What happened

Earlier this week the Kenya Revenue Authority (KRA) published a notice in the Kenya Times stating that, effective from the start of the next fiscal quarter, every import shipment entering Kenya must be covered by a valid insurance policy. The directive applies to all goods, regardless of value or category, and will be enforced at the point of customs clearance. Importers who fail to present proof of insurance will face delays, additional administrative fees, or possible seizure of the cargo. KRA officials say the move is intended to protect the nation’s revenue base and reduce the risk of loss or damage to imported goods while they are in transit or storage.

Context and background

KRA, the government agency responsible for tax collection and customs administration, has periodically reviewed import procedures to improve compliance and safeguard revenue. Historically, insurance was only mandatory for high‑value items such as machinery, vehicles and pharmaceuticals, while low‑value consignments could clear customs without a policy. Over the past two years, the authority observed a rise in claims of damaged or missing cargo, which often resulted in revenue shortfalls when duties could not be collected from goods that never reached the market.

The new rule follows a series of stakeholder consultations that began in early 2024, involving freight forwarders, insurance providers, the Kenya Association of Manufacturers and the Kenya Chamber of Commerce. Those meetings highlighted gaps in the existing framework, especially for small and medium‑sized enterprises (SMEs) that sometimes relied on informal arrangements to cover risk. KRA’s decision aligns with similar measures adopted by regional customs unions, where mandatory cargo insurance has become a standard prerequisite for clearance.

Implementation will be overseen by the Customs and Border Control Department, which will integrate insurance verification into its electronic clearance system (e‑Clear). Importers will be required to upload a digital copy of the insurance certificate alongside the import declaration. The policy must be issued by a licensed insurer operating in Kenya and must cover the full declared value of the goods, including freight and handling charges. Failure to comply could trigger a penalty of up to Sh10,000 per shipment, in addition to the cost of re‑inspection.

Compared with what is normal

Under the previous regime, only about 30 % of import consignments carried a formal insurance policy, primarily those above Sh500,000 in value. The new mandate expands that coverage to 100 % of shipments, a substantial shift for businesses that previously relied on carrier liability or informal risk‑sharing arrangements. The following points illustrate the change:

• Earlier: Insurance required mainly for high‑value items (≈30 % of total imports).
• Now: Mandatory insurance for all goods, irrespective of value.
• Customs clearance time may increase initially as firms adapt to the new documentation requirement.
• Potential cost increase of 0.5 %–2 % of the CIF value, depending on the insurer’s rates.

Why it matters

For Kenyan SMEs that import raw materials, finished products or equipment, the rule introduces an additional line item on the cost sheet. While the insurance premium is generally modest, it represents a new cash outflow that must be budgeted before the goods are shipped. Moreover, the requirement changes the timing of cash flow: insurers often demand payment upfront, meaning businesses need to secure funds earlier in the procurement cycle.

The enforcement of mandatory insurance also reduces the likelihood of cargo loss or damage going unreported. When a shipment is insured, the insurer has a vested interest in ensuring proper handling, which can improve overall supply‑chain reliability. From a tax perspective, the policy provides a clear audit trail, making it easier for KRA to verify the declared value of goods and collect the correct duties.

Logistics providers and freight forwarders will need to adjust their standard operating procedures. Many will likely partner with insurance brokers to offer bundled services, streamlining the process for their clients. Failure to adapt could result in lost business as importers gravitate toward forwarders who can guarantee compliance.

Practical steps

• Contact a licensed Kenyan insurer immediately to discuss a blanket policy that can cover multiple shipments, reducing per‑shipment administrative work.
• Update your e‑Clear customs filing templates to include a field for the insurance certificate reference number.
• Train your finance and logistics teams on the new documentation requirement, ensuring the insurance copy is uploaded before the shipment arrives at the port.
• Review your cash‑flow projections to accommodate the upfront insurance premium, and consider negotiating payment terms with suppliers to offset the additional cost.
• Monitor KRA’s official communications for any clarification on acceptable policy formats or grace periods during the initial rollout.

Beavoren Ventures’ Tax Planning & Compliance team can help import‑focused SMEs navigate the new insurance mandate, ensuring that policies are correctly structured, documented and aligned with tax obligations.

Need help with compliance? Email info@beavorenventures.co.ke or call +254 716 296 857.

Disclaimer: This article is informational and does not constitute formal tax, audit or legal advice. For guidance specific to your circumstances, please contact Beavoren Ventures.