One of the main challenges faced by importers is unplanned costs that arise from import duties. To help businesses in the import business deal with this headache, Co-operative Bank of Kenya introduced the Import Duty Financing Solution.
The product seeks to solve the unexpected costs incurred during importation by providing working capital to facilitate duty payment, clearing costs or any other logistical expenses associated with the clearance of imported goods.
“During the different forums in the various parts of the country with our MSMEs customers, this was highlighted as a pain point by the different customers that import goods into the country,” the company says about the solution.
Co-op Bank says it used the feedback from customers to develop the Import Duty Financing solution to solve this challenge. The product was launched on the 28th February 2020 and customers expressed relief since they no longer have to strain their business working capital to meet these unexpected costs incurred during the importation process.
Import Duty Finance (IDF) is a financing solution for importers designed to help them have a seamless process during clearing and transportation of imported cargo from the port/airport of origin to the final destination. The solution targets importers of both goods and services.
The facility is booked in the customer’s account and payments/disbursements are done directly to the service provider, say KRA, against proforma invoices. The Import Duty Finance product facilitate MSME to pay for import duty and other related costs promptly, such as storage charges and demurrages, clearing, forwarding, and other logistics costs as well as facilitating transportation of goods from the port to the final destination.
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The facility comes in handy as it enables importers to avoid high storage and demurrage charges at the port and auction of imported goods due to non-payment of duty.
The product targets a number of business groups including importers of motor vehicles and equipment, importers of second-hand items for sale, importers of other goods such as manufacturers (raw materials), construction materials suppliers or other businesses, as well as clearing and logistics companies.
