Certificate of Origin Rule: What SMEs, Consolidators, and Importers Need to Know

Toplink

Published on

August 27, 2025

Clearing and Forwarding, consolidation, freight forwarding, shipping

Kenya’s import and export sector is facing a significant regulatory change that could reshape trade operations, especially for small and medium-sized enterprises (SMEs), freight consolidators, and importers. The Kenya Revenue Authority (KRA), through amendments to the Finance Act 2025, has introduced a new rule requiring a mandatory Certificate of Origin (CoO) for all imports into the country. This directive, which came into effect on July 1, 2025, has been granted a grace period until September 30, 2025. After that, compliance will be compulsory, and non-compliance could lead to penalties, including forfeiture of goods.

While the government argues that the new measure aims to safeguard revenue leakages, the broader implications raise concerns across different industry players. In this blog post, we will unpack what this new directive means, its impact on businesses, and why stakeholders are calling for a review of the regulation.

What is a Certificate of Origin?

A Certificate of Origin (CoO) is an official document used in international trade to certify that the goods being exported were wholly obtained, produced, manufactured, or processed in a particular country. It is typically issued by designated government authorities or chambers of commerce in the exporting country.

Globally, CoOs play a key role in securing preferential trade agreements, reducing tariffs, and ensuring compliance with customs regulations. For Kenya, however, this rule now extends beyond preferential treatment, applying to all imports, regardless of whether goods are eligible for trade preferences.

For more on what a Certificate of Origin entails, you can refer to resources from the World Customs Organization or trade facilitation guides by International Chamber of Commerce.

The New Finance Act 2025 Directive

The directive under the Finance Act 2025 stipulates:

All importers must present a Certificate of Origin for their consignments.
Failure to comply could attract penalties, including the risk of forfeiture.
The regulation covers all imports, even those not seeking preferential treatment.

This blanket application is where the controversy lies. Traditionally, a CoO is only necessary for imports under preferential or free trade agreements. For example, under the East African Community (EAC) Customs Management Act, a CoO is only required when goods are imported at reduced tariffs under trade agreements.

By making it mandatory across the board, the Kenyan directive creates an additional layer of compliance that many argue is unnecessary.

Why the Rule is Problematic

1. Impact on SMEs and Consolidators

SMEs and freight consolidators are among the hardest hit. These businesses often source imports from diverse global locations, consolidating smaller shipments from multiple suppliers. Requiring a CoO for each item within a consolidated consignment could slow down trade processes, increase administrative costs, and create barriers for small businesses already struggling with high logistics expenses.

For instance, imagine an SME importing spare parts from five different suppliers abroad. Previously, they could consolidate shipments into one container. Now, each supplier would need to provide a separate CoO, significantly delaying shipping and increasing costs.

2. Revenue and Economic Slowdown

The government hopes the directive will protect revenue from leakages. However, critics argue that the directive could have the opposite effect. With delays in imports, higher clearance costs, and more paperwork, businesses may scale down operations, reduce imports, or even seek informal routes that bypass KRA oversight—leading to potential revenue loss.

According to reports, Kenya imported goods worth KES 879 billion in 2024. Introducing barriers at this scale could have ripple effects on supply chains, local production, and consumer prices.

3. Administrative Bottlenecks

The directive comes with significant administrative challenges. The KRA has yet to clearly outline which authorities abroad are authorized to issue CoOs. Without such clarity, importers face uncertainty, bottlenecks at clearance points, and the risk of goods being delayed or forfeited.

4. Conflict with Existing Laws

The Finance Act 2025 seems to conflict with existing provisions under the EAC Customs Management Act. Section 210 of the Act does not list failure to provide a CoO as grounds for forfeiture. This creates a legal gray area, increasing confusion for traders.

Broader Implications for Importers and the Economy

Cost of Doing Business: Importers will face higher costs due to the need for CoOs, especially for consolidated shipments.
Delays in Clearance: Extra documentation will increase clearance times at Kenyan ports such as Mombasa Port and the Kenya National Single Window System.
Supply Chain Disruptions: SMEs relying on imported raw materials could experience supply chain disruptions, delaying production and exports.
Competitiveness: Kenya risks losing its competitive edge compared to regional peers if these barriers discourage trade.

What Industry Leaders Are Saying

Agayo Ogambi, CEO of the Shippers Council of Eastern Africa and Chairperson of the Mombasa Port and Northern Corridor Charter, has raised serious concerns about the directive. According to him, the rule risks “slowing down access to raw materials, raising import costs, and delaying cargo clearance.”

Industry stakeholders argue that while securing revenue is noble, the approach is not appropriate. Instead, the government should strengthen systems that detect under-declaration and misclassification rather than burdening legitimate traders.

For more updates on trade facilitation, you can visit the Shippers Council of Eastern Africa or follow updates from the Kenya Revenue Authority.

Proposed Way Forward

1. Review of the Directive

The Finance Act 2025 should be reviewed to exempt certain categories of imports from the CoO requirement. This includes goods not seeking preferential treatment and small consolidated shipments.

2. Clear Guidelines from KRA

The KRA must urgently provide a list of recognized authorities authorized to issue CoOs abroad. Without this, importers will remain in limbo.

3. Stakeholder Engagement

A collaborative approach involving freight forwarders, consolidators, SMEs, and chambers of commerce is necessary to develop a practical implementation framework.

4. Digital Transformation

Kenya can leverage digital platforms like the Kenya TradeNet System under the Kenya Trade Network Agency (KenTrade) to streamline CoO issuance, verification, and tracking, reducing bottlenecks.

5. Regional Harmonization

Since Kenya is part of the EAC, rules should be harmonized regionally to avoid creating trade barriers within the bloc.

Conclusion

The new requirement for mandatory Certificates of Origin for all imports is a significant policy shift that has raised more questions than answers. While the government’s intent to safeguard revenue is understandable, the execution risks hurting the very businesses that drive Kenya’s economy—SMEs, consolidators, and manufacturers.

For the directive to be effective, KRA and the government must refine the approach, provide clarity, and align with international best practices. Otherwise, Kenya could face higher trade costs, slower supply chains, and lost competitiveness.

As the September 30, 2025 grace period approaches, businesses must stay informed, prepare for compliance, and engage with policymakers to ensure their voices are heard.

Useful Resources

This blog post was prepared to help Kenyan importers, SMEs, and freight consolidators navigate the new changes under the Finance Act 2025. For personalized trade support, consider reaching out to professional clearing and forwarding agents such as Toplink Consolidators for compliance guidance.