20 November 2012

Uganda: UNBS, Private Sector Battle Over Pre-Shipment Inspection Charges

The private sector is still contesting the decision to reinstate pre-shipment inspection fees, saying while the intention is good, it will be another non-tariff barrier raising the cost of doing business.

Starting December 3, goods entering Uganda, including the previously suspended pre-inspection for imported cars, will be subjected to pre-import inspection.

Trade minister Amelia Kyambadde last week called on the private sector to embrace the decision, saying the fee is small but its impact will help the country overcome substandard products.

But Moses Ogwal, the Private Sector Foundation Uganda (PSFU) policy officer, questioned why the Government went ahead and signed agreements with companies on prices without consulting those who will pay the charges.

"Is the Government the one going to pay? It is only fair that the private sector is consulted," noted Ogwal during a recent meeting attended by Kampala traders, PSFU and the Uganda Manufacturers Association.

Ogwal said their survey indicated that inspection is generally cheap, and since the surcharge will be on huge volumes of goods, it should even be cheaper if well negotiated.

"If you are negotiating and guaranteeing many clients, the price should drastically change," said Ogwal.

Vehicles will be charged a pre-shipment fee ranging from $140 to $220, depending on the country of origin, with the highest charge ($220) being for cars from South Africa, while the lowest charge ($140) will be imposed on cars from Japan.

General goods will be charged from $235 to $2,375.

The private sector also questioned the surcharge on vehicles, saying there is already a 70% charge on vehicles eight years and older, which makes the additional charge redundant.

It is estimated that about $30m will be spent on the companies that are doing the pre-inspection, yet the Uganda National Bureau of Standards (UNBS) needs only about $8m to fully be empowered with manpower and technical capacity.

"If you can spend $30m on some three companies for a year, you should rethink how you are working," Ogwal observed.

UNBS chief Ben Manyindo called for further debate with the business community, but discouraged those dealing in substandard goods, saying their business costs will rise.

He said standards are driven by the consumer and the Government for regulatory purposes, but more importantly, they boost business.

"But if you have been doing good business, then we need to engage," said Manyindo. "It is better to pay $500 more and have quality."

Everest Kayondo, the chairman of the Kampala City Traders Association, questioned how the companies procured to do the inspection were chosen.

But Manyindo explained that an international bid was put out, but no Ugandan company applied.

Pre-inspection was instituted in 2010, but later suspended as the private sector protested.

UNBS will enforce the restrictions to ensure goods comply with standards under the pre-export verification of conformity.

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