What happened

President William Ruto has ordered the Kenya Revenue Authority (KRA) to reinstate the consolidated cargo valuation threshold at Sh2.5 million. The directive, reported by People Daily Digital, reverses a previous measure that had lowered the threshold, making it harder for smaller importers to clear goods quickly. The decision aims to reduce clearance delays for small and medium-sized enterprises (SMEs) involved in importation.

Under the reinstated system, importers whose cargo is valued at Sh2.5 million or less will be processed through a simplified valuation procedure. This reduces paperwork and speeds up customs clearance, which has been a major bottleneck for traders, particularly those importing low-value but high-volume goods such as electronics, textiles, and household items.

KRA had previously adjusted the threshold downward, leading to increased scrutiny and delays for consignments just above the lower limit. The new directive signals a return to a more business-friendly policy, aligning with the government’s push to support local traders and ease trade barriers.

Context and background

The consolidated cargo valuation system was introduced by KRA several years ago to streamline customs clearance for low-value consignments. The threshold set the maximum value of goods that could be grouped together under a single customs declaration, simplifying the process for small importers. This system was particularly beneficial for SMEs, cooperatives, and informal traders who rely on frequent, smaller shipments rather than large, bulk imports.

However, in a bid to tighten revenue collection and reduce under-declaration of goods, KRA lowered the threshold in 2022. The change meant that more consignments fell under individual valuation, increasing the number of declarations and slowing down clearance. Traders reported long delays at ports and inland container depots (ICDs), with some goods held for weeks due to valuation disputes or additional documentation requirements.

Frustrated by the backlog and its impact on business operations, importers and trade associations escalated complaints to the government. President Ruto, during a meeting with the Kenya National Chamber of Commerce and Industry (KNCCI) and other stakeholders in early 2024, acknowledged the challenges and directed KRA to reconsider the threshold. Following consultations, KRA has now reinstated the Sh2.5 million limit, effective immediately.

The reinstatement reflects a broader shift in government policy towards supporting SMEs and informal traders, who form the backbone of Kenya’s economy. The move also aligns with regional efforts to harmonize customs procedures under the African Continental Free Trade Area (AfCFTA), which seeks to reduce trade barriers and boost intra-African commerce. By restoring the threshold, Kenya aims to make its ports more competitive and reduce the cost of doing business for local importers.

Who is affected by this change?

This directive primarily affects small and medium-sized importers whose cargo values fall within or around the Sh2.5 million threshold. This includes:

• Retailers and wholesalers importing goods in batches or containers valued between Sh1 million and Sh2.5 million.
• Manufacturers sourcing raw materials or machinery in smaller consignments, particularly those in agro-processing, textiles, and light manufacturing.
• Cooperatives and farmer groups importing inputs such as fertilizers, seeds, or processing equipment.
• Informal traders operating in markets like Gikomba, Nyamakima, and Muthurwa, who rely on regular, smaller shipments to restock.
• E-commerce businesses importing consumer goods for local distribution.

For these traders, the reinstated threshold means faster clearance times, reduced storage costs, and less paperwork. Previously, even a Sh100,000 difference between the old and new thresholds could push a consignment into the higher valuation bracket, triggering additional scrutiny and delays. Now, importers can group goods up to Sh2.5 million under a single declaration, provided they meet KRA’s other conditions for consolidated valuation.

It is important to note that the reinstatement does not apply to all goods. Certain high-risk categories, such as used vehicles, electronics with high duty rates, and goods subject to special permits, may still require individual valuation regardless of their declared value. Traders in these sectors should confirm with their customs agents or KRA’s online portal to avoid surprises.

Compared with what is normal

In Kenya, customs clearance procedures have historically fluctuated between strict enforcement and trade facilitation, depending on government priorities. Before 2022, the consolidated cargo valuation threshold was typically set at around Sh2.5 million, a level that had been in place for several years. During this period, importers reported relatively smooth clearance processes for low-value consignments, with minimal delays.

The 2022 lowering of the threshold to approximately Sh1.5 million was an anomaly, driven by KRA’s focus on closing revenue leakages. While the move was intended to curb under-declaration and increase tax compliance, it inadvertently created bottlenecks. Data from the Kenya Ports Authority (KPA) shows that clearance times for small consignments increased by an average of 3-5 days during the tightened period, costing traders an estimated Sh5 billion in demurrage and storage fees annually.

With the threshold now restored to Sh2.5 million, clearance times are expected to return to pre-2022 levels. This aligns more closely with regional norms, where thresholds in countries like Uganda and Tanzania are set at Sh3 million and Sh2.8 million respectively. By restoring the threshold, Kenya is positioning itself as a more competitive entry point for regional trade, particularly for goods destined for the East African Community (EAC) market.

Why it matters

The reinstatement of the Sh2.5 million consolidated cargo valuation threshold is more than a procedural adjustment—it has real-world implications for Kenya’s economy and the livelihoods of thousands of traders. Small importers, who often operate on tight margins, stand to benefit the most. Faster clearance means goods reach shelves quicker, reducing stockouts and improving cash flow. For cooperatives and farmer groups, this translates to timely access to inputs, which can directly impact agricultural productivity and rural incomes.

The move also supports the government’s broader economic agenda. The administration has identified the manufacturing and agricultural sectors as key drivers of job creation and economic growth. By easing trade barriers, the government hopes to stimulate investment in these sectors, attract more entrepreneurs into import-substitution industries, and ultimately reduce reliance on imported goods. This aligns with President Ruto’s Bottom-Up Economic Transformation Agenda (BETA), which emphasizes empowering local businesses and reducing the cost of living.

However, the effectiveness of the reinstated threshold will depend on how KRA implements it. Traders must ensure their customs declarations are accurate and comply with all documentation requirements. KRA has warned that any attempt to exploit the consolidated system for under-declaration will result in penalties, including fines and additional scrutiny. The authority has also pledged to deploy more valuation officers to handle the increased volume of consolidated declarations, but capacity constraints at ports could still pose challenges.

The impact on government revenue is another consideration. While the consolidated system simplifies clearance for low-value goods, it does not reduce the total duty payable. KRA will still collect the same amount of revenue; the change is primarily about efficiency. However, if the move leads to an increase in import volumes due to improved business confidence, overall revenue could rise over time as more traders comply with the system.

Practical steps

If you are an importer whose business relies on consolidated cargo declarations, here are the steps you should take this week to ensure smooth operations:

• Review your customs declarations: Check whether your recent consignments were incorrectly classified under the higher valuation bracket. If so, work with your customs agent to file an amendment and request a refund where applicable.
• Update your supplier contracts: If you source goods in batches, confirm with your suppliers that individual consignments are now worth Sh2.5 million or less. This will help you optimize your ordering strategy and avoid unnecessary delays.
• Train your staff or agents: Ensure your customs clearance team or agents are familiar with the reinstated threshold and the conditions for consolidated valuation. KRA has published guidelines on its website, and these should be shared with all relevant staff.
• Monitor clearance times: Track how long your consignments take to clear customs over the next two months. If delays persist, raise the issue with KRA’s customer service or through the KNCCI to ensure the directive is being implemented as intended.
• Explore regional opportunities: If your business imports goods for resale in Uganda, Tanzania, or Rwanda, consider how the reinstated threshold might affect your cross-border trade strategy. The EAC is working towards harmonizing customs procedures, and Kenya’s move could position it as a more attractive hub for regional distribution.

What next for KRA and traders?

KRA has indicated that the reinstated threshold is a temporary measure pending a broader review of customs valuation policies. The authority is likely to introduce stricter penalties for non-compliance and may deploy technology, such as artificial intelligence, to detect under-declaration more effectively. Traders should therefore prepare for a system that balances facilitation with enforcement.

For now, the immediate focus is on implementation. KRA’s Customs and Border Control Department has been directed to prioritize the processing of consolidated declarations and to deploy additional staff to ports and ICDs. However, the success of this policy will depend on cooperation between traders, customs agents, and KRA officials. Any breakdown in communication or misinterpretation of the rules could lead to renewed delays.

The government’s decision to reinstate the threshold is a positive signal for Kenya’s business community, but it is not a silver bullet. Traders must remain vigilant, ensure compliance, and take advantage of the simplified process to improve their operations. The long-term goal should be to create a predictable and transparent customs environment that supports growth without compromising revenue collection.

This development underscores the importance of staying informed about regulatory changes that directly impact your business. Tax Planning & Compliance services can help you interpret these changes, optimize your customs declarations, and avoid costly mistakes.

Talk to our team at Beavoren Ventures — info@beavorenventures.co.ke — to set up your systems correctly.

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.