 05:23 2 22:47 2 01:12 3 20:29 0 19:14 7 21:04 0 02:30 Lodgment to release 5 13:38 2 05:56 0 17:16 6 016:32 4 01:54 2 10:25 0 10:27 Release to removal 0 09:41 0 07:41 0 05:25 0 22:02 0 01:23 0 00:33 0 02:29 Pre-lodgment Arrival to removal 4 01:33 2 10:03 1 02:39 5 13:18 - 0 16:15 0 05:22 Arrival to lodgment 0 00:00 0 00:00 0 00:00 0 00:00 - 0 00:00 0 00:00 Lodgment to release 4 00:07 2 14:02 0 19:08 5 03:17 - 0 16:15 0 03:47 Release to removal 0 09:46 0 03:45 0 10:15 0 15:10 - 0 00:000 0 01:34 Post-lodgment Arrival to removal 16 15:26 5 14:37 4 16:58 15 19:54 4 22:31 18 01:30 0 16:40 Arrival to lodgment 8 09:12 3 01:49 4 02:25 7 09:47 0 19:14 14 04:20 0 02:48 Lodgment to release 7 20:40 2 05:34 0 15:24 8 02:30 4 01:54 3 20:10 0 11:15 Release to removal 0 09:33 0 07:51 0 00:35 1 05:07 0 01:23 0 01:00 0 02:35


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3.3. RELEASE TIMES BETWEEN PROCESSES IN LONG ROOM Table 5: Descriptive statistics on time between processes in long rooms (dd hh:mm) Stations NRB JKIA NAM MBA ELD KSM MAL Procedure Mean Mean Mean Mean Mean Mean Mean Lodgment to allocation 1 00:22 0 16:37 - 1 05:18 0 00:21 - 0 12:08 Lodgment to acceptance 3 09:47 1 00:35 0 02:35 2 09:41 0 02:52 0 01:08 0 12:22 Lodgment to cash office 4 08:24 1 14:22 0 07:19 2 17:25 0 03:34 - 1 04:00 Lodgment to manifest 4 09:23 1 18:53 - 3 12:48 0 04:55 - - Lodgment to CDO 5 07:23 - - 5 08:12 0 03:06 - -


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3.4. RELEASE TIMES BETWEEN PROCESSES AFTER LONG ROOM ACTIVITIES Table 6: Descriptive statistics on time between processes after long room activities (dd hh:mm) Stations NRB JKIA NAM MBA ELD KSM MAL Procedure Mean Mean Mean Mean Mean Mean Mean Time taken by CDO 0 04:53 - - 2 01:53 0 00:10 - - Dispatch of MPRO to KPA 0 04:56 - - 1 05:14 - - - Dispatch to Sheds 0 12:46 0 03:22 - 0 08:33 0 01:25 - - Time taken by KPA to release MPRO 3 20:02 - - 2 01:44 - - - Customs request for goods 2 18:30 0 09:05 - 1 09:11 0 00:15 0 16:29 0 00:06 Availing goods for inspection 0 05:18 0 02:16 0 00:00 0 03:38 0 00:10 0 01:00 0 00:03 Entry adjustment - - - 0 00:40 0 20:00 0 01:02 - KEBS intervention 0 04:41 0 01:19 0 00:29 0 01:51 - - 0 00:01 KEPHIS intervention - 0 00:20 - 0 00:09 - - 0 00:05 Port Health intervention 0 00:22 0 05:54 - 0 00:09 - - 0 00:05 Intervention by other Agencies - 0 00:43 - 0 04:27 6 07:00 - - End of inspection to release 0 04:58 0 08:41 0 02:01 0 04:48 0 23:18 0 03:00 0 00:28


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3.5. COMPARISON OF MEAN RELEASE TIME BY IMPORT CLASSES Table 7 compares the mean release times across different groups of import entries. It indicates four time periods for each import group, namely, from arrival to release, from arrival to lodgment, from lodgment to release and from release to removal from Customs control. Some of the key findings are as follows:

a) By goods regime, the average time between arrival and removal of dutiable formal entries is 5 days 6 hours for airports, 9 days 3 hours for seaports and 2 days 15 hours at the land border posts. It is however longer for non-dutiable and other goods regimes except at the airports where their clearance is slightly shorter.

b) In general, dutiable, non-dutiable and exempt entries take a shorter time to

process at the seaports than the other goods regime.

c) At the seaports, Pre-Shipment Inspection (PSI) entries are cleared faster than destination inspection and exempt entries while at the airports, destination inspection entries take a much shorter time to clear – 1 day 5 hours against 6 days 3 hours and 5 days 8 hours for PSI and exempt entries respectively.

d) The release time for containerised cargo at the seaports is much longer than Less

Container Load (LCL) and other cargoes. The situation is however different at the land border posts as it takes a shorter time to clear containerised and LCL cargoes than other cargoes.

e) At the seaports, cargoes exempted from payment of duties and taxes take a longer

time to release than non-exempted. The longer release time for exempted shipments could be traced to delays in lodgment which in turn may be due to the delay in getting exemption letters from the relevant authorities. This doesn’t hold true at the land border posts.


