Pre-shipment inspection to push prices upwards
A STATUTORY Instrument (SI) compelling Zimbabwean importers to present their goods for a pre-shipment inspection, at a cost of between US$250 and US$7 500, is likely to result in the upward adjustment of prices once it comes into effect on March 1.
Importers would be required to pay inspection fees to a specialist French company called Bureau Veritas, appointed by the Ministry of Industry and Commerce to carry out the consignment-based conformity assessment with effect from next month.
Economists predicted this week that this additional cost would be passed onto the final consumer in the form of a price increase.
Zimbabwe National Chamber of Commerce (ZNCC) chief executive officer, Christopher Mugaga, said with rampant smuggling of goods at the country’s ports of entry, it would be difficult to compel importers to present their goods for inspection without creating excuses for them to evade payment of duty.
And for those who will conform to the new requirement, the cost of inspection would be passed onto the consumer.
The inspection has been introduced to prevent the importation of substandard goods into Zimbabwe.
But it would add to import duties already rated among the world’s highest, making life for consumers already battling to find money for the most basic commodities even more difficult.
Kingston Khanyile, chief executive officer at Mtilikwe Financial Services, said while the SI is meant to mitigate dumping of substandard goods, the costs arising from this exercise will simply be passed onto the final consumer.
“It’s a commendable move by government. The cost is minimal and there will be a marginal increase of prices but that will not stop the demand for imports,” he said.
SI 132 of 2015, gazetted on December 18 last year, says in some instances, the Minister of Industry and Commerce would use his discretion on whether to exempt some imports or not.
The SI has caused anxiety in industry, which feels that there have not been enough consultations on the policy.
Meetings were held with several lobby groups to discuss the effects of the SI, with some saying they feared that goods in transit could be subjected to the new fees, in violation of existing trade protocols.
Analysts said additional fees on imports could also trigger high levels of smuggling as thousands of people who have lost their jobs in the past 16 years have turned to cross border trading, where they import anything, including substandard goods to make ends meet.
“Now that businesses have to pay to be inspected this is going to increase bribes and corruption thereby making business in the country uncompetitive. This is also going to increase prices on a consumer who is already hard- pressed,” said economic commentator, Luxon Zembe.
On the list of goods subject to pre-shipment inspection are food and agricultural products that include oils, fats, dairy products, fertiliser, meat and meat products, yeast, biscuits, fruits and vegetables and cereals.
The list also includes building products, timber and timber products, electrical goods, body care and health products, clothing and textiles, engineering equipment, automotive and transportation and toys. What that means is that a greater number of goods that the country imports are now subject to pre-shipment inspection.
“Compliance of goods to applicable international standards shall be demonstrated with conformity documents issued by accredited/competent entities and/or testing,” Veritas said in its notice.
“(On vehicles), it is recommended to have the steering wheel on the right hand side…however, vehicles with steering wheels on the left hand side will not be rejected. Genetically Modified Organisms are prohibited in food/agricultural products. The fees, which are net of any taxes, cover the documentary verification and physical inspections of the goods plus price valuation,” Veritas added.
The new system comes on the heels of a recent government directive which ordered a catalogue of 40 imported basic food commodities that constitute the bulk of the consumer basket to be included among those that pay for Value Added Tax. –Shame Makoshori
and Idah Mhetu
Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette