Pre-Export Verification Of Conformity to Standards A government program to protect Zambians

Danger from sub standard goods Melted charger

Historical Background Changes in the economic policy of Zambia led to introduction of an open market economy around 1992. Resulted in an influx of different products on the Zambian market from all over the world. No scheme in place to check the quality of imported products until April 2003 The absence of procedures to check the quality and safety of imports resulted in the presence of inferior quality and un-safe products on the local market. Introduction of the Import Quality Monitoring Scheme The scheme was introduced in April 2003 under Statutory Instrument No. 41/2003 Targeted selected imports due to limitations on testing capacity Involves inspection of goods at points of entry Scheme not effective in controlling the quality and safety of imports

Objectives and benefits for Zambia Prevent the importation of products not meeting quality and / or safety standards Prevent the importation of counterfeit products Protecting consumers and the interests of importers Supporting local producers against unfair competition and deceptive practices Facilitate the clearance process by eliminating bottlenecks caused by the verification performed on arrival at entry points Promote exports and the quality image of the country products (via compliance)

Why PVoC? It is very difficult to professionally verify goods at border points Limited capabilities of ZABS (necessary to keep product experts at every border point); Verification opportunity is limited by the need to discharge and re-load goods in containers; Testing capabilities are limited; Testing and assessment takes time, during which goods are stored, this incurs direct storage costs (costs can be significant), and increase working capital cost. It is even more difficult to track sub-standard products when in the market

HIT RATIO Number of products in hypermarket is about 10,000. It will take one person about 1 week to estimate only correctness of labeling and expiry dates. Inspectors stand very little chance to chase all sub-standard products in the market.

Solution: PVoC – Pre-Export Verification of Conformity to Standards Products are verified before they come to Zambia by qualified personnel of well established independent international companies. The verification process consists of the following modules: physical inspection sampling and testing document verification factory assessment (for certified products) To verify products in this way the following is required: international office network international experts international laboratory network experience and track record in similar projects

ALTERNATIVES TO PVoC Keep the status quo by not accurately checking the bulk of imported goods and thus continue with importation of sub-standard goods onto the Zambian market (the situation today); Increase several-fold capabilities of ZABS (large budget increase) to check on reasonable proportion of imported goods. ZABS will strive for that but it will take time and require heavy investment from the Government. Withdraw counterfeit and sub-standard goods from the market: requires sizeable workforce and a reinforcement regime, etc. Prevention is better than cure.

HOW IS THIS PROBLEM SOLVED IN OTHER COUNTRIES: DEVELOPED WORLD Options Analysis Option 1 Self declaration of conformity supported by 3rd party test reports, audit reports, design approval etc. Market surveillance. Requires mature market and very well developed function of market surveillance. Not yet an option for Zambia.

HOW IS THIS PROBLEM SOLVED IN OTHER COUNTRIES: DEVELOPED WORLD Options Analysis Option 2 Certification of products by state accredited private certification body (function exercised today by ZABS). Requires full fledged National Quality Infrastructure in the country (not in place today) and Very well developed network of product specific focused laboratories and product certification bodies To have it in place calls for developed R&D for every product type in the market, plus extensive standards library. Both are inadequate in Zambia, and the process of developing them is quite slow.

HOW IS THIS PROBLEM SOLVED IN OTHER COUNTRIES: DEVELOPING WORLD Option 1 Regulator focuses on a limited number of goods. Limited means a couple of dozen (e.g. The Philippines). Not suitable for Zambia, since there are a significant number of critical goods and the local production is far outweighed by imported goods Option 2 Leave everything to market. The current situation in Zambia, current regulation on import quality not very effective Option 3 Regulator exercises full control (South Africa). Cannot be implemented in Zambia currently as this requires a heavy financial and human resource investment by Government. Option 4 PVoC (Kenya, Egypt, Saudi Arabia, Algeria, Kuwait, Syria, more).

VARIOUS CONFORMITY ASSESSMENT PROGRAMMES IN AFRICA AND MIDDLE EAST Saudi Arabia Uganda Since 2010 Nigeria Kenya (Since 2005) Tanzania (coming soon) Kuwait Egypt (Since 2001) Iraq Since 2011 Algeria Lebanon Iran

FEE STRUCTURE Route A 0.450% of the FOB Value of the goods imported Minimum fee per shipment: USD 350 (shipments up to USD77,700 FOB value) Maximum fee per shipment: USD 7500 Route B 0.400% of the FOB Value of the goods imported Minimum fee per shipment: USD 290 (shipments up to USD72,500 FOB value) Maximum fee per shipment: USD 7000 subject to applicable commercial rates at the port of loading Route C USD350 (three hundred and fifty US Dollars)

Coverage and conditions The above fees cover the documentary verification and the physical inspection of goods, The above fees do not include the following activities: Testing: to be quoted on a case by case basis Containers sealing (if requested): to be quoted on a case by case basis Product Registration: to be quoted on a case by case basis Manufacturer licensing: to be quoted on a case by case basis Additional fees where goods or facilities are not ready or available at the time the supplier has advised and therefore an additional inspection visit is required.

