Consultancy Services for Development of the Business Model and Tariff Structure for Kenya Trade Network Agency (KENTRADE)
BACKGROUND TO THE STUDY
The rational for development and operationalization of KENTRADE is to fulfil the government’s Vision 2030 under the Economic Pillar with the objective of correcting the inefficient processes existing in the international trade and costing the country dearly in terms of time and costs which are major inhibitors to the development of the country. KENTRADE as the organization charged with the responsibility of running the TradeNet System will take a lead role in the whole trade facilitation and trade documentation processing in the country.
The System is accessible on a twenty-four-hour basis seven days a week (24/7) across the country and integrates/interfaces with various systems of stakeholders involved in trade logistics such as Kenya Revenue Authority (KRA), Kenya Ports Authority (KPA) among other Partner Government agencies to provide a single electronic entry point for submission of cargo clearance documents in Kenya.
In 2014 through the assistance of Trade Mark East Africa (TMEA) KenTrade commissioned a consultancy to develop/design a business model, and business plan to facilitate implementation and operationalization of the KNESWS. The scope of the assignment in general was to develop a for KENTRADE to run and manage KNESWS in line with Vision 2030; and develop a 5 year business plan necessary to implement the recommended business model.
Various business models were developed of which one was recommended for adoption. The Board having reviewed the recommended model and after further deliberation decided that further work be done so that it can make informed decision as to which model to be adopted by KenTrade. Also during this consultancy, the business of KenTrade was divided into the traditional Single Window Messengering service which forms the core of its business and innovative business under which KenTrade would provide on purely commercial basis.
OBJECTIVES OF THIS CONSULTANCY
The general objective of this consultancy is therefore to assist KenTrade:
- Develop tariffs and tariff structure for the services offered through the Kenya TradeNet System based on the savings that the trading community is getting or likely to get from the operationalization of the Single Window System; and
- Identify and recommend an appropriate business model to be implemented by KenTrade including refining the business models earlier identified taking into account that KenTrade must operate with minimal reliance or none at all on funding from the National Government.
SCOPE OF WORK
The scope of work for this assignment will cover the following activities/tasks:
A. Development of Kenya TradeNet System Services Tariff structure
- Analyze the cost savings arising from the use of Kenya TradeNet System by the various categories of users. Specifically, the consultant will be required to;
a.) Determine the costs savings arising from the usage of Kenya TradeNet System to the trade community. This activity will include but not limited to:
- Use appropriate research tools to collect transaction cost data before and after the implementation of the System. (Import and export both at the sea Ports, airports and Land borders).
- Develop tools to assist in collection and analysis of qualitative and quantitative data from the trade community with a view of obtaining opinions from the users on their experience based on current usage of the Kenya TradeNet System and past trade operational systems.
- Collect, clean and analyze the data.
- Develop cost savings estimation model for current and future use.
b.) Identify potential revenue streams and recommend suitable chargeable services
2. Determining the tariffs to be applied for the services offered
a.) Based on the cost savings that the users of the System are enjoying (or any other suitable basis), suggest the charges/tariffs and a tariff structure that should be introduced, including basis of charging
b.) Derive the monthly, quarterly & annual revenue collection estimates based on (a) above.
B. Business Model Development
To develop an appropriate business model, the consultant will be expected to familiarize themselves with the Business Model report prepared by the Agency recently.
To develop the model to be implemented by KenTrade as its long term system for running the Kenya TradeNet System and other underlying businesses the consultants will be expected to follow the proposed outline below although this is only indicative as the consultant can also come up with their own methodology:
- Carry out a detailed analysis of alternative business models indicated in the Business Model Report to determine those which would make KenTrade have a long term sustainability with minimal or zero reliance on exchequer resources.
- In particular analyze in detail the Public Private Partnership, Joint Venture, Strategic Partnership models etc and evaluate whether they would be applicable to KenTrade including any positive and negative factors.
NB: The consultant is not limited to the above models and will be expected to address other available and suitable models.
- Based on the best choice of the model and after approval by KenTrade develop a strategy for implementing the model;
- Prepare a detailed work plan for the implementation of the approved model (Implementation Plan). This should include:
- the identification and description of all relevant steps in the process;
- proposed timing for each step;
- responsibilities of the relevant parties at each step;
- cost/budget implication (costing)
- rationale for each major step; and
- critical assumptions made in developing the proposed timetable;