Zimra can't monitor 90% of transit trucks

THE Zimbabwe Revenue Authority (Zimra) is failing to effectively monitor more than 90 percent of cross-border trucks that transit through the country, meaning these can easily be used as conduits to smuggle both food and non-food items.

Industry is thoroughly displeased as most of the smuggled goods - retailing at prices lower than locally produced goods - are militating against efforts to rehabilitate an already sagging manufacturing sector.

Some of the haulage trucks passing through Zimbabwe's borders to countries such as Zambia, Malawi and the DRC are allegedly being used as Trojan horses to dump illegal, cheap and sub-standard goods onto the local market.

Industrialists from the country's two biggest representative bodies, the Confederation of Zimbabwe Industries (CZI) and the Zimbabwe National Chamber of Commerce (ZNCC), convened a meeting in Harare last week to interrogate how best to defeat smuggling, a practice that is making many local businesses uncompetitive.

Due to lack of capacity, Zimra can only examine under 10 percent of all cargo freight passing through the country's borders, making Zimbabwe a smuggler's paradise.

"Zimra does not have 100 percent capacity to do total examination of trucks coming in the country. We can only manage 5 to 8 percent," Zimra's head of compliance and risk Mr Adrian Swarres told the meeting which was jointly organised by industry representatives and the Industry and Commerce Ministry.

Industry is lobbying the tax authority to work with the Zimbabwe National Road Administration (Zinara) and leverage on the latter's toll gate system to help tighten control and boost efficiency.

"Zimra needs to constantly monitor trucks in transit all the way until they leave the country . . . There is also need to capacitate SAZ (the Standards Association of Zimbabwe) to enable them to scrutinise imports and ensure they meet the right quality and standards," said ZNCC vice-president Mr Davison Norupiri.

But analysts believe this could be a costly and arduous proposition.

In 2010, Treasury recommended that Zimra introduce the electronic cargo tracking system (ECTS). Four years later, nothing concrete has materialised.

ECTS relies on a control centre and automatic devices. Devices are attached to trucks to constantly give feedback such as the vehicle's location, speed and status of the container to the command centre.

It also reports whether a truck has been tampered with or not.

If the device gives information that is contrary to that declared earlier, for example, goods being dumped, customs officials are able to act almost instantly.

Kenya and Uganda mulled adoption of ECTS around 2010 and have already successfully introduced the system.

Uganda introduced the system in March last year at an estimated cost of US$5,2 million (13 billion Ugandan shillings)

The Uganda Revenue Authority believes that through the innovation it will be able to facilitate trade through timely execution and cancellation of customs bond guarantees for cargo in transit.

In Zimbabwe, customs clearing for road cargo is quite lengthy, taking up to four days compared to one day on the South African side of Beitbridge Border Post.

Imports are forecast to top US$8 billion by year-end, according to Government estimates. However, this figure excludes the value of imports that slip through border controls undetected.

RBZ Governor Dr John Mangudya said in September US$5,8 billion worth of grey imports had entered the local market between 2009 and June this year.

Zimra believes transit cargo is posing serious challenges to both the authority and the clearing agents involved.

The authority is losing significant revenue through goods that are being dumped onto the local market without paying the required customs duty.

Last week, Zimra reported that it had missed its third quarter revenue target by 9 percent at US$885 million. During the review period, customs duty collections missed a US$117 million target by more than 25 percent.

SAZ has since 2009 been lobbying for establishment of the National Quality Regulatory Authority to protect consumers from sub-standard imports.

OK Zimbabwe chief executive officer Mr Willard Zireva said efforts to resuscitate local industry would fail if illegal imports were allowed to flourish.

"Grey imports are a disaster to this country," Zireva told the CZI/ZNCC conference. "It is surprising to see lots of cooking oil in areas like Machipisa and Budiriro, selling at cheaper prices (than in retail outlets) and you wonder how it gets through our borders. This certainly hurts (cooking oil producer) Olivine, for instance; consumers will go for the cheaper product."

Cooking oil manufacturers make up a sub-sector that has been able to buck the down-trend in the manufacturing sector.

Local producers currently have the ability to meet local demand.

The sector has capacity to produce 12 000 tonnes of oil a month against demand of 10 000 tonnes.

Smuggling has emerged as one of the biggest threats to domestic manufacturing, according to the Ministry of Industry and Commerce Advisory Committee on the Ease and Cost of Doing Business in Zimbabwe.

The CZI 2014 Manufacturing Sector Survey Report released in October blames the tax man for high system inefficiencies and complex import procedures that work against efforts to revive industry and improve the cost of doing business.

Industrialists say corruption at border control points was rife, tariffs were unsustainably high and the process of raw material imports cumbersome.

Presenting the survey results, CZI senior economist Ms Daphne Mazambani said: "Issues that required urgent attention were Zimra-related problems such as huge taxes, high fees and licence costs".