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Table 7: Average release time by import classes (dd hh:mm)

1. By Goods Regime Airports Land Border Posts Seaports Mean Std Dev Mean Std Dev Mean Std Dev (a) Dutiable Arrival to removal 5 06:05 2 14:53 2 15:41 4 04:51 9 03:46 7 22:16 Arrival to lodgment 1 19:21 2 04:03 1 10:16 3 17:57 3 01:41 6 05:22 Lodgment to release 2 04:27 1 13:57 1 03:10 2 01:00 6 03:12 3 10:36 Release to removal 0 06:07 0 12:40 0 04:02 0 08:12 0 09:03 0 20:24 (b) Non-dutiable Arrival to removal 5 23:30 2 18:16 - - 9 09:05 8 12:16 Arrival to lodgment 1 22:39 2 05:16 - - 3 02:18 5 14:25 Lodgment to release 2 09:09 1 14:49 - - 6 22:26 5 03:06 Release to removal 0 07:32 0 14:52 - - 0 19:44 1 01:05 (c) Exempt/Relief Arrival to removal 6 11:24 3 10:18 0 07:07 0 00:10 10 21:09 8 11:51 Arrival to lodgment 2 13:19 3 02:54 0 01:02 0 00:03 5 18:50 7 13:55 Lodgment to release 2 20:10 1 18:46 0 05:23 0 00:44 6 14:21 3 06:55 Release to removal 0 12:26 1 01:07 0 00:41 0 00:37 0 16:29 0 19:54 (d) TREO Arrival to removal - - - - 13 04:04 6 02:36 Arrival to lodgment - - - - 3 11:55 4 13:35 Lodgment to release - - - - 8 11:47 5 12:38 Release to removal - - - - 1 06:44 1 08:14


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Airports Land Border Posts Seaports Mean Std Dev Mean Std Dev Mean Std Dev (e) Transit Arrival to removal 4 21:51 0 07:59 0 14:01 1 01:14 12 06:54 8 11:17 Arrival to lodgment 0 14:15 1 05:43 0 02:31 0 07:15 3 22:31 6 15:52 Lodgment to release 3 01:54 4 03:03 0 08:57 0 16:10 6 22:57 3 23:23 Release to removal 0 12:39 1 00:56 0 02:31 0 17:25 2 03:42 2 08:42 (f) EPZ Arrival to removal 4 06:53 3 11:38 - - 11 14:10 7 21:23 Arrival to lodgment 1 21:41 3 01:33 - - 3 18:37 5 14:19 Lodgment to release 1 00:03 0 15:49 - - 8 08:47 3 22:43 Release to removal 0 04:49 0 06:47 - - 0 17:05 0 15:37 (g) MUB Arrival to removal 2 15:30 - - - 22 06:52 0 23:48 Arrival to lodgment 1 13:50 - - - 8 08:09 6 05:44 Lodgment to release 1 01:10 - - - 10 13:28 3 02:16 Release to removal 0 00:30 - - - 0 02:24 0 02:15 (h) Warehousing Arrival to removal 4 13:21 1 15:48 - - 11 05:43 6 21:17 Arrival to lodgment 1 13:14 1 18:40 - - 3 15:50 5 20:56 Lodgment to release 1 17:49 1 00:08 - - 9 04:59 3 23:50 Release to removal 0 05:09 1 07:22 - - 0 17:44 0 13:04


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Airports Land Border Posts Seaports Mean Std Dev Mean Std Dev Mean Std Dev (i) Others Arrival to removal 5 06:16 0 15:45 - - 11 16:50 - Arrival to lodgment 3 03:33 2 04:45 - - 2 18:45 - Lodgment to release 2 01:17 1 14:44 - - 7 21:05 - Release to removal 0 01:26 0 01:44 - - 1 01:00 - 2. By Type of Cargo (a) Containerised Arrival to removal - - 0 14:34 1 02:05 12 09:50 8 11:54 Arrival to lodgment - - 0 02:31 0 07:22 4 07:24 6 11:09 Lodgment to release - - 0 09:26 0 17:08 7 15:40 4 02:27 Release to removal - - 0 02:36 0 17:43 1 06:42 1 18:26 (b) LCL Arrival to removal 5 09:27 2 19:09 0 12:17 0 09:36 8 08:07 6 15:21 Arrival to lodgment 1 21:11 2 07:01 0 00:52 0 00:29 2 20:35 6 11:43 Lodgment to release 2 05:39 1 15:26 0 12:59 0 09:16 5 14:47 3 03:18 Release to removal 0 07:04 0 15:10 0 00:48 0 00:48 0 06:14 0 12:18 (c) Others Arrival to removal 6 17:16 3 11:29 2 06:09 3 20:17 8 03:07 7 00:09 Arrival to lodgment 2 07:57 3 23:22 1 03:28 3 05:15 2 03:47 5 12:30 Lodgment to release 2 17:20 1 20:17 1 00:30 2 02:14 5 13:31 3 05:18 Release to removal 0 08:50 0 21:55 0 04:21 0 08:41 0 11:18 1 04:38


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3. By Type of inspection Airports Land Border Posts Seaports Mean Std Dev Mean Std Dev Mean Std Dev (a) PSI Arrival to removal 6 03:08 3 10:34 2 04:05 3 13:14 8 23:21 7 15:56 Arrival to lodgment 1 20:18 2 14:51 1 06:34 3 13:00 3 00:26 6 01:04 Lodgment to release 2 07:53 1 11:49 0 12:53 0 14:22 6 04:38 3 11:35 Release to removal 0 07:48 0 14:21 0 06:16 0 10:44 0 08:48 0 13:30 (b) Destination inspection Arrival to removal 1 05:13 - 3 05:56 5 12:24 11 03:51 7 20:15 Arrival to lodgment 0 03:53 0 05:30 2 14:06 5 01:54 6 00:41 6 15:45 Lodgment to release 0 12:04 0 11:17 0 15:16 0 16:00 5 11:58 4 08:10 Release to removal 0 00:49 0 00:48 0 02:21 0 04:48 1 02:21 2 10:28 (c) Exempt Arrival to removal 5 08:14 2 16:53 0 12:57 1 05:04 12 01:39 8 06:55 Arrival to lodgment 1 20:43 2 05:45 0 01:21 0 01:25 3 158:39 6 07:17 Lodgment to release 2 05:30 1 15:27 0 08:07 0 13:151 7 14:00 4 04:35 Release to removal 0 07:03 1 15:21 0 03:30 1 00:22 1 12:14 2 00:54


