Clearance and Forwarding Services in East Africa

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    Clearance and Forwarding Services in East Africa market report transcript

    Regional Market Outlook on Clearance and Forwarding Services

    Customs Brokerage Market Analysis

    The industry can leverage from the presence of a large number of customs brokers/ freight forwarders and can benefit from low switching cost across countries

    The market is highly fragmented and the operational knowledge, competency levels with regard to the customs brokers differ from player to player; and hence the operating procedures vary from the best-in-class to the least acceptable levels in the industry

    Highly Fragmented Industry

    • Customs Brokerage Services is highly fragmented across East African countries such as Ethiopia, Tanzania, Uganda and Kenya with about >500 companies offering service in service each country
    • In Kenya, there are around 868 licensed customs agents

    Considered as Value Added Activity

    • Large freight forwarders like DHL, CEVA and Kuehne Nagel also have their own customs brokerage divisions. However, the same is provided as a value added activity and they use multiple partners in East African regions to provide a one-stop solution for buyers who are interested in reducing the complexity

    Low Margins & Exclusive Service Providers are Less

    • Customs Brokerage is viewed as a business activity with low margins and is considered a value added activity by most Freight Forwarders
    • National service providers in different locations provide customs brokerage services along with freight forwarding activity to leverage their earning potential
    • Standalone customs brokers with large regional presence are few and limited

    Customs Clearance and Trade Regulations


    Market Trend

    • Customs operations are automated, but the verification and regulatory compliance confirmation is still manual, which states 70 percent of the clearance are automated and 30 percent are manual

    Customs Clearance Process

    • The Kenya Revenue Authority last month launched Integrated Customs Management System (iCMS) which is built on the latest technology and integrates all customs systems. The new system is expected to cut clearance time by 60%


    • Customs process in Kenya is regulated by Kenya Revenue Authority which sets out the applicable tariff for each HS code under the East African Customs Management Act
    • All imports into Kenya is controlled by Kenya Bureau of Standards which has outsourced inspection at origin to several companies for imports valued above $2000
    • Sensitive goods have industry specific regulatory bodies tasked with issuing permits. For example, Pharmacy & Poisons Board (Pharmaceutical )

    Trade Indicators

    • All Eastern African countries adopt electronic customs data interchange system, which automates the customs entry and exit procedures
    • Risk-based customs inspection is not widely used across most countries, however, the frequency of manual inspections remains high, coupled with meagre port infrastructure and high burden in customs procedure. The processing and transit time in clearing cargo shipments are higher in most countries
    • Customs procedures in East Africa is a time consuming process and by updating the clearance system from ASYCUDA to iCMS, TANCIS customs clearance systems, burden for customs procedure in 2017 has been reduced compared to 2016

    SWOT Analysis - East Africa


    • Availability of ICT systems that support the logistics functions with the development of the custom clearance system, the customs clearance process is being standardized at a faster rate in Ethiopia, Uganda, Tanzania and Kenya
    • Knowledgeable and well trained workforce within the region makes good terms with government officials in order to clear the goods faster
    • Customs clearance procedures are quite complex thereby major firms need to outsource these services to achieve economies of scale


    • The industry is highly fragmented with huge number of small and large service providers spread across East Africa. As a result, the bargaining power of customs brokerage service providers is weak
    • There is no standard pricing structure followed across the industry. It varies from one service provider to another, however activity based pricing is preferred pricing model
    • There exists huge ambiguity in the customs clearance process, thus increasing the lead time


    • Political goodwill among East African countries seeking to promote growth of businesses by new initiatives and projects e.g. TradeNet, Port of Mombasa Charter, Standard Gauge Railway that will aid faster movement of goods among East African countries
    • Cargo consolidation in collaboration with other small volume importers to reduce sea freight charges
    • Africa Free Trade Area initiative - by creating a single continental market for goods and services, the member states of the African Union hope to boost trade between African countries


    • In developing economies, such as Kenya, Ethiopia, Tanzania and Uganda, profit margins of brokers and traders are highly affected due to incidences of corruption and rent-seeking
    • Political instability during elections; Internal political uncertainty across the East African region will pose a much greater risk to businesses on the continent than the effect of international geopolitics
    • Other than political risk, businesses are facing a growing threat of cyber-attacks, which are a systemic threat

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