How Kebs new rules could raise prices for shoppers

The MV Big Lift Barentsz ship docked at the Kenya Ports Authority's (KPA) newly constructed container terminal. The new cranes worth Sh5.34 billion are meant to boost efficiency at the port. [Gideon Maundu, Standard]

Early this month, a Ship arrived from Saudi Arabia carrying 40,000 tonnes of Calcium Ammonium Nitrate fertiliser.

It was allowed to berth without any restrictions from the Kenya Ports Authorities (KPA).

But it was stopped from offloading the fertiliser before inspection due to the long queues by ships and would take time before the Kenya Bureau of Standards (Kebs) certifies quality and cargo standards as Kenya Revenue Authority (KRA) calculates taxation

The fertiliser importer, who cannot be named for fear of drawing attention from Kebs, said the CAN was meant for farmers preparing for the forthcoming short rains.

On the 9th of this month again, another ship from Ukraine docked with Diammonium phosphate fertiliser and encountered the same cargo impasse.

Both ships are yet to be cleared and have joined an expanding queue of cargo imports that are lining up at the port of Mombasa.

They are awaiting clearance after Kebs launched strict inspection measures in the wake of the sugar import scandal that claimed the job of former Chief Executive Charles Ongwae.

“During normal times, it would take us four to six days to have our cargo inspected and the necessary documents verified before we hit the market. But these are tough times. We could be here even for 30 days,” said the importer.

Acting Kebs boss Bernard Nguyo, however, told importers to put up with the new measures to accommodate the inconvenience of delays.

This is until new structures aimed at reforming Pre-export Verification of Conformity (PVoC) process are put in place.

PVoC allows goods to be inspected and tested in accordance with the quality standards set by Kebs in their country of origin before they are shipped to Kenya.

Kebs has contracted global firms to inspect the goods, and once their quality is verified and certified, they issue the importers with a certificate of conformity.

The certificate means that when they land at the port of Mombasa, they do not need to go through some other rigorous inspection.

“The idea is simple. Since Kebs cannot be everywhere at the same time.

We contract these companies to do the inspection for us in the country of origin,” said Nguyo in an interview with the Financial Standard last week.

This was during the International Standards Day.  But as simple as the idea sounds, its effectiveness was thrown into turmoil a few months ago when the country found itself jostling with a sugar import scandal.

The sugar importers were found to have brought a large amount of the commodity that was sub-standard.

The sugar was suspected to contain metallic pollutants such as lead and mercury, despite having been tested and verified under PVoC.

And that is where the game changed. Kebs, wary of the incompetence of global inspection firms it contracted, began to test each and every container landing at the port.

Mandatory testing

That is unlike before when it would merely take a few samples from randomly chosen containers and let the rest of the cargo pass. “We have no option currently but to find a way of strengthening the PVoC programme,” said Nguyo.

“That is the only way we can ensure that goods coming in are of right quality. Currently that is what we are doing. But until we have achieved that objective, mandatory testing for all the goods at the port must go on.”

When asked if there is a timeline when the PVoC programme is expected to take place, Nguyo asserts: “I cannot say when. But I can say we are making much progress.”

In line with strengthening the PVoC, some international inspection companies found culpable after the sugar scandals, had their contracts reviewed.

China Certification and Inspections Group Company and Société Générale de Surveillance SA of Switzerland were suspended for failure to inspect goods before they were allowed into the country.

“Again, we will be reviewing other contracts we have with some other international inspecting companies and we will be either penalising or terminating them,” Nguyo averred.

According to one importer, while Kebs struggles with reforming the PVoC, traders are incurring huge demurrage and freight charges as ships remain docked with their goods.

“These costs will eventually be passed to the consumer. Many of us now prefer to import through the port of Dar es Salaam,” he said.

A month after Kebs begun restructuring PVoC, it launched an ingenious way to assuage the importers buy having the goods released from ships to avoid demurrage costs, but they are not allowed into the market yet.

Freight costs

This was meant to cut costs arising from the challenges faced by standards agency in terms of personnel.

The plan dubbed Release under Seal entailed the cargo being offloaded from the shipsand stored in a warehouse rented by the importer awaiting inspection.

Kebs argued that the costs of storing in a warehouse would be lower than the demurrage and freight costs incurred by the importers.

But the plan backfired as soon as it was started since mporters were not happy with it.

Both Kebs and KRA officials charged with overseeing the goods in these warehouses exploited the chance to let the items out into the market after taking bribes from the importers.

Many have been arrested and arraigned in various courts.

Kebs has now done away with Release under Seal and reverted to the old, rigorous process of testing each and every container before letting the importers off the hook.

And until Kebs finds a way of getting its house in order by quickly reforming the PVoC, then importers will keep feeling the cost pain.