What happened

On 14 May 2024, President William Ruto directed the Kenya Revenue Authority (KRA) to reduce the consolidated cargo valuation threshold from Sh5 million to Sh2 million with immediate effect. This means that any import consignment declared at or below Sh2 million will now follow a simplified valuation process, reducing paperwork and potential delays for small and medium-sized importers. The change applies nationwide and covers all ports of entry, including Mombasa, Nairobi, Kisumu and Malaba.

Context and background

The consolidated cargo valuation threshold is the value above which KRA requires detailed documentation for import declarations. Before this change, the threshold stood at Sh5 million, a level that had been in place since 2020 when the government raised it from Sh1 million to reduce trade friction during the COVID-19 pandemic. The earlier move was meant to cushion small traders and manufacturers during supply chain disruptions, but over time, stakeholders—especially clearing agents and business associations—argued that the Sh5 million limit was still too high for many Kenyan SMEs, leaving them exposed to lengthy verification processes even for relatively small consignments.

The push for a lower threshold gained momentum after the 2023–2024 budget cycle, when the Kenya Association of Manufacturers (KAM) and the Kenya International Freight & Warehousing Association (KIFWA) submitted a joint memorandum to the National Treasury. In the memorandum, they noted that over 60% of import declarations processed at Mombasa port involved consignments valued below Sh5 million, and that many of these were unnecessarily subjected to full cargo inspection and valuation, slowing clearance times and increasing costs for small traders. The associations proposed lowering the threshold to Sh2 million to align with regional practices, where countries such as Uganda and Tanzania use similar limits to streamline trade.

The government’s decision follows President Ruto’s directive during a stakeholder forum in Mombasa on 14 May 2024, where he emphasized reducing the cost of doing business by cutting red tape at border points. During the forum, he was joined by Cabinet Secretary for National Treasury and Economic Planning Prof. Njuguna Ndung’u, KRA Commissioner General Humphrey Wattanga, and representatives from the Kenya Private Sector Alliance (KEPSA). The President noted that the move was part of broader efforts to enhance trade competitiveness and support local industries by lowering clearance costs for raw materials and intermediate goods.

How the new threshold compares with past norms

Before 2020, the consolidated cargo valuation threshold was Sh1 million. During the pandemic, the government temporarily raised it to Sh5 million to ease trade bottlenecks caused by global supply chain disruptions and port congestion. While the increase helped at the time, it also led to longer clearance times for smaller consignments, as KRA officers were required to verify every declaration under Sh5 million. The new Sh2 million threshold effectively reverts to a pre-2020 level, but with updated procedures to reflect current technology and systems at KRA. Compared with regional peers, the new threshold now aligns Kenya more closely with Uganda (Sh2.5 million) and Tanzania (Sh3 million), though it remains lower than Rwanda’s Sh5 million limit.

For context, the average value of a small consignment cleared at Mombasa port is estimated at Sh1.2 million, based on KRA’s 2023 clearance data. This means the new threshold will cover the majority of import declarations processed at the port, reducing the administrative burden on both traders and customs officials. Under the old system, only about 30% of declarations fell above the Sh5 million threshold; now, around 75% of declarations will fall under the simplified process, according to preliminary KRA estimates.

Why it matters

For Kenyan SMEs that import raw materials, spare parts, or finished goods, the lower threshold means faster clearance times and lower costs. Under the previous Sh5 million threshold, even a consignment worth Sh1.5 million could trigger full cargo inspection, manual verification, and additional documentation requirements, adding days to the clearance process. With the new Sh2 million limit, such consignments will now be processed through a streamlined declaration system, reducing delays and demurrage charges at the port.

The change is also expected to benefit manufacturers who rely on timely delivery of intermediate inputs. For example, a Nairobi-based textile manufacturer importing fabric from China at Sh1.8 million per container will now avoid the full inspection process, potentially saving up to Sh50,000 in demurrage and clearance fees per consignment. Similarly, agro-processors importing packaging materials or machinery parts under Sh2 million will see reduced clearance times, improving their working capital cycles. The Kenya Bureau of Standards (KEBS) and Port Health authorities will still conduct random inspections, but these will no longer be triggered solely by the value of the consignment.

However, the change also places a greater administrative burden on KRA’s Customs and Border Control department, which must now process a higher volume of simplified declarations. To manage this, KRA has indicated it will deploy additional automated systems, including the Integrated Customs Management System (iCMS), to handle the increased workload. Traders are still required to maintain accurate records, and KRA retains the right to conduct post-clearance audits to ensure compliance with valuation and duty payment requirements.