Contractors Contact Details Bureau Veritas: SGS : Flat No. 2, Plot No. 32254, Thabo Mbeki Road, Lusaka, Zambia Email: andrei.koval@sgs.com hellen.achieng@sgs.com Phone: +260 966 999 459 +260 967 770 874 +260 967 770 875 Enquiries:zm.pvoc@sgs.com

Conclusion Benefits Protect Consumer and Local Industry, Reduce Fraudulent Transactions, Fight against Counterfeit products Prevent Unfair Competition, Simplify Procedures and Faster Customs Clearance,, Pre-export Verification avoids re-export of non compliant goods (protects the local importer) CONSUMER PROTECTION: Consumers and Importers lose income because of too many non conforming products in the market Even when they turn to branded products, they will face counterfeit products with non conformity risk being even higher. CONFORMED PRODUCTS AT LOWER PRICE PVoC program does not increase the price of the products PVoC program encourages serious importers to select reliable suppliers which can provide available conformed products at reduced price

WHY PVoC IS NOT A PSI The purpose of PSI is to improve revenue collection by ZRA by means of Correct classification of goods Correct valuation of goods Verification of packing list and quantity of shipment PSI was administered under the Ministry of Finance The purpose of PVoC is to ensure conformity of good to standards, mainly in terms of health, safety and environment protection Quantity is not essential Sampling, testing, analyzing of data sheets, risk assessment are critical activities The PVoC will be administered by a statutory body (ZABS) under the Ministry of Commerce Trade and Industry

Zambian Legislation Standards Act, Cap 416 of the Laws of Zambia Under Part II Section 5 of the Act, the functions of the Bureau are specified and two of these include: To promote and require the adoption of standards in industry and commerce with a view to improving quality of commodities, industrial efficiency and productivity and after sale support services and all aspects of quality assurance of commodities To make arrangements or provide facilities for the examination and testing of: (i) commodities to which standards apply; and (ii) The material or substance from which a commodity may be produced, manufactured, processed, treated or finished Import Quality Monitoring Regulation The current regulation on import quality monitoring, SI 41 of 2003 is being amended to facilitate implementation of the PVoC program

Conformity assessment ZABS PVoC Process

What is conformity assessment? Conformity verification is essentially risk assessment of the exporter/manufacturer’s statement that their goods conform to agreed set of requirements Consists of the following modules Verification of conformity Physical pre-shipment Inspection Documentary check of conformity Sampling and testing Factory or logistics centre assessment

Conformity assessment is essentially a risk management system Takes into account the safety hazards inherent to the specific product (such as mechanical, electrical, thermal, fire or explosion, chemical, biological or radiation hazards) the severity of hazards the homogeneity of the consignment the reliability of the manufacturer / exporter the final buyer and end use

FORMS OF CONFORMITY ASSESSMENT Voluntary Conformity Assessment Mandatory Conformity Assessment Depending on the risk of the product Mandatory Certification Declaration of Conformity Systems of Voluntary Certification, Systems of Mandatory Certification Declaration based on own proofs Declaration based on 3rd Party documents (certificates and Test reports) Equal Legal authority

Voluntary Conformity Assessment Mandatory Conformity Assessment Mandatory Certification Declaration of Conformity Systems of Voluntary Certification Systems of Mandatory Certification Declaration based on own proofs PVoC SASO GOST R CE, GOST R ISO 9001, 14000… BRC FI, SE, NE, DE… CSA Declaration based on 3rd Party documents (certifica and Test reports)

FLOW CHART FOR PVoC GEOGRAPHIC PROCESS PVoC Agents Exporter PVoC: Inspection, Testing, Audit, Documentary verification …  EXPORTING COUNTRY Compliant Goods certificate Clearance ZAMBIA PVoC Agents Importer

There are THREE ROUTES of verification of goods ROUTE A: applicable to any goods and any trader ROUTE B: Recommended for frequent exporter with homogeneous products, Self-declaration of compliance supported by substantiated evidence (test reports, certificates, etc.), Registration is renewable annually, subject to continual compliance. ROUTE C Only for manufacturers; certain distributors may qualify as well! Consistent shipment compliance: Evaluation of test reports and additional testing to demonstrate full compliance with the Standards; Audit of the manufacturing facility & subsequent surveillance visits: Process closely follows ISO / IEC Guide 28 – General Rules for a model 3rd party Certification Systems for products Licensing is renewable annually, subject to continual compliance.

Review of registration HERE THEY ARE Inspection Testing / test report Satisfactory? Certificate Goods Non conformity report registered goods Review of registration Risk assessment Based on the risk Assessment: documentary review Testing ROUTE B ROUTE A Licensed Random inspection ROUTE C Yes No

FLOW CHART FOR PVOC ROUTE A Inspection Testing / test report Satisfactory? Yes Certificate Goods No Non conformity report

FLOW CHART FOR PVOC FACILITATION PROCESS - ROUTE B Satisfactory? Yes Certificate No Non conformity report ROUTE B Based on the risk Assessment: documentary review Inspection Testing Review of registration Risk assessment registered goods

FLOW CHART FOR PVOC FACILITATION PROCESS - ROUTE C Satisfactory? Yes Certificate No Non conformity report ROUTE C Licensed goods Random inspection

Still, how does it work?

BASICS OF BUSINESS PROCESS Application (RFC+PI) Registration Offer to exporter Assigning Standards (classification) Analysing supporting documents Receipt of acceptance, invoicing Scheduling inspection Writing instruction to exporter& inspector Issuance of CoC Reviewing results Inspection Testing

BASICS OF BUSINESS PROCESS – GOOD REGISTERED OR LICENSED Application (RFC+PI+IDF) Registration Offer to exporter Assigning Standards (classification) Analysing supporting documents Receipt of acceptance, invoicing Scheduling inspection Writing instruction to exporter& inspector Issuance of CoC Reviewing results Inspection Testing

WHERE DOES IT BREAK Payment delays Application (RFC+PI) Registration Offer to exporter Assigning Standards (classification) Analysing supporting documents Receipt of acceptance, invoicing Scheduling inspection Payment delays Writing instruction to exporter& inspector Issuance of CoC Reviewing results Inspection Testing

Verification Of Conformity certificate One document: Issued by a competent and authorized company Required for each shipment and for customs clearance Printed on safety paper or electronic format

Used products without standards One document: Inspection Report Only Route A will be used as consistency in quality cannot be assured