Fake import scare

Fake import scare
Published: 30 December 2007

Danger looms of substandard or fake cement from outside Tanzania flooding the country following the government’s recent tax waiver on the importation of the commodity. The government’s move was meant to avert a crisis in the wake of an acute shortage of the crucial item that saw retail prices recently shoot up to an unprecedented T$22,000/- to 25,000/- per 50 kg bag (US$22.14 or US$442/tonne).

Only weeks earlier the corresponding prices ranged between 12,000/- and 17,000/-, in part depending on the distance from the three cement factories in the country. These are based in Dar es Salaam, Mbeya and Tanga.

Following the development, the government intervened by issuing permits to 23 private companies from the East African region to pump the product into Tanzania duty free. Surprisingly, most of these firms have failed to deliver the cement as per specifications in their contract with the government.

This has made the government, through Tanzania Revenue Authority (TRA), to remove a 20 per cent additional import duty on cement imported from outside the EA region.

This latest strategy was meant to allow in enough consignments of the item to saturate the domestic market and thus push down wholesale and retail prices. Under the tax waiver, cement importers are subjected only to 25 per cent import tax instead of paying the usual 25 per cent import tax plus 20 per cent additional import duty.

But the Contractors Registration Board Registrar Boniface Muhegi is worried over the impact these measures could have on the supply,distribution and quality of the cement so imported.

“There is a huge possibility of receiving substandard and fake cement if the respective authorities do not devise and institute stringent controls against the importers. We need to be extra vigilant lest we become a dumping ground for cement imports of dubious quality,” he noted in an exclusive interview with The Guardian in Dar es Salaam earlier this week.

Muhegi said the removal of the additional import duty and the decision to allowing dealers to pump in cement was a dangerously blanket approach full of loopholes which selfish traders could easily use to import low-quality cement in order to maximise profit.

“If not checked properly, substandard cement will find its way into the construction works going on around the country. We should stand warned that, technically, buildings other structures constructed using low-quality cement will be at great risk of collapsing, in most cases with calamitous consequences,” he warned.

The expert recommended that there be more rigorous pre-shipment inspection to prevent the penetration of substandard or fake cement imports into the country. “Importation permits should be issued only to selected, carefully screened, companies and not everybody. Superior quality of the cement should be one of the criteria for the issuance of the import licences,” he concluded.