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3.6. PROFILE OF SAMPLE ENTRIES The survey results are based on randomly selected 1,901 import entries in 7 Customs stations - Nairobi, JKIA, Namanga, Mombasa, Eldoret, Kisumu, and Malaba. These are entries that were assessed and released from August 16 to September 7, 2004. From table 8, the entries can be characterized as follows:

a) Dutiable entries comprise 56.4% of the total; transit, 20.2%. b) By selectivity status, entries that are free of physical inspection make up 50.5% of the

total; of those subject to physical inspection, 70.5%, 27.5% and 2.3% of these entries are subject to random, detailed and scanner inspections respectively.

c) Pre-lodgments account for only 25.6% of import entries, the usual mode is to lodge after

arrival of cargoes. For Nairobi station, pre-lodgments account for 61.5% of import entries.

d) The most number of lodgments are made on Mondays (28.1%) followed by Tuesdays

(21.5%). The situation is different at border stations as most lodgments are made on Fridays.

e) Interestingly, 57% of the lodgments are in the afternoons. f) All entries are lodged manually by use of the single entry document (C63). 96.4% of

these entries are declared by appointed agents.

g) Exemption from customs duties and taxes applies to 6.8% of import entries. These duties

and taxes are settled mostly by cheque payment through the banks.


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Table 8: Descriptive statistics on sample entries Stations NRB JKIA NAM MBA ELD KSM MAL ALL

STATIONS % % % % % % % % Day of lodgment Sunday - - 14.3 - - - 9.8 1.2 Monday 9.0 20.9 - 49.3 - - 5.9 28.1 Tuesday 25.6 24.4 - 19.8 - 40.0 14.6 21.5 Wednesday 43.6 23.6 19.0 9.1 - - 15.6 18.3 Thursday 16.7 15.0 19.0 8.9 - - 15.6 13.0 Friday 5.1 16.1 42.9 12.9 100 60.0 22.0 16.0 Saturday - - 4.8 - - - 16.6 1.9 Total 100 100 100 100 100 100 100 100 Time of lodgment Before noon 51.3 34.7 52.4 49.8 100 - 54.1 42.9 Afternoon 48.7 65.3 47.6 50.2 - 100 45.9 57.1 Total 100 100 100 100 100 100 100 100 Complete documentation Yes 92.1 97.9 100 95.9 100 100 100 97.0 No 7.9 2.1 - 4.1 - - - 3.0 Total 100 100 100 100 100 100 100 100


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Stations NRB JKIA NAM MBA ELD KSM MAL ALL STATIONS

% % % % % % % % Lodgment Pre-lodgment 61.5 4.1 50.0 48.0 - 44.4 10.8 25.6 Post-lodgment 38.5 95.9 50.0 52.0 100 56.6 89.2 74.4 Total 100 100 100 100 100 100 100 100 Goods regime Dutiable 67.1 68.9 100 52.4 100 100 3.8 56.4 Non-dutiable 19.0 13.8 - 1.7 - - - 7.8 Exempt/Relief 5.1 12.1 - 2.1 - - 1.0 6.8 TREO 1.3 - - 5.5 - - - 2.0 Transit - 0.8 - 26.5 - - 95.2 20.2 EPZ 1.3 2.3 - 5.0 - - - 2.9 MUB - 0.1 - 0.6 - - - 0.3 Warehousing 6.3 2.3 - 6.0 - - - 3.4 Others - 0.2 - 0.2 - - - 0.2 Total 100 100 100 100 100 100 100 100 Declarant Agent 93.5 96.4 100 95.4 100 100 100 96.4 Self 6.5 3.6 - 4.6 - - - 3.6 Total 100 100 100 100 100 100 100 100


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% % % % % % % % Document rejection Yes 8.3 6.7 11.1 18.0 100 - 86.7 12.8 No 91.7 93.3 88.9 81.9 - 100 13.3 87.1 Total 100 100 100 100 100 100 100 100 CCA query Yes 20.0 9.1 - 2.4 - - - 7.3 No 80.0 90.9 - 97.6 - - - 92.7 Total 100 100 - 100 - - - 100 Manifest query Yes 100 - - 5.6 - - - 3.2 No - 100 - 94.4 - - - 96.8 Total 100 100 - 100 - - - 100 Query by Customs Yes - - - 25.0 - - - 25.0 No - - - 75.0 - - - 75.0 Total - - - 100 - - - 100


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% % % % % % % % Direct release Yes 50.0 1.1 - 38.7 - - - 29.6 No 50.0 98.9 - 61.3 - - - 70.4 Total 100 100 - 100 - - - 100 Physical inspection

Yes 98.4 14.4 100 92.5 100 100 80.0 50.5 No 1.6 85.6 - 7.5 - - 20.0 49.5 Total 100 100 100 100 100 100 100 100 Type of inspection

Random 75.3 30.1 100 76.9 - 100 75 70.2 Detailed 24.7 68.0 - 20.4 100 - 25 27.5 Scanner - - - 2.9 - - - 2.3 Total 100 100 100 100 - 100 100 100 Selection based on Random 97.3 78.6 100 94.8 - 60.0 60.0 92.1 Risk analysis 2.7 21.4 - 5.2 100 40.0 40.0 7.9 Total 100 100 100 100 100 100 100 100


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% % % % % % % % Lab analysis Yes 3.9 0.9 - 2.8 - - - 1.9 No 96.1 99.1 100 97.2 - 100 - 98.1 Total 100 100 100 100 - 100 - 100 Offence raised

Yes - 02 - 1.7 100 - 40.0 1.4 No 100 99.8 - 98.3 - 100 60.0 98.6 Total 100 100 - 100 100 100 100 100 Reasons foe rejection