The lower threshold may also impact revenue collection in the short term, as fewer consignments will undergo full verification. KRA has not provided a specific revenue impact estimate, but analysts suggest the loss will be offset by increased compliance from traders who previously avoided full declarations due to the complexity of the process. The government has emphasized that the move is aimed at long-term trade facilitation rather than short-term revenue gains.

Practical steps

• Review your current import declarations: Assess whether your recent consignments valued between Sh2 million and Sh5 million would have qualified for simplified processing under the new threshold. If so, consider adjusting your logistics planning to take advantage of faster clearance times.
• Update your customs broker: If you use a clearing agent, confirm that they are aware of the new threshold and have adjusted their processes accordingly. Some agents may still be using the old Sh5 million benchmark, leading to unnecessary delays.
• Prepare for post-clearance audits: While the new threshold reduces front-end inspection, KRA will still conduct random audits. Ensure all invoices, packing lists, and certificates of origin are accurate and readily available.
• Check for regional alignment: If your supply chain includes imports from Uganda or Tanzania, ensure your declared values align with the new Kenyan threshold to avoid discrepancies during cross-border transit.
• Monitor KRA communications: The authority is expected to issue updated guidelines within the next two weeks. Subscribe to KRA’s email alerts or follow their official social media channels for clarifications on valuation rules and declaration processes.

What traders should watch next

The new Sh2 million threshold is the latest in a series of trade facilitation measures announced by the government in 2024. Earlier in the year, KRA launched the National Electronic Single Window System (NaSWIS), which is expected to further reduce clearance times by integrating customs, port, and health authorities into a single digital platform. Traders should monitor the rollout of NaSWIS, as it may introduce additional changes to declaration processes in the coming months.

Another area to watch is the proposed East African Community (EAC) Customs Union reforms, which aim to harmonize valuation thresholds across member states. If adopted, these reforms could lead to further adjustments to Kenya’s consolidated cargo valuation threshold in the next 12–18 months. Traders who frequently import goods from EAC partner states should stay informed about these regional discussions.

Finally, businesses that rely on imports for over 30% of their input costs should review their working capital forecasts. While clearance times are expected to improve, any delays in supplier payments or shipping schedules could still impact cash flow. Consider building a buffer of 10–15% into your import budgets to account for unforeseen delays.

For sectors such as manufacturing, agro-processing, and retail, the new threshold offers a tangible reduction in trade costs. However, the benefits will only be realized if traders actively update their processes and work closely with customs brokers to navigate the transition smoothly.

What this means for your business

If your business imports goods valued below Sh2 million, the new threshold will directly reduce your operational costs by cutting clearance times and demurrage fees. For example, a small electronics importer in Nairobi who previously faced two days of delays at Mombasa port for a Sh1.5 million consignment will now see clearance times drop to less than 24 hours, assuming all documentation is in order. This translates to savings of approximately Sh30,000–Sh50,000 per consignment in demurrage and storage costs, based on typical port charges.

The change also levels the playing field for SMEs competing with larger importers. Previously, small traders often had to absorb the cost of delays due to limited bargaining power with clearing agents or shipping lines. With the new threshold, even the smallest consignments will benefit from simplified processing, reducing the advantage of bulk importers who could previously negotiate faster clearance through volume discounts.

However, businesses that previously declared consignments just above Sh5 million may now face higher scrutiny if their goods fall under the new Sh2 million threshold. If your declared value is close to the limit, ensure that your invoices and certificates accurately reflect the true cost of the goods, including insurance and freight (CIF value). KRA’s post-clearance audit teams are likely to focus on declarations near the threshold to prevent undervaluation.

The government’s decision to lower the threshold is part of a broader strategy to reduce the cost of doing business in Kenya. Other recent measures include the elimination of the import declaration fee (IDF) for raw materials in the 2024–2025 budget and the expansion of the duty remission scheme for manufacturers. These changes, combined with the new valuation threshold, signal a shift toward making Kenya a more attractive destination for trade and investment.

The role of technology in the transition

KRA’s ability to implement the new threshold smoothly will depend heavily on its technology infrastructure. The authority has been rolling out the iCMS system, which integrates cargo tracking, valuation, and duty payment into a single digital platform. Traders who have not yet adopted the system will need to do so promptly, as manual declarations will no longer be accepted for consignments under Sh2 million.

The transition also highlights the importance of accurate data in customs declarations. Under the new system, KRA’s risk engine will use historical import data, supplier information, and regional trade patterns to flag declarations for inspection. Traders who maintain inconsistent records or fail to update their supplier databases risk triggering manual reviews, even for consignments under the threshold.