22 November 2012

Uganda: Traders to Petition Museveni Over New Inspection Fee

Traders have put up stiff resistance against the introduction of a new tariff, which is supposed to streamline the inspection for counterfeit goods imported into the country. The tariff, which comes into effect by December 3, 2012, has already put many traders on tenterhooks.

Speaking to The Observer, Evaristo Kayondo, the chairman of Kampala City Traders Association (KACITA), said the Pre-Export Verification of Conformity (PVOC) tariff is exorbitant.

"We do not know how they arrived at these figures. Nobody is comfortable with it being put in place. You can imagine the lowest fee we shall pay is $235 and the highest amount we shall pay for a consignment is $2,350. It's too high," lamented Kayondo.

Kayondo says the traders are planning to petition President Museveni because the Trade minister, Amelia Kyambadde, has already pushed the proposal to Cabinet. But the Uganda National Bureau of Standards (UNBS), which has licensed three firms to carry out these inspections, says the process is in conformity with international practice.

"This system is used all over the world. For example, you cannot export fish to the European Union without inspection. We have been buying goods, some of which are counterfeit without this verification process," argues the manager for Testing at UNBS, James Mubangizi.

Mubangizi said the new tariff is being imposed to curtail the importation of fake products which are flooding the markets. However, Mubangizi fears that those raising the red flag have an ulterior motive.

"If you are importing goods worth Shs 100m and you are only charged Shs 500,000, which is representative of 0.5 percent, why would you cry foul? Some of those scared are importers of counterfeit goods. Some of them are powerful people, others are smugglers. It even makes the processing of goods much faster."

But the KACITA boss says the fees will not include charges for testing certification and container filling. "The total fee we are going to pay is not explicit. It's higher than what is being portrayed," argued Kayondo.

He also questioned the issue of licensing of the three firms to carry out inspection; Intertek, SGS and Bureau Verita. "Why is the process of inspection restricted to three firms? In free competition, the market prices should be determined by demand and supply," Kayondo told The Observer.

Kayondo expressed doubt over whether these half-hearted measures would completely rid the country of counterfeit goods. "It presumes that counterfeit products are coming from outside. Some are internally generated," says Kayondo.

Kigozi Ssebbagala, the executive director of Uganda Manufacturers Association (UMA), also expressed reservations about the new tariff. "We as manufacturers believe that we need to empower our own institutions. We need to update our equipment and laboratories to check for authenticity not only for imports but locally manufactured goods," argues Ssebaggala.

He said UNBS has enough land to build a laboratory in Bweyogerere. "Why should we give each of these foreign companies roughly $10 million?" Ssebaggala asks.

He also questioned the capacity of goods inspection yet Uganda has 52 entry points and UNBS only monitors 22. "What about the other entry points? Goods will continue being smuggled. There is also fear of rivalry in business and connivance where a competitor's goods are withheld and his rival's cleared so that he can get to the market first."

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