Wrong HS - 12.0 - 9.4 20.0 - - 9.9 Wrong value - 22.0 - 10.6 - - - 13.2 Wrong quantity - 12.0 - 1.2 80.0 - 10.0 7.9 Wrong exchange - 4.0 - - - - - 1.3 Others 100 50.0 - 78.8 - - 90.0 67.5 Total 100 100 100 100 100 - 100 100 CCA for query Wrong quantity 8.3 - - - - - - 1.6 Wrong description of goods - 23.4 - - - - - 17.5 Wrong values 8.3 29.8 - - - - - 23.8 Other 83.3 46.8 - 100 - - - 57.1 Total 100 100 - 100 - - - 100


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% % % % % % % % Manifest reason for query Wrong description of goods - 50.0 - 5.6 - - - 9.5 Other 100 50.0 - 94.4 - - - 90.5 Total 100 100 - 100 - - - 100 KEBS intervention Yes 68.8 67.8 95.2 55.8 - - 2.4 56.4 No 31.2 32.2 4.8 44.2 100 100 97.6 43.6 Total 100 100 100 100 100 100 100 100 KEPHIS intervention Yes - 02. - 0.8 - - 1.4 0.5 No 100 99.8 100 99.2 100 100 98.6 99.5 Total 100 100 100 100 100 100 100 1.3 Port Health intervention Yes 11.3 3.5 - 1.1 - - 0.5 2.6 No 88.8 96.5 100 98.9 100 100 99.5 97.4 Total 100 100 100 100 100 100 100 100 Other interventions Yes - 0.4 - 0.9 80.0 - - 0.7 No 100 99.6 100 99.1 20.0 100 100 99.3 Total 100 100 100 100 100 100 100 100


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3.7. RESULTS OF THE INTERVIEW SURVEY Causes of Delay During data collection, TRS Core Team when supervising collection of data interviewed some members of staff in the respective stations. The team also held discussions with key stakeholders who offered various explanations as to why certain process segments are usually lengthy. The factors cited are associated with limitations of the current computer system, inadequacy of infrastructure, organizational weaknesses and institutional flaws. The time between lodgment of declaration and release by Customs occupies a significant segment in the total processing time across all ports:

a) Delays in the submission of inbound manifest by shipping lines. Before a declaration is lodged, the inward manifest of the vessel carrying the cargo must be submitted to the Customs. This allows validation of the importer’s declaration regarding the cargo against the report of the shipping line. But in spite of an existing agreement between Customs and shipping lines about the latter’s submission of manifest ahead of arrival of vessels, many shipping lines submit their manifest after the arrival of vessels. Consequently, importers cannot lodge until the manifest has been submitted to Customs. However, Customs regulations allow lodgment of declarations seven days prior to arrival of a vessel provided that a manifest has been submitted.

b) Computer breakdowns. The clearing agents complained of occasional server

breakdowns that cause delay in processing of entries by Customs.

c) Delay in the arrival of original documents required for lodgment. On the part of the importers, agents cited delays in the arrival of original copies of invoices, packing lists and bills of lading as contributing delays in lodgment since the original copies are required for the same. In addition, the original bill of lading has to be stamped by the shipping line before it can be used for the declaration.

d) Delays in submission of required documents by importer/broker. Customs

examination of the entry can be held-up by late submission of documents that Customs officers require to establish the true value of the transaction or nature of goods

e) Misdeclarations. These are another cause of delays, especially because

documents not properly completed are rejected. Although the forwarders association has embarked on a training program for all it’s members, this has not yet covered everyone.

f) Delays in submission of payment information. There are cases which have been

cited in which banks have delayed in updating Customs with payment information thus delaying the acceptance of documents. These claims have indicated that the updating of the online system that connects Customs and the designated banks has not always been instantaneous.


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g) Cargo scanning. Forwarders have complained that cargo scanning causes delays especially where scanned containers have had to be subjected to 100% verification.

h) Lack of facilities. Sometimes verification has had to be delayed in bad weather

since there are no covered verification sheds.


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4. POLICY RECOMMENDATIONS AND CONCLUSIONS 4.1. FOR SHORT TERM IMPLEMENTATION 4.1.1. Process inefficiencies: There are minor process inefficiencies that can be easily

corrected to enormous advantage. Two intervening events in the entry process stand out at Mombasa and Nairobi ICD. The first of these is the movement of an entry between receiving and allocation (see annex VII) which takes one day on average. The second is the movement of entries between long room manifest and the port CDO which takes two days. In both cases, the duration is too long; the first case being attributed to manual data and the second case to inefficiencies in the entry dispatch system. Regarding the dispatch system, sometimes vehicles are unavailable to provide the service or in other cases a dispatch is routed through transport section which fails to prioritize it. These can be corrected to benefit the entry speed by as much as two days on average.

4.1.2. Emphasize pre-lodgment of declarations: The findings bring out a wide

disparity in release times between documents that are pre-lodged and those that are not. The variation is as much as 8 to 10 days. On the other hand, it is clear that agents prefer post-lodgment. Some of the post-lodgments though are attributable to the requirement for destination inspection in the case of some goods, a requirement that can only be complied with after arrival of goods. In other cases, post-lodgments are attributed delays by shipping lines to submit requisite cargo documentation. As a measure to achieve faster clearance times, the customs should consider encouraging importers to pre-lodge, minimize the requirement for destination inspection and urge shipping agents to submit documents in time.

4.1.3. Removal of duplicated numbering of entries: The long-room process at

automated stations requires that entries are assigned two identification numbers; (i) the pool number which is assigned immediately after data capture, and (ii) the entry number which is assigned in the Cash office. The entry process speed can benefit from elimination of one of the numbering steps. The second numbering step at the Cash office is ideal for removal to be replaced with a running series at the point of receiving.

4.1.4. Review of the role of long-room audit unit: The role of long room audit unit

requires review. The study established that:

(i) It is a bottleneck given that in each case, fewer Officers at this unit review the output of the more numerous declaration officers.

(ii) During the course of the study, audit officers “stopped” only a small

percentage of declarations, recording no additional revenue yield.

