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The East African : April 14th 2014
The EastAfrican BUSINESS APRIL 12-18,2014 RULE COMES INTO FORCE IN ON JUNE 1 Uganda to enforce mandatory pre-export inspection of cars The inspection will cove≥ tests fo≥ ≥adiation and chemical contamination on selected impo≥ts By HALIMA ABDALLAH Special Correspondent U ganda will no longer allow the importation of vehi- cles without an international certificate of roadworthiness once the pre-export verification regulation comes into force on June 1. The new rule will require imports destined for or in transit through Uganda to be subjected to Pre-Export Verification of Conformity (PVoC) standards. The inspection also covers tests for radiation and chemical contamination on selected imports. The regulation, initially resisted by the motor vehicle traders, was introduced in the wake of the Fukushima nuclear disaster of March 2011. The government has waived, up to May 31, a 15 per cent penalty it had imposed on Cost, Insurance and Freight (CIF) value of imports that are not inspected. Beyond the deadline, all vehicles must be inspected in their countries of origin by recognised agencies that the Uganda National Bureau of Standards (UNBS) has contracted or face penalties. At least 11,000 vehicles are imported into the country every month. Five thousand of these are in transit to countries like South Sudan and DR Congo. A study by the Uganda Consumers Protection Association (UCPA) done between June and December 2013 revealed that out of the 768 vehicles involved in the study, 350 failed the inspection tests. Those that failed were referred for corrective measures but 38 still failed. “For vehicles that fail the inspection test, the importer CAR IMPORTS At least 11,000 vehicles are imported into Uganda every month. Five thousand of these are in transit to countries like South Sudan and DR Congo. A study by the Uganda Consumers Protection Association done between June and December 2013 revealed that out of the 768 vehicles involved in the study, 350 failed the inspection tests. Most importers bring cars from Japan, Singapore, United Kingdom, South Africa and UAE shall be given 30 days to rectify the faults. Failure to do so will result in the vehicle being destroyed at the cost of the importer,” said Amelia Kyambadde, Minister for Trade, Industry and Co-operatives. Kenya already requires all imported vehicles have PVoC. According to the Kenya Bureau of Standards (KeBS), which administers the programme, the intention is to minimise the risk of unsafe and substandard vehicles entering the market. The programme is a requirement under the World Trade Organisation (WTO) rules. KeBS has appointed Bureau Veritas, Intertek International and Société Générale de Surveillance (SGS), and China Certification and Inspection Group under the framework of bilateral co-operation for 45 Govt banks on la≥ge≥ tax base to meet goals By DICTA ASIIMWE Special Correspondent UGANDA’S BUDGET is projected to grow by 9.6 per cent in the financial year that begins July despite the threat of aid cuts and shortfalls in revenue collections. Officials are counting on improved public sector efficiency, which they hope will stimulate growth and therefore expand the country’s tax base to fund increased spending. The government has in- stituted an output budgeting tool to remove ghost workers from its payroll so that money spent on financing mostly social service sectors can yield the intended results of reducing poverty. The government is also paying salaries early to get rid of arrears and stimulate growth of Ugandan companies. Government officials be- The new rule will see vehicles being inspected before they are shipped to Uganda. Picture: File products originating from China. Tanzania has similar regulations. Last month, the Uganda Used Vehicles Importers Association made last-minute attempts to stop the implementation of the PVoC in vain. It claimed that it is costly because there are just a few service providers, which makes the business less competitive. They had also opposed the 15 per cent surcharge on CIF. The UCPA has supported the government’s decision, saying car importers have for a long time brought substandard vehicles into the country. The importers had preferred that the inspection be done in-country, as a measure to reduce the cost of doing business, which shifts the final high cost to the consumers. The import- ers say that PVoC will cost about $300, which will be passed on to the consumers. But UCPA said it assessed authentic pre-import inspection reports which showed that inspection costs range between $125 and $220, depending on the country of origin. Most importers bring cars from Japan, Singapore, United