NAIROBI, Kenya, Oct 13 – The weakening shilling is now causing a backlog at the port of Mombasa, as importers hold off clearing their goods hoping for the local currency to strengthen.
The Kenya Revenue Authority says a number of importers are delaying offloading goods at the port as they wait for the shilling to strengthen against the dollar, ensuring they mitigate the loses they may incur from the weakening shilling.
KRA Commissioner General Michael Waweru says while technically the goods are on Kenyan shores it was not translating into collected revenues.
“What we should be worried about is not that it is exchanging at 110 against the dollar but we should be concerned about the stability. Even if it trades higher so long as it is stable that is what we should be going for, because the imports are in the high seas and they will come either way,” Waweru said.
The problem stems from the fact that while importers buy goods in dollars, the conversion for the payment of taxes and duties is made at the prevailing exchange rate, thus forcing the delay.
This week has seen the shilling hit an all time high of Sh107 against the greenback. However, seesaw activity has seen it come down to Sh101 before closing Thursday’s trading session at Sh102.75.
KRA Commissioner of Customs Wambui Namu however said importers would begin feeling the pinch when they start accruing penalties for docking longer than the expected duration, urging them to offload and clear as fast as possible.
“Soon there will be lack of berthing space at the docks and this could lead to further delays and penalties on their side,” Namu said.
Waweru said with time the country would need to look at the number of goods that are imported and ensure that earnings from exports exceed what is imported.
“In the long run imports are going to become expensive and exports cheaper so what happens is that customs revenues will decrease because there are fewer goods coming in and then more income from the sectors that are exporting,” he said.
At the same time, the Commissioner General said KRA was working on harmonising custom collection at border points in an effort of facilitating regional trade.
Borrowing a leaf from western economies where customs revenues account for between three to ten percent of total revenues, Waweru said this would have to reduce.
“In Kenya customs account for 60 percent of revenues, which is too high if we want to trade with our neighbors,” he remarked.