(iii)The audit unit will better serve the process if it converted into a fully fledged post importation audit unit.


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4.1.5. Review of the Cash office function: Although the Customs has moved away from direct collection of cash to collection through designated banks, the Cash office continues to operate very much in the same way as it did prior to that change. It is recommended that the role of Cash office be reviewed to make it more efficient.

4.1.6. Review of the role of CDO: At Kilindini and ICD Embakasi there is a CDO

which acts as the first point of dispatch for entries originating from the long-room. The checks carried out at this point are no different from those already done at the long-rooms. It is recommended that this process be modified such that entries originating from long-room are dispatched straight to respective sheds.

4.2. FOR MEDIUM AND LONG TERM IMPLEMENTATION 4.2.1. Customs Computerization

Customs is faced with increasing volumes of traffic, no corresponding increase in resources and greater expectations from business for faster clearance times. At the same time, governments and society expect Customs to provide an effective control on imports, exports and transit traffic.

There is no doubt that the use of ICT can improve the control and risk assessment of a Customs administration and at the same time allow for a reduction in clearance times. The effective and efficient application of ICT requires a detailed process re-engineering exercise as well as a huge investment in the process of implementing it, from conception through to operation and maintenance. It impacts on the entire Customs operation and may entail changes to infrastructure and procedures.

For these reasons the WCO has prepared comprehensive guidelines for Customs Administration on key considerations for purchase, development and maintenance of Customs ICT systems. The guidelines authorise the most important benefits as:

i. Better controls and risk assessment.

ii. Better clearance and reduced release times. iii. Better Revenue collection. iv. Better use of resources. v. Reduced compliance costs.

vi. Improving integrity. vii. Higher quality data.

viii. Better trade statistics.


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4.2.2. Post Clearance Audits

Historically, Customs has examined each individual transaction at the time of clearance. This has some benefits; the goods are available for inspection and possible seizure before consumption. It does not, however, allow Customs to take an overall view of a trader's level of activities or comparison of declarations over time or with similar importers.

Post clearance audits allow advance selection and planning. Customs has the opportunity to gather information on a range of declarations both from the target of the audit and similar traders. It gives more time to study the tariff classifications used and the value declared. An audit gives an overall picture of a trader's performance. Given KRA's wide responsibilities, which are not confined to Customs, the possibility of a fully integrated audit involving domestic tax experts is always possible.

4.2.3. Risk Management

Risk Management is informed decision-making. It can be applied in the Customs area to the selection of transactions for control and the level of control to be applied.

Identifying the risk; the introduction of an electronic declaration system would provide the critical mass of data necessary for analysis. The use of various databases would combine to identify those requiring different levels of attention.

Analyzing the risk; to determine the gravity, probability and possible frequency a risk could occur.

Applying a rating to each risk; from that of major risk with serious revenue implications to those with lesser impact.

How to deal with the risk; to decide on the most appropriate action taking into account of the likely outcome and resource implication.

Review and evaluation; continuous updating is expected to take account of results and new trends emerging.

4.2.4. Authorized Trader Scheme

A number of countries have recently implemented what has commonly been referred to as the “Authorized Trader Scheme” in response to security threats posed by the international trade supply chain. Although these programmes are mainly geared towards enhancing the security of the international trade supply chain, they come with additional benefits to business by way of faster clearance of cargo and to Customs the potential to reduce commercial fraud. The authorized trader scheme is essentially a programme of partnership between Customs and the trade in which in exchange for expedited clearance of their shipments, traders implement the following:


40

a) Customs determined standards and internal policies which provide

adequate safeguards that preclude the compromise of their shipments and containers.

b) Use of smarter, more secure containers c) Work closely with Customs by providing information on suspect

shipments on a regular basis.

d) Provide Customs with adequate access to their physical and financial flows

Importers, Agents, Transporters authorized to use such programs will normally have a demonstrated history of complying with all relevant legislative and regulatory requirements and have made significant investment in security enhancing business practices. The benefits that accrue to them include transmission of limited data regarding their shipments and the processing of their consignments through a dedicated lane with limited physical verification stops.

In Canada the program is called FAST (Free and Secure Trade Program) and in the United States it is called C-TPAT (Customs – Trade Partnership Against Terrorism). In both cases, the requirements on the part of business are elaborate and detailed but the benefits are enormous for both Customs and the trade.

�


41

ANNEXES ANNEX I

TRS PROJECT DATA SHEET

Project and Project Area Country Kenya Organisation Kenya Revenue Authority (KRA) Project Title Time Release Study (TRS) Project Sites JKIA, ICD Embakasi, Kilindini Mombasa, Kisumu

Pier, Malaba, Eldoret and Namanga. Project Focus Primary Type of Focus Areas of strengths and weaknesses in the Customs

clearance process.

Primary Type of Intervention Promotion of local investment through trade facilitation.

Primary Type of Beneficiaries Traders and institutions which in one way or another facilitate customs clearance process.

Development Objective Enhanced revenue collection and promotion of investment to facilitate economic growth and development.

Immediate Objective In line with the CRMP, the objective is to eliminate barriers to the speedy movement of goods across our borders.

Project Period Approval Date 6th July, 2004 Starting Date 26th July, 2004 Estimated Ending Date 2nd October, 2004 (Extended to 15th October, 2004) Project Execution Project Sponsor M. G. Waweru – CG Project Owner F. Thunanira – Commissioner, C&ED Project Advisor R. McDonagh – Deputy Director, WCO Project Manager Y.O. Oloo – Ag. DC, C&ED Project Financing KRA with support from World Bank. WCO provided

technical assistance.