Kingdom, South Africa and United Arab Emirates. UCPA argues that inspect- ing the vehicles from the country of origin is the cheapest option because there is assurance of capacities to fix the vehicles in case of any problem. Where the vehicles have been found to be completely unroadworthy, then it is more convenient to leave them in those countries. Additional reporting by Steve Mbogo lieve that these reforms will stimulate growth and automatically increase taxes so as to finance the country’s ambitious budgetary targets. According to proposals in the 2014/15 budget framework paper, the government plans to increase overall budget allocations by 9.6 per cent to Ush14.3 trillion ($5.5 million), compared with allocations that totalled Ush13.1 trillion ($5.1 billion) for the financial year that ends this June. The emphasis on infra- structure will continue into the new financial year, with the works and transport sector taking 18.1 per cent of the budget, while the Ministry of Energy and Mineral Development will receive the second highest allocation — 12 per cent. The increased expendi- ture comes despite a Ush277.1 billion ($110 million) reduction in donor aid. The Uganda Revenue Authority (URA) has also registered Ush270 billion ($105 million) in collections for Uganda will still focus on infrastructure this financial year. Picture: File the year to January 2014. But Keith Muhakanizi, Uganda’s Secretary to the Treasury, is optimistic that revenues will change next year because of the expected 6.8 per cent economic growth rate and reforms in the way government delivers services to the people. Mr Muhakanizi said that budget release performance stands at 103 per cent to date despite shortages in domestic revenue. The government sold treasury bills to bridge the shortfalls. Donors also released all the money they promised and the only weaknesses have been found in the poor execution by government departments. The worst culprits were the health, agriculture and education ministries, which could in turn explain the low government allocations to these areas. The Ministry of Health will this year get Ush1.2 trillion ($464.3 million), 40 per cent of which is expected from donors — who usually choose specific areas like HIV/Aids, tuberculosis, family planning and malaria. Arthur Bainomugisha the executive director at Advocates Coalition for Development and Environment blames the low absorption capacities of some of these ministries on corruption and lethargy among public servants. Leade≥s ag≥ee to build ≥egional oil ≥efine≥y in Uganda, pipeline to Lamu By GEORGE OMONDI The EastAfrican KENYA, UGANDA and Rwanda have agreed to set up a regional oil refinery in Hoima in western Uganda, and a pipeline to Lamu on the Kenyan Coast. This was one of the deals struck in Kigali on April 6, by Kenya’s President Uhuru Kenyatta, Uganda’s President Yoweri Museveni and Rwanda’s President Paul Kagame on the sidelines of the ongoing commemorations of the 1994 genocide. “The discussions centred on the oil refinery at Hoima,” said the Presidential Strategic Communications Unit said in a statement. “The leaders also agreed on joint construction of a crude oil pipeline from Hoima to Lamu in Kenya.” The regional refinery and a crude oil pipeline linking Uganda’s oilfields to Kenya’s seaport of Lamu are among a raft of agreements that are covered in a trilateral pact signed last year. The pact had, however, left room for the three States to decide whether to pool resources for the refinery and how to do so. Uganda and Kenya have both confirmed commercial quantities of recently discovered oil and both are currently sprucing up their midstream capacities. Kenya closed down its ageing Ap≥il 1 The date when the deal was struck in Kigali, Rwanda Changamwe-based oil refinery last year citing inefficiencies that made locally refined fuel more costly than imported finished products. The assets of Kenya Petroleum Refineries Ltd were also unusable in refining the waxy oil discovered in both countries. The Changamwe-based facility was built to handle murban crude oil from the Middle East. As a result, regional leaders have been mulling various pipeline and refinery options for when the oil finds come online. Experts have, however, warned that a pipeline for waxy oil is likely to be a very expensive undertaking. Concerned States will not only have to invest in an inbuilt heating system to keep the crude flowing, but also ensure its security from sabotage. South Sudan and Ethiopia are expected to join the initiative at a later stage as it progresses towards the Lamu Port. The project is expected to boost regional trade and increase energy co-operation between the East African states.
April 7th 2014
April 21st 2014