Kenya is seeking far-reaching changes in its courier business, which will deny the state-backed Postal Corporation of Kenya exclusivity, ease licensing procedures and cut import taxes on parcels.

The recommendations proposed by Analysys Mason, a global research firm hired by the Communications Commission of Kenya to audit the courier business, are expected to help double the sector’s worth to at least Ksh14 billion ($165 million) in the next two years.

They are also expected to bring down the cost of courier services: Analysys Mason recommended that the monopoly that the PCK has enjoyed for decades to deliver all items weighing up to 350 grammes to be phased out, to allow other couriers to participate.

Currently, other operators delivering such items charge at least five times the standard tariff, making it prohibitive for customers.

But the PCK is to retain the right to issue postage stamps and provide post office boxes to customers.

“The cost should be reduced to enable us compete fairly with PCK. One cannot pay $2.35 to us while PCK charges $0.35,” said Charity Mwanzia, general manager operations at M&S Logistics Ltd, a cargo agents and freight forwarders company.

The recommendations are also meant to crack down on unlicensed courier companies, said to be choking the industry by cutting prices.

“Unlicensed operators may be more willing to become licensed if CCK simplifies the licence regime, reduces reporting obligations, and lowers the licence fees,” said Ian Streule, partner at Analysys Mason Ltd.

According to the report, quarterly reporting requirements for licensed operators are difficult, the duration of courier licence is too long — given the rapidly changing nature of the market — while the application form is complex and lengthy.

Courier providers said there was a need to introduce a threshold for imports below which no import duty, taxes, insurance or levies are charged, as this is hurting the business by making it costly.

“Kenya should allow free import of low-value parcels, instead of taking them through long clearing processes. Countries have set thresholds of $50, $300 or $1,000,” said Alan Casels, DHL Express country manager for Kenya.

DHL moves 400,000 deliveries every year in Kenya, with Nairobi serving as the regional hub for countries in the greater East African region.

ALSO READ: Of quirky, strange parcels that are moved across EA

Data by Analysys Mason shows duty and tax on incoming international items amount to at least 50 per cent of their value, which significantly inhibits international trade, which is rising in Kenya.

“Duty and tax are payable regardless of value of the item. For many items, the cost of administering tax and duty exceeds the amount collected. Despite a customs declaration itemising the contents, each item is opened to assess contents. Items can take over a week to be released,” said Analysys Mason in the report released Tuesday.

CCK data shows in the last quarter of 2013, international incoming letters were over 2.5 million, while outbound mail were 978,000. Letters posted locally were 17 million.

Courier executives said unlicensed operators are resistant to licensing because they are reluctant to adhere to CCK tariff requirements and pay licence fees.

“The delivery of parcels model in Kenya is not comprehensive; we are working on a framework that will improve the sector including a ban on unlicensed courier services providers,” said Francis Wangusi, CCK director-general.