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ANNEX II

TERMS OF REFERENCE (TOR) FOR KENYA TIME-RELEASE STUDY

I. Framework Having regard to the expansion of world trade and the need for efficient and effective procedures to transport goods across borders. Having regard to the need to facilitate trade and at the same time ensure the security of the supply chain and taking into account the need for trade to be able to have consistent, fast and predictable release procedures. Noting the introduction of simplification procedures by many Administrations. Acknowledging that efficient and effective clearance procedures will contribute to the expansion of external trade and the attraction of foreign direct investment thereby providing increased employment opportunities. In the context of the current efforts by KRA to reform and modernize its Customs and Excise Department, it has decided to carry out a study of the time taken to release goods from the point of arrival in Kenya until they are in free circulation or are entered into another Customs regime. The study will be financed by the World Bank and supported by the WCO. Mr. Ray McDonagh, an expert from the WCO will be directly supporting Kenya Customs in this endeavour. The study will measure the average time between arrival and removal of goods to establish the exact position regarding the efficiency of Kenyan clearance procedures.

II. Purpose and Methodology The purpose of the study is to determine if problems exist, the type of problems and the reasons for these problems. In addition, once the methodology is established and understood by Customs officials, they will be in a position to repeat the measurements, so that it will serve as a useful tool to determine the impact and progress of the modernization program that Customs is about to implement. The data collected in the initial TRS will serve as a benchmark for this purpose. The objective is to address the problems identified, remove bottlenecks and improve procedures. In particular, the study will:

• Measure the time between the arrival of the goods and their release; • Calculate: the average time required for the clearance of goods by:

-Region or regions -Type of traffic (air, sea, road, rail) or all types of traffic, -Customs Office.


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- Customs Regime - The average time for each of the operations to be carried out by other services,

• Determine the percentage of imports requiring the intervention of other official

bodies; • Determine the average time required for release of goods requiring the

intervention of other bodies; • Determine the average time required for release of goods not requiring the

intervention of other bodies; • Determine where in the procedure the problems exist and the type of such

problems; • Identify the constraints affecting Customs and where possible other bodies; • Provide a precise picture of the way the clearance procedure functions; • Consider possible corrective action, if necessary in co-operation with other

bodies and suggest solutions. The TRS is normally carried out in three different steps, with a total estimated time of completion of 12 weeks.

1. Preparation Phase This phase involves the setting up of the study group and it decides on the elements set out under 4 and 5 below. It is estimated it would take about 30 days (2 days to issue letter of invitation and 10 days later meet to discuss; 2 to 4 days for discussion. This process could be delayed by non response from other agencies or trade.)

2. Implementation Phase This phase involves mainly the collection of data in the designated points, following the specific methodology and time-table. This part requires a minimum of one week but can be longer if KRA decides to collect data over a longer period of time.

3. Analysis of data and finalization of report Estimated time is 3 weeks. The final report will be drafted by the Secretary of the TRS Study Group with the support of the WCO Expert and adopted by the TRS Study Group. All times mentioned above are indicative.

III. TRS Study Group It is expected that Kenya Customs will set up a TRS Study Group in order to steer and supervise implementation and follow up of the study. Kenyan Customs authorities will appoint a Chairperson, who will also act as Project Manager, to exercise the functions normally associated with those roles. The Group will also include a specialist in Customs procedures, a specialist in organizational matters and administrative structures, a statistician and a person with knowledge of IT


44

systems. The Group will also include a representative of each of the official bodies whose interventions are being measured as part of the study. Where the Chairman so decides, one or more of the specialist requirements may be provided by the same individual. Letters of invitation setting out the aims and purpose of the study should be sent to all other parties whose participation is desired including agencies and brokers. This letter could also refer to an initial bilateral meeting that would take place between customs with WCO presence and the relevant agency. A representative(s) of the trade may also be invited to take part in the work of the group by the Chairman in consultation with the Kenyan Customs administration. The Chairman, in consultation with the other members of the Group, may appoint liaison officers from each point of entry taking part in the study. A member of the Group will be appointed to act as Secretary. The rules of procedure of the Group will be drawn up and adopted by the Group.

IV. Initial Meeting between WCO Expert and TRS Study Group These initial encounters ere critical to explain the methodology, design and scope of the study and prepare a clear action plan and a time-table. It will be important that the TRS Study Group devotes some time to understand the implications and different elements of the study. The items listed below indicate the broad headings for discussion. The meeting will drill down in detail as set out in the WCO Handbook on the TRS.

• Make-up of Working Group. • Scope and design of study; confirm participation of non Customs and consider

any issues arising. • Work plan and methodology, look at mandate and make necessary decisions. • Duration and time of the study. • Geographical scope. • Types of goods. • Choice of traffic. • Sampling • Data forms. • Testing of Procedures. • Collection and recording of data. • Verification of data-ensuring quality control, consistency. • Analysis of data. • Use of IT. • Final Report. • Follow-up action.


45

Preparation of Guidelines Having considered the above, it will be necessary to:

• Prepare a timetable for future work. • Prepare the study and agree on the entire methodology. • Produce (review) data collection forms. • Arrange creation of software for IT use.

This agenda would form the basis for subsequent introductory meetings with other parties to the study.


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ANNEX III

TRS WORKING GROUP

Organization of the study This study was co-financed by KRA and the World Bank with technical assistance from the WCO. The study team is composed of a Core Team comprising the following:

1. Mr. Ray McDonagh WCO – Technical advisor. 2. Mr. Y. Oloo KRA – Customs Specialist (Project

Manger) 3. Mr. W. Ojwang KRA – IT Specialist 4. Mr. G. Aduwi KRA – Research Analyst 5. Mr. H. Kimtai KRA – Customs Specialist (Secretary) 6. Mr. I. Kiprop KRA – Customs Statistician

Assisting this Core Team are Liaison Officers from various regions at which the stations the survey was carried out:

