Kenya hopes a new electronic system for clearing all trade goods at its borders, replacing masses of paperwork, will end trade mispricing and other forms of fraud costing some $250 milion a year
NAIROBI (Thomson Reuters Foundation) – Kenya hopes to tackle corruption on its borders by introducing electronic customs clearance in November, a move predicted to save $250 million a year, the Daily Nation reported on Wednesday.
The computers will be installed first at the port of Mombasa and airports, followed by other border entry points in April 2014.
The Single Window System will create a platform for submission, receipt and processing of trade-related cargo clearance documents at a single entry point. Currently, businesses have to move to and fro between several departments.
The Kenya Trade Network Agency (KenTrade), which is implementing the project, predicts that it will save the country up to $250 million per year in the first three years of operation and up to $450 million a year thereafter.
"It removes the headache of bulky paperwork by automating the entire process and making it transparent, where one can monitor progress through an audit trail,” KenTrade chief executive Alex Kabuga told Business Daily.
Trade mispricing is a major problem in Kenya, according to the Washington-based lobby group Global Financial Integrity (GFI). This happens when companies artificially distort the prices of their trade goods to avoid taxes and secretly move money across borders.
GFI is able to detect trade mispricing by comparing the declared value of goods when they leave a country with the value declared on arrival in another country where they are being sold. If there is a big discrepancy between the two invoices, it shows companies are artificially mispricing their goods to hide the true nature of their business.
This costs poor countries billions of dollars each year in taxes that are not paid, but are needed for development.
GFI estimates that Africa lost $1.2 trillion to $1.4 trillion through such illicit financial flows between 1980 and 2009. This is three times as much as the total amount of development aid that outside governments have pumped into the continent over 30 years.
Our Standards: The Thomson Reuters Trust Principles.
