Interview with Everest Kayondo, Chairman, KACITA
Q: Recently Kampala traders went on strike following a disagreement between importers and the government over the reintroduction of the Pre-Export Verification of Conformity (PVOC) system which was initially introduced in 2010 but later put on hold for review. What exactly were traders protesting for?
A: First of all I would like to correct the impression that Kacita is against PVOC. We support the programme since it has been identified as one of the channels of controlling the flow of substandard goods into Uganda. However we disagree with a few things in its implementation and procedure. PVOC requires traders to have their goods inspected for conformity to quality when they are still within countries where they were manufactured or bought, before being shipped into Uganda but at a set fee. It presumes that substandard goods are only generated externally and yet others are internally generated. Hence the best position would have been to build the capacity of UNBS other than the present arraignment which a sign of short-termism!
We find fees, which were previously recorded at between $235 and $2,375, depending on the size of the container to be another tax. Our contention was that by levying inspection fees it would mean two things; it would impact on our profitability by pushing the cost of doing business up. Or, we would be forced to pass on the cost to the consumers thus making the products too expensive.
The programme, if implemented as initially set, it would also eliminate small time traders who bring in finished products in consolidated cargo. It would slow progress of imports. Imagine inspecting thousands of products before they are shipped. How much manpower would be required to do that and how long it would take anyway to have one container loaded? Right now in the agreements they were catered for in that consolidated cargoes will be inspected at the boarder except cosmetic and food products. This will help small traders to continue trading.
Otherwise if the system was implemented as they had wished in its original version, it would eliminate the small traders.
Also there was the issue of hidden costs. The hidden costs included, inter alia:
*Asking for air tickets to fly inspectors to places where the service providers do not have offices; this is especially true in a country like China where these service providers are not present in all towns of the country. Therefore service providers were asking for return air tickets as well as accommodation charges from the traders!
*Testing fees were not included in the charges; hence for goods which require laboratory testing, a different levy has to be charges.
*Again a different fee was required in order to access ‘standards’ hence the standards were not known to the traders.
*We also questioned the rationale of quality goods being made to pay higher fees: basing of FOB price as opposed to a fixed rate.
For example, charge for non- compliance of 15%, etc. PVoC is on contractual obligation were by the government has outsourced the service providers which have three year contracts to inspect the goods. They include; SGS, Intertek, Bureau Veritas, JEVIC, East African Automobile and Jabal Kilimanjaro among others. So this means the programme will be run on profit oriented motive rather than service delivery.
Q: What is the status of PVOC now? Has it been enrolled yet?
A: Since we are not opposed to the starting of PVOC, of course it’s on. However, the agreements were revised and service providers were brought on board and we presented our side to them. But Kacita being a business community we don’t negotiate on behalf of government. For us we just present our grievances and from what I understand every three months these agreements will be reviewed to see how they suit with the business community.
As we speak now PVOC is ongoing but on selected items and the reviews will be done. Meanwhile, we concurrently expect service providers to enlighten the public especially those involved in the affected items.
Q: So do you entirely agree with the new version?
A: Not entirely agree but since there is a provision that every after three months the stakeholders will be sitting to evaluate the progress and address any mishaps that might have arisen, we think there will be chance of reviewing the agreements as we make necessary amendments to facilitate trade rather than suffocate it.
Q: After the strike, you were quoted in the press as saying it was a win- win situation. Do you still maintain this status quo?
A: Yes it is a win- win. There were no winners or losers. Some of our concerns were addressed during the negotiation period. The few issues that were not addressed we think with time, they will be also handled. There were some misunderstandings on both sides. For example our definition of what a consignment is, was very different from service providers. But we hope those will be ironed out as we move along the corridors of implementation.
Q: Is the implementation of PVOC so far going on well?
A: You see it takes quite a long time before good are loaded and reach the country. But I think we shall be getting reports whether it is smooth or with some overtones and then we see how to address them.
Q: So the inspectors actually go on ground at the point of origin of goods.
A: That is what is presumed. But the inspection according to our definition and observation, what they are doing now is more of an observation than inspection because they are not carrying out any testing. They just observe products and make pronouncements. So, it’s purely judgmental and that is where we have a problem. We hope out of this exercise there will be elimination of substandard products that come in the country because that is really our wish. We are also consumers and we would never want any compromise on quality, but we wish it to be on a commensurate rate and cost.
Q: What is the future of Kacita? How do you see it five-ten years from now?
A: Right now we are addressing the issue of becoming Kacita-Uganda as a brand. Our members have instructed us to become Kacita-Uganda and we are supposed to open up branches all over the country and we should advocate for all the traders in the country. And I think in the near future we will be addressing problems impacting on all traders in the country. Then the trading community will be facilitated in all manners of trade.
We have so far addressed the perception that we are a group that is supposed to be rioting. In fact it’s not our wish to be rioting but it’s our wish to be heard. And when we get heard, we need solutions not explanations. Those are the differences our politicians must learn in order to address our issues properly.
Q: Any measures in place to attract new members?
A: Service delivery. We are looking at setting up a more vibrant resource center. We have started one at Kacita offices with a few computers and our members have been coming and learning how to use the Computer, Internet and how to use search tools for suppliers and even for markets. So we have moved to that level but we want to make it a fully fledged resource center where many more members can be served.
Most of our members are what you call BBC (Born Before the Computers). So the Dot.Coms are very few. They have not yet joined the trade. So we want even the BBC’s to be conversant with the computer and even to increase their movements to source for goods so that they can use the internet as an alternative to sourcing goods and markets.
Q: What is the membership base for Kacita?
A: Fifty two paid up members. But if we talked about our sympathisers you would be surprised at the numbers.
Q: What are some of the other key concerns affecting members?
A: There is no blue print of concerns. Each time we get new challenges and issues and we solve them as they emerge. Yesterday it was license fees, another day it was PVoC, this day it’s single window, the other time it’s single custom’s territory or cash bond. So we handle issues on case by case basis.
You remember at one point it was the exchange rate which was going through the roof. So there is no blue print. Sometimes we solve them other times we fail, so we can’t claim 100% victory and if anyone expects us to achieve 100% then they are wrong – that is where public go is wrong. Kacita can’t solve everything but at least we bring it on table. Sometimes conception takes longer – we can’t be happy with everything.
Q: What issues are you handling now?
A: Right now what is urgently needed to be addressed are single window and single custom’s territory. Traders need to be advised on how they can benefit and what challenges are involved so concerned parties such as Uganda Revenue Authority, Ministry of Trade and that of Finance are supposed to make arrangements. For Kacita it will be mobilisation as we are not the government.