PHILLIMON MHLANGA
Struggling local firms want government to remove the pre-inspection programme on imports being undertaken by Bureau Veritas amid revelations companies are using informal means to import to escape the more than US$20m they pay monthly to the French firm.
Bureau Veritas Group, which is listed on France’s largest stock exchange — the Euronext Stock Exchange — was five years ago given a mandate to do the Consignment Based Conformity Assessment (CBCA) which entails shipment inspection, verification of documents, sample testing and risk assessment of goods in the country of origin.
Business Times can report that more than 70% of goods imported were now being smuggled into the country by the “runners” to evade “punitive” pre-inspection costs, and paying correct taxes as corruption takes its toll, according to Industry and Commerce Minister, Sekai Nzenza.
The runners, referred to as Omalayitsha, use undesignated entry points or under declare goods where they misrepresent the quantity of goods they are bringing into the country to avoid paying the correct taxes.
Most of the products invite a duty of 40% or more and varying additional costs charged per item.
This means government is losing billions of dollars in potential revenue. Nzenza last week revealed some goods were smuggled into Zimbabwe as companies evade hefty CBCA charges and taxes at the country’s borders.
“Zimbabwe is open for business, but not opening its borders to substandard products.
As government, we need to engage the captains of industry,” Nzenza said.
She said the substandard imports that continuously flood the country create an uneven playing field.
“It affects industry as a whole. We want to ensure this [CBCA) process is efficient, transparent and to ease the ease of doing business.
What is critical at this stage is to have a tool that works and is put in place for our industry,” Nzenza said.
But, local businesses last week raised consternation over business costs due to the implementation of CBCA. For each consignment, local companies are forced to pay at least US$250, which they say was killing their businesses and result in products becoming expensive and uncompetitive.
Companies say the interbank market is not efficient resulting in them failing to get the much needed foreign currency required for the procurement of critical raw materials.
This means for those who want to raise foreign currency for CBCA, they need to source it from the black market where premiums are high.
This week, to buy US$1 on the parallel market, one needed to pay ZWL$29.
Bureau Veritas’ four-year contract expired in 2019 and was extended by one year.
The contract is expiring this week amid indications that government is likely to renew it, according the well-placed sources in the Ministry of Industry and Commerce.
Confederation of Zimbabwe Industries (CZI) chief executive officer, Sekai Kuvarika, said the cost of complying with CBCA was hitting hard on business.
Apart from that, local companies were losing millions of dollars through costly delays caused by pre-inspection exercise.
More than half of CZI members want CBCA inspection programme to be removed, according to a recent survey.
The removal of the CBCA would allow market forces to govern which will force those providing substandard products out of business.
Formal businesses, Kuvarika said, have now turned to crossborder runners or Omalayitsha, who smuggle imported goods through Zimbabwe’s porous borders and would deliver imported goods “the next day”.
Omalayitsha, who are said to be organised and efficient, are used by both big and small companies because of their low charges because they avoid duties and taxes.
Runners taking goods into Zimbabwe are said to be charging between 20% and 25% of the value of the items as their fee.
That’s considerably less than the import duties they would normally have to pay. Kuvarika said despite the CBCA programme, sub-standard products are still finding their way into the local market because of the porous borders.
“It’s costly. We cannot celebrate the country going informal. We should be getting worried.
We should ask ourselves what input it (CBCA) has on ease of doing business,” queried Kuvarika.
“How has it contributed to the competitiveness to this economy?” Industry players say they have not graduated across routes.
They remain in the same route and it takes about three weeks to get a conformity certificate. CBCA has three routes.
First time importers go through route A, where inspection is mandatory. Route B is for regular importers.
Route C is for manufacturers whose factories are nspected annually. However, there have been serious reported delays in processing certificate of conformity. Companies not graduating across routes, remain in Route A.
Zimbabwe National Chamber of Commerce (ZNCC) senior economist, Dumisani Sibanda said the CBCA programme has been a toll on business affecting competitiveness.
“Delays have been a cause of concern. The ZNCC have engaged Bureau Veritas.
There is need to escalate the migration to Route B or C.
There is also need to do inspection of goods when in the country to speed up the process,” Sibanda said.
A business executive, who preferred not to be named, said the formal sector is facing competition from informal sector with the CBCA programme bringing “an extra financial burden”.
“We bring at least 300 containers a month. It’s frustrating. This CBCA for us is the single most frustrating on doing business in this country,” the executive said. Zimbabwe has only one service provider, Bureau Veritas.
Other countries who conduct CBCA have several players.
For example, Botswana has four service providers; Kenya has five, Uganda four. Zambia has advertised.
While industry has expressed disquiet, government appear to be in favour of the programme and is likely to renew Bureau Veritas contract this week.
Bureau Veritas contracts manager for Zimbabwe and Botswana, Tendai Malunga said Zimbabwe had the lowest fees in sub-Saharan Africa.
“It’s ok for business to say US$20m was too much but, the issue of sub-standard products cannot be underestimated.
What Zimbabwe is implementing is not unique because more countries are doing it,” Malunga said.
“Turnaround time is five days on Route A, two days on Routes A and B on average. Some take three weeks to give conformity certificate.”
He said about 50% of goods into Zimbabwe are on Route C adding that compliance to standards take time.
Angelicia Katuruza, a director in the Ministry of Industry and Commerce, said government will increase service providers to break the monopoly of Bureau Veritas.
“We are working with the Procurement Regulatory Authority of Zimbabwe and we have managed to procure three service providers for preshipment inspections which I cannot name at the moment,” Katuruza said.
She said business has been closing shops before and by its nature a business is “born, grow and die” adding that competition with sub-standard products was hurting formal businesses.
“Uninspected motor vehicles are entering the Zimbabwe. We hear there is a huge fence of cars that failed conformity in other countries.
There are also huge motor vehicle parts selling in the Zimbabwe market. This is not good for the economy,” Katuruza said.
Standard Association of Zimbabwe director general ,Eve Gadzikwa threw her weight behind the CBCA programme calling for it to be simplified as there are some unintended consequences.
“It’s timely because Zimbabwe ratified African Continental Free Trade Area. CBCA is a good programme so that we don’t get a raw deal,” Gadzikwa said.
“Zimbabwe has to raise the bar in terms of standards as it cannot be a dumping ground. With the coming in of the single market, there is a high probability that Zimbabwe becomes a dumping ground,” Gadzikwa said.
Consumer Council of Zimbabwe deputy executive director, Rose Mpofu said the CBCA programme comes handy as consumers struggle to get protection and exposed to “shoddy, unsafe products, misleading adverts and expired products”.
“We do have evidence of both informal and formal sector who are selling substandard goods. I can’t name them at the moment.
The SAZ standards are voluntary so without regulated standards we are in trouble,” Mpofu said adding that “more countries are using CBCA scheme to protect consumers against substandard goods”.
