Real-time system saves region $7m

Monday October 9 2017

Kenya Revenue Authority (KRA) board chairman member flag off a cargo truck during the launch of a new Electronic Cargo Tracking System. Photo by Salaton Njau

Kenya Revenue Authority (KRA) board officer flag off a cargo truck during the launch of a new Electronic Cargo Tracking System for monitoring cargo transiting through Kenya to the neighbouring countries within the East African Community on March 1, 2017. PHOTO| SALATON NJAU | NATION 

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East African region has saved more than $7 million by using the electronic real time cargo tracking system.

The commissioner of Customs at the Uganda Revenue Authority Dicksons Kateshumbwa told The EastAfrican in Kampala that the revenue body had saved more than $1.03 million in physical escort costs alone, from more than 20,000 consignments over the past six months.

“Previously, we would ‘herd’ the trucks we considered to be carrying high-value goods and escort them to their destination. If we compound these escort costs, and the incidental daily costs of the e-monitored cargo, we have saved more than $7.3 million so far, which is quite an achievement,” said Mr Kateshumbwa.

At the Mombasa port, the Kenya Revenue Authority, working in partnership with representatives from tax agencies in Uganda and Rwanda decide which consignments will be monitored.

“We use analytical tools to assist us in deciding what kind of cargo will be monitored. They are based on the value of the product, type of product, diversion risk factor and the Custom value due to the destination country. Our target goods include textiles, sugar, tea, cigarettes and rice,” said KRA Rects operations team leader Peter Olali.

Previously, cunning importers would misdeclare the destination of the transit goods and claim to be waiting to pay levies at the border posts. They would then divert the goods or stage-manage robberies. This would result in the respective countries losing out on taxes.

“The new system has afforded us the information and intelligence-sharing on high-risk transit cargo. We have curbed diversions, thefts and tax evasion, earning countries their rightful share of taxes,” said Mr Olali.

The three countries operate rapid response teams stationed at different points on the Northern Corridor. In Kenya, the teams, comprising Customs and police officers cover the Mombasa-Malaba and Mombasa-Busia highways.

They are based in Mazeras, Voi, Mtito Andei, Machakos, Nairobi, Naivasha, Kericho, Kisumu and Eldoret. In Uganda, they are based in Iganga, Jinja and Kampala.

The revenue agencies have also stepped up the war on adulteration and diversion of fuel by monitoring trucks, which now pass through the Busia border.

Adulteration of fuel has become a challenge for Kenya, which in recent times has seen Uganda and Rwanda favour fuel imported by Tanzania.

“The electronic system allows us to install fuel meters and sensors making it possible to monitor trucks from either the Kisumu or Eldoret depots in real time. In case of malpractices, the system will send an alert to the central monitoring system for immediate action,” said Mr Olali.

However, in August, firms that offer cargo tracking services in Kenya challenged the electronic system in court, seeking to block the joint deal with Uganda and Rwanda.

In their court filing, the firms want KRA stopped from implementing the e-tracking system, claiming it will affect their $50 million investment, and put at risk the jobs of more than 700 people.

“As a result of the launch, the applicants have received numerous phone calls from transporters who have informed them that they do not intend to renew their contracts. By virtue of KRA’s misrepresentation, secrecy and deceit, the petitioners are reasonably apprehensive that their businesses will be rendered redundant by the full implementation of the Rects system leading to colossal and unconscionable losses,” lobby chairman Tibbs Vincent Robert said in court filings.