KRA Launches Malaba Service Centre to Enhance Trade Efficiency

The Kenya Revenue Authority (KRA) has taken a significant step in enhancing trade facilitation with the launch of a new service centre at the Malaba One-Stop Border Post (OSBP). This development is expected to accelerate the clearance of goods and services, streamline operations, and improve revenue collection. As Kenya continues to strengthen its position as a regional trade hub, the Malaba border post plays a vital role in facilitating transit trade to several East and Central African nations.

Malaba OSBP: A Key Trade Gateway

The Malaba OSBP, located along the Kenya-Uganda border, is one of the busiest trade gateways in East Africa. It is responsible for the clearance of an estimated 80% of transit goods destined for Uganda, Rwanda, South Sudan, Burundi, and the Democratic Republic of Congo. This strategic location serves as a vital link for the movement of goods from the Port of Mombasa, through Kenya, and into these landlocked nations.

Before the establishment of the OSBP, clearance processes at border points in East Africa were time-consuming, often involving multiple government agencies, leading to delays and inefficiencies. Traders faced long wait times, high costs, and a lack of coordination between customs and border control agencies. The introduction of the OSBP system was aimed at addressing these challenges by bringing together different agencies from both Kenya and Uganda in a single location to coordinate efforts in facilitating faster and more efficient clearance of goods and services.

Revenue Growth: A Remarkable Increase

Since the establishment of the Malaba OSBP, KRA has reported a substantial increase in revenue collection. According to the authority, revenue at the border post has grown by a remarkable 500%, rising from Ksh 962 million in the 2012/13 financial year to Ksh 5.28 billion in the 2023/24 financial year. This growth can be attributed to the increased efficiency and reduced time for clearance of goods at the border, as well as improved monitoring and enforcement of customs regulations.

The new service centre at the Malaba OSBP is expected to further enhance KRA’s ability to collect customs revenue. By integrating all Partner Government Agencies (PGAs) operating at the border post into a single facility, the KRA aims to improve coordination and streamline the information exchange process. This will result in a more efficient flow of data, helping authorities prevent cross-border crimes such as smuggling and human trafficking, and ensuring that traders comply with all relevant customs regulations.

KRA’s Commissioner General, in a statement during the inauguration, emphasized the importance of cooperation among the various agencies working at the border post. “The cooperation among agencies is expected to enhance trade facilitation and ensure seamless information exchange, including accurate operational data that is crucial for preventing cross-border crimes and trade malpractices including smuggling of goods and human trafficking,” the Commissioner General noted.

Efficiency Gains: Reducing Clearance Times

One of the most significant benefits of the Malaba OSBP is the reduction in the time it takes to clear goods. Prior to the implementation of the OSBP, traders often experienced long delays at the border, with clearance taking days or even weeks. This not only increased the cost of doing business but also created a bottleneck for trade in the region.

However, with the operationalization of the OSBP, clearance times have been drastically reduced. Currently, goods are cleared within a day of arrival at the border, a significant improvement from the previous situation. This has been made possible by the integration of the various PGAs, which allows for real-time information sharing and coordinated inspections.

The clearance time for travellers has also improved significantly. According to KRA, the facility now screens and clears an average of 1,000 travellers on a daily basis. The average time for traveller clearance has been reduced from two hours to just five minutes. This improvement not only enhances the efficiency of passenger movement but also contributes to the overall security and integrity of the border post.

A Model for Trade Facilitation

The Malaba OSBP is often cited as a model for trade facilitation in the region. A recent survey conducted by the East African Community (EAC) Secretariat and TradeMark Africa revealed that the time required to clear goods at the OSBP has decreased by 76%, far exceeding TradeMark Africa’s target of a 30% reduction. This achievement highlights the success of the OSBP system in promoting trade efficiency and reducing barriers to the movement of goods across borders.

The EAC and TradeMark Africa survey also underscored the importance of continued investment in infrastructure and capacity building at border posts. By upgrading facilities and enhancing the skills of customs officers, border agencies can further reduce clearance times and improve the overall efficiency of cross-border trade.

The success of the Malaba OSBP has encouraged other countries in the region to adopt similar models. Several other border posts in East Africa, including Busia, Namanga, and Isebania, have implemented the OSBP system, with positive results in terms of reduced clearance times and increased revenue collection. The Malaba OSBP serves as a shining example of how improved coordination and modern infrastructure can transform border operations and boost regional trade.

Regional Trade and Economic Integration

The success of the Malaba OSBP is not just a win for Kenya, but for the entire East African region. By facilitating faster clearance of goods, the OSBP contributes to the region’s broader goals of economic integration and trade facilitation. The East African Community (EAC) has made significant strides in promoting regional trade through initiatives such as the Customs Union and the Common Market, and the OSBP system is a critical component of these efforts.

As East African countries continue to work towards deeper economic integration, the importance of efficient border operations cannot be overstated. Trade is the lifeblood of regional economies, and any delays or inefficiencies at border posts can have far-reaching consequences for businesses, consumers, and governments.

The Malaba OSBP plays a crucial role in ensuring that goods move seamlessly across borders, reducing the cost of trade and increasing the competitiveness of the region’s economies. By cutting down on clearance times and improving the overall efficiency of border operations, the OSBP helps to create a more conducive environment for trade and investment, which in turn supports economic growth and development.

Addressing Challenges

Despite the significant progress made at the Malaba OSBP, challenges remain. Cross-border trade is complex, and there are still issues related to infrastructure, capacity, and coordination that need to be addressed. For example, while clearance times have improved, there are still occasional delays caused by congestion at the border or technical issues with the systems used to process goods.

In addition, the threat of cross-border crimes such as smuggling and human trafficking continues to pose a challenge for customs and border control agencies. The integration of PGAs at the Malaba OSBP is a positive step in addressing these issues, but ongoing efforts will be needed to ensure that border operations remain secure and efficient.

The Future of Trade Facilitation in East Africa

The inauguration of the new service centre at the Malaba OSBP marks another milestone in Kenya’s efforts to boost trade efficiency and enhance customs revenue. As the KRA continues to invest in modernizing border operations, the future looks promising for trade facilitation in the region.

By reducing clearance times, improving coordination among agencies, and preventing cross-border crimes, the Malaba OSBP is helping to create a more efficient and secure trade environment. This, in turn, will support the region’s broader goals of economic integration and development.

As East Africa continues to grow as a major trade corridor, the importance of efficient border operations will only increase. The Malaba OSBP serves as a model for other border posts in the region, and its success provides valuable lessons for improving trade facilitation across East Africa and beyond.