Good riddance to PSI

Jun 16, 2001

FINANCE minister Gerald Ssendaula has proposed that pre-inspection services (PSI) be phased out at the beginning of the new financial year.

FINANCE minister Gerald Ssendaula has proposed that pre-inspection services (PSI) be phased out at the beginning of the new financial year. In his speech presenting the 2001/2002 national budget, Ssendaula said he and his Kenyan and Tanzanian counterparts had conceded that the benefits of PSI have been very limited, given the high cost of these services. This is music to importers' ears. PSI has been adding substantially to the cost of imports and frustrating trade. Costs have been escalating because of delays in making physical inspection and price verification. Worldwide, many PSI firms have had a record of corruption, necessitating the institution of bodies to police them. This was the ultimate irony because PSI exists fundamentally to check undervaluation and to do quality control. The World Trade Organisation consequently passed a resolution that PSI is phased out in member countries by 2003. It is just as well that Uganda is following this global trend. Fears that PSI was degenerating into corrupt cartels were exemplified here by the failure to appoint a second PSI firm, which it was thought would create competition and ensure more efficient services. The tender process has dragged on for over two years, with the government failing to conclude the issue. Deliberations have been leaked regularly to the competing firms and the media; lobbying has been both open and clandestine. We are now gladly rid of this. But the challenge is now going to be on the Uganda Revenue Authority, who do not have to uplift the value of goods to justify their existence. URA, though, is going to have to build capacity in terms of personnel, infrastructure and commitment. They will also have to network with customs authorities in other countries to ensure much more efficient flow of trade. ends

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