1. JKIA Mr. Simon Mwangi 2. Nairobi L/R & ICD Mr. E.M. Njuguna.

Mr. R. Mwamburi 3. Namanga Mr. Joram Njamiu 4. Mombasa and Kilindini Mr. G. Muia

Mr. A.Y.B. Katsenga

5. Kisumu L/R & Pier Mr. Kariuki Githigi 6. Malaba ’’ 7. Eldoret Mr. Ben Masira

Also joining the Core Team and the Liaison Officers are representatives of the following agencies/stakeholders:

1. Kenyan Bureau of Standards (KEBS) 2. Kenya Plant and Health Inspectorate Services (KEPHIS) 3. Kenya Ports Authority (KPA) 4. Ministry of Health (Port Health) 5. Association of the Courier Service Industry 6. Association of the Air Cargo Handlers


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ANNEX IV: CUSTOMS & EXCISE DEPARTMENT

POOL NUMBER TIME RELEASE STUDY

DATA FORM

ENTRY NUMBER

Section A 1 Importer Name 2 Customs Office Code N B I 0 0 1

3 Mode of air sea

Transport road rail

4 Vessel Name

5 Transport Airway bill B/L number

Document

Voyage Number Delivery Note Manifest

6

7 Appointed Agent Self Consignment Note

8 Name & PIN of declarant 9 Type of declaration SED (C63)

Name others (invoice, transport PIN Documents, etc.)

10 Form of declaration Electronic Manual 11 Goods regime Dutiable Non-dutiable Exempted/relief TREO

12 Classification of goods Preferential Transit Commodity code Number of Items PSI Destination Insp. Exempt EPZ MUB Country of: Origin Weight Warehousing Consignt. Containerized LCL Others Others (specify)

Section B 13 Arrival of Vessel date time 14 Start of unloading date time

15 End of unloading date time 16 Delivery to Shed/Yard date time

Section C 17 Date of payment in bank date time 18 Acceptance of date time

Declaration

19 Lodgement of declaration date time 20 Accompanying documents Yes No

21 Complete documentation yes no 22 Document rejection Yes No


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23 Request for information date time 24 Doc. Relodged date time

25 Document Allocation date time 26 Assessment of duty date time

27 Reasons for rejection Wrong HS Wrong value Wrong QTY Wrong exchange Others

Section D 28 Receiving in Cash office date time 29 Dispatch from date time

Cash office

30 Method of Additional payment (if required) Payment Cash Cheque (a) Requested date time Bankers order Bank advise Slips

31

(b) Paid date time Others (specify)

Section E CCA/ Manifest Audit 32 (a). CCA Received date time 33 (a) CCA Yes No

Document request/Query (b).Manifest Recvd

Date. time (b) Manifest doc request/query, Yes No

34 (a) CCA Requested date time 35. (a).CCA Received date time (b) Manifest Requested

date time 35. (b).Manifest Received date time

36 (a) CCA Reason for Query 37 (a).Dispatch to Man date time Wrong qty Wrong consignee other Wrong description of goods Wrong values (b)Manifest Reason for Query

(b).Dispatch to CDO date time

Wrong qty Wrong consignee other Wrong description of goods Wrong arrival date

Section F CDO Activities 38 Received date time 39 Delivery order on hand Yes No

Subject to warehouse rent Yes No

40 Delivery order received date time 41 Query raised by Customs Yes No

42 Query by Customs date time 43 Query raised by KEBS Yes No

44 Query by KEBS date time 45 Query raised by KEPHIS Yes No


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6 Query by KEPHIS date time 47 Query raised by Port health Yes No

48 Query by Port health date

time

49 Dispatch of MPRO to KPA

date

time

50 Direct release Yes No Dispatch of entry to sheds/ Customs W/H date

time

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Section G

52 Receipt at sheds date time 53 Receipt of MPRO date time

54 Physical Inspection Yes No 55 Customs request date time for goods

56 Type of Inspection 57 Goods available for Inspection Random Detailed Scanner date time

58 Selection based on 59 End of Inspection Random Risk analysis date time

60 Lab analysis Yes No 61 Entry Adj. Request date time

62 Entry adj. Acceptance date time 63 Offence raised Yes No Section H

64 Intervention by other Agencies Yes No

65 KEBS Intervention 66 KEBS Intervention complete date time date time

67 KEPHIS Intervention 68 KEPHIS Intervention complete date time date time

69 Port Health Intervention 70 Port Health intervention complete date time date time

71 Others (Specify) 72 Others Intervention complete date time date time Section I Final Release

73 Release by Customs 74 Removal from Customs control date time date time


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ANNEX V TIME RELEASE STUDY

GUIDELINES ON COMPLETION OF DATA FORM

Specific Guidelines Section A To be completed by an officer designated by the TRS liaison officer. The officer should fill in this section together with box 19 at the time of receiving documents. This data form is to be attached to entries selected for purposes of the study by the receiving clerk. Notes (i) Roads in box 3 to include all modes of transport by road. (ii) Self in box 7 is where the importer is same as a clearing agent. (iii) Self can also be used in special circumstance where the importer has been given

permission to clear own goods without involving an agent. (iv) Exempted/Relief is where the exemption under Third Schedule is applicable or

partial exemption has been granted by treasury. (v) Non dutiable is where duty is free by tariff and falls under zero-rated category

under the VAT Act. (vi) Dutiable in box 12 is where goods are liable to any tax under import regime. (vii) For box 12, if the number of items declared in an entry is more than 1 indicate

H.S. Code of the first item declared and indicate the total number of items in the box below.

(viii) Other in box 12 is where the goods are imported in bulk. Section B To be completed by a representative of Kenya Ports Authority for Mombasa Port, or by other handling agent at the port of release as arranged by TRS liaison officer. Section C To be completed by the declaration officer processing a customs entry to which TRS data form has been attached. Note For box 24, if there is more than one re-lodgment then enter date and time of final re-lodgment. Section D To be completed by officers at the cash office.


