PVoC is a great hindrance to the import business, please scrap it

Having been in the import business for more than 30 years, I can categorically state that the introduction of compulsory Pre-Export Verification of Conformity (PVoC) for imports has been the greatest deterrent to the business of imports I have ever dealt with.

It might have been a well meaning policy but I do not think any of us, the stakeholders, were consulted before its implementation because it’s a lose-lose situation for all parties concerned. Here is why.

The PVoC is very long and tedious process. There is a lot of paperwork involved and most of it is to be done by the exporter, who finds it irritating and would rather deal with importers from other countries which have much less cumbersome processes.

The process takes more than two weeks, sometimes longer, as paperwork is sent back and forth before the actual loading can be arranged with mutual consent. As an importer uses funds derived from one import to fund the next one, this extra period taken up by inspection means slower turnaround time. That, in turn, means less imports, which leads to lower revenue for the government in terms of import duties and VAT.

Due to the cumbersome process and all the paperwork involved, most exporters shun Kenyan importers, who end up getting the left-over goods after the prime products have been sold to importers whose containers can be loaded without much ado.

Kenyan importers incur storage charges while their cargo goes through the lengthy inspection since space is a very valuable commodity, adding to the costs.

Many importers buy goods from online auctions, which have very simple rules: Bid, pay and collect. They give successful bidders a maximum of three days to collect their goods as they need space for the next auction. Besides, they would never agree to do the paperwork required for PVoC process or allow inspectors into their premises.

Such importers have closed shop with the coming of PVoC, which means the importer, his clients and the taxman all lose.

Here are a couple of points to ponder. First, contrary to the popular belief, almost 80 per cent of importers are honest and would not engage in ‘sharp’ practices simply because the amount of money made through these is not worth the stress and it’ll be expensive in the long run.

Secondly, even after PVoC was introduced, KRA still find undeclared goods in containers which were supposedly loaded and sealed in the presence of inspectors at source — meaning that corruption is not a local phenomenon but a global issue.

PVoC is creating hardships, especially to small-scale importers who work on low margins and fast turn-around. It has, in many cases, put them out of business even though they had painstakingly built it over a long time. It slows down the volume of imports, which must be hurting the tax collection too.

Policymakers should scrap this policy and allow local inspection like before. The result will be an immediate spike in business activity and resultant tax revenues in form of import duties, VAT and income tax.