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Note Bank advice slip is only applicable to stations where payment is received at the bank before lodgment of entry. Section E To be completed by manifest officers in respective long rooms. Section F To be completed by officers in the CDO in respective stations. Note Customs officer to record the date and time when the document is being referred to other agencies. Similarly, indicate date and time when it is being returned. Section G To be completed by officers at the verification sheds. Note

i. Where joint verification is carried out and there are no issues raised by any agency then Section H should not be completed.

ii. Where joint verification is carried out and difficulties are raised by other agencies

then fill in the relevant boxes. Where there are other sections of KRA intervening outside the normal clearance procedure, indicate the name of section and duration taken. Where there is further intervention by KRA or any other agencies after box 59 has been completed in then amend box 59 to indicate the new date and time. Section H To be completed by customs officers at the shed/customs warehouse. Section I To be completed by customs officer releasing the goods and at the gates respectively. General Guidelines All entries which have been surveyed during the study should be kept separately from other entries until the study report is published. All reference to time should be indicated in 24 hour clock format. If the reason for rejection of the entry is more than one please tick appropriately.


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ANNEX VI

IMPLEMENTATION TIMETABLE

Period - Week Commencing: Activity 26th July 2004

Preparation and deliberation on TOR for the Study with the WCO Advisor.

2nd August 2004

Preparation of questionnaire (data form) and guidelines for the study.

9th August 2004

Final preparation

11th August 2004

Trial period at ICD Embakasi.

12th - 13th August 2004

Reflection on the trial period.

16th August 2004

TRS for Group A starts.

23rd August 2004

Continuation of Group A and reflection for Group B.

30th August 2004

TRS for Group B starts.

6th September 2004

Continuation of Group B study and preparation of analysis for Group A

13th September 2004

Analysis of Group B study.

20th September 2004

Preparation of TRS report.

27th September 2004

Review of the TRS report with the WCO Advisor (second visit).

4th October 2004 (Extended to 15th October, 2004)

Presentation of TRS report to Commissioner General, KRA.


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ANNEX VII CUSTOMS CLEARANCE PROCEDURES

General Customs Clearance Procedures Step 1: Lodgment of Entry The clearing agent makes a declaration on form C 63 and present to customs. The receiving clerk acknowledges receipt by stamping the entry with a receiving stamp showing the date and time it’s lodged. The receiving clerk verifies and ensures that the following documents are attached to the entry for processing. Original invoice. Original bill of lading. Import declaration form (IDF). Clean report of finding (CRF). IDF deposit slip Step 2: Pooling of Entry The data entry clerk forwards the documents for data capture. The declaration details are entered in the computer for processing. On completion of data capture the entry is forwarded to the head of declaration (HDO) long room for allocation. Step 3: Allocation of Entry All the pooled entries are received by the HDO. The HDO maintains the list of officers in the declaration section. The entries are allocated to the officers for processing. The date and time of allocation is indicated on the entry. Details of each entry allocated to the officers are maintained by the HDO for monitoring. Step 4: Entry Processing The processing officers will check the declaration and pass the entry, reject or refer to senior officers for action. The officer will pass the entry in the computer and stamp on the relevant box marked for official user. The entry rejected by the officer is returned to the clearing agent for corrections and amendments. The rejected entry is re-lodged for processing upon completion of the amendments by the clearing agent. Step 5: Dispatch to Cash Office. All the passed entries are collected, recorded and dispatched to cash office. The clerical officer records entry pool no, name of the clearing agent and the amount of duty payable. This is done for control purpose only.


54

Step 6: Cash Office The accountant in-charge of long room will receive the entries and compare the taxes payable on the entry against the payments received in the bank. The entry is given to the cashier to validate in the main computer in order to generate cash abstract to be used at the time the goods are being removed at the gates and central documentation office for confirmation of duty payment and authenticate that the entry was passed in the long room and that taxes have been paid .The entry is numbered, split and forwarded to Customs Clearance Audit (CCA) section. Step 7: Customs Clearance Audit The entries are checked and targeted for 100% verification. Step 8: Manifest Audit Officers at the manifest section compare the ship manifest with the declaration on the entry. They then check the quantity declared weight and goods description. The entry is stopped if the declaration is not in order and the agent is asked to comply before dispatch to for physical verification at the release sheds. Step 9: Central Documentation Office (CDO)/Transit Shed All the documents are received at the CDO/transit sheds. The entries are checked and compared against the cash abstract. If all the details agree, the release orders are dispatched to the port authority/container Freight operator to facilitate collection of their handling charges. The entry is dispatched to the sheds where the goods are located for verification. Step 10: Verification and Release by Customs Verification process commences when the entry and release order is received from port or evidence of payment for the container freight station. The officer will request for the goods to be deposited at the verification area for either 100% verification or normal verification. The officer will examine the goods and write examination account on the reverse of the entry. The goods are released to the agent/importer. Step 11: Removal from Customs Control The clearing agent will process the gate pass with the port Authority/transit shed operator. The goods will be loaded on the truck and moved to the gate where Customs preventive officers record the truck details and release goods to free circulation or commencement of another regime.


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ANNEX VIII: CUSTOMS CLEARANCE PROCEDURE FLOW CHART

LODGMENT OF ENTRY

ALLOCATION OF ENTRY

ENTRY REJECTION

ENTRY REFERRAL TO SENIOR OFFICER FOR

ACTION

CASH OFFICE

CUSTOMS CLEARANCE OFFICE

MANIFEST AUDIT

CDO / TRANSIT SHED PORT

AUTHORITY /AIRFREIGHT

COMPANY.

VERIFICATION RELEASE

GATE / REMOVAL

ENTRY

PROCESSING

POOLING OF ENTRY

CFS


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ANNEX IX

CUSTOMS STATIONS

Times Tower, Haile Selassie Avenue, PO Box 48240 – 00100,

Telephone 254-2-310900, Fax 254 – 2 – 253532, E- mail: [email protected]

Nairobi, Kenya.