The Sunday Mail
Howdy folks!
It is refreshing to note that our Government is upgrading the security of our official entry points by installing security devices such as CCTVs, scanners and checkpoint devices, with a view of curbing corruption.
I remember arguing in a piece titled “A sovereign nation without borders” that no amount of tariff protection or embargo will achieve its intended goals, as long as our borders are porous. While our national budgets might appropriately impose tariff interventions to promote the incubation and growth of our local industry, those efforts would be futile when the borders are simply letting the very protected products pass through without paying duty.
The bottom-line, for the billionth time, is we need to secure all our official ports of entry and disinfect them from rent seeking elements bent on sabotaging our economic programmes. We should set our economy in the right channel. The mechanisation of our borders is therefore a long overdue endeavour which ought to be given all the attention it deserves. But the problem is not only with informal ports of entry.
The real darkness eclipses when we mention the issue of illegal ports of entry that are ironically more numerous than the official ones. This is where some of the protected imports are channelled into the country like nobody’s business.
My message to Cde Chombo (Minister of Home Affairs) is that we need a holistic and robust approach in taking care of the stinking mess at both our formal and informal borders. It can only work that one way!
Otherwise, we will continue to have imports that are surging every other year, with no meaningful customs duty to show for it, and that alone tells you that something is not okay.
While our imports for the preceding year were projected at a whopping US$6,3 billion, our revised customs duty target of $328 million for the same year doesn’t do justice to such a huge volume of imports, folks, does it? It only represents an actual average duty of 5,14 percent; which is much lower than the 40 percent average duty we get when we use the duties in the tariff handbook. So how do we reconcile that?
Then we have central bank governor (Dr John Mangudya) calling upon business to take advantage of the weak South African rand to import raw materials and capital goods, a noble idea at face value, albeit leaving some of us with reservations.
All our raw materials and capital goods do not come from our sister across the river alone. They also come from countries whose currencies are gaining to the US dollar, like the yuan. But my point really is on the availability of liquidity to import capital. You see, capital acquisition requires the availability of concessionary loans, given that the industrialists operating with antediluvian machinery always highlight that they do not have access to facilities they can tap into to upgrade in line with international trends. So it bounces back to the liquidity court.
But what must also be noted is that the National Budget only gives rebate on customs duty and VAT on capital equipment imported by the mining, agriculture, manufacturing and energy sectors for equipment valued at US$1 million and above.
Anything below that huge figure doesn’t accrue that VIP treatment. So much for the need to promote the “small man” (SMEs) that the man who reads the same budget defined as the new important man in the republic! Again how do you reconcile that?
I am also sceptical about the proliferation of assembly plants being set up in the country by foreign international corporations. While these corporations create employment and contribute to the national fiscus through the various taxes they pay, we have to also understand the other side of the coin. Why set up assembly plants and not manufacturing plants that significantly add value to our local resources?
The usual approach with most of these assembly plants is to just break down their finished products into components manufactured from elsewhere and pack them in boxes. The components pass through our borders as raw materials or intermediate goods, and the tax-man is automatically instructed by his tariff handbook to be as kind as they could be in the treatment of such consignments, duty wise.
Once the components have crossed into the republic, all it takes are a few men with simple screwdrivers to patch the components together and mount them into finished products that are “proudly Zimbabwean”.
No high setup costs wanted here, no fancy plant to talk about and therefore no real commitment to the whole industrialisation agenda but a speculative approach to tap into the market that is US dollar dominated. Since there is no real infrastructural commitment laid out, when things become more attractive elsewhere, they can simply pack their screwdrivers into their toolboxes and hurry to the next victim, I mean country.
This economy does not need selfish speculators for it to turn around the corner. It needs those who can stand with it through thick and thin. This speculation is also cascading even to the citizens of the country who are supposed to know better. When you look at the tobacco-cotton-maize production triangle, you get a glimpse of what I am talking about.
Folks want to be in it just for the money, quick buck, while disregarding the cardinal virtues such as quality. Most folks who thronged into tobacco growing last year were mainly attracted by the prices of the golden leaf. So anyone with a hoe tried the crop, dedicating vast tracks of land into the crop without giving attention to quality.
At the end of the day, their tobacco did not attract the attractive prices that had initially provoked them. lt condemned them to the poor quality group where they were given peanuts. And yet, in all this, the price of good quality tobacco has never changed over the past half-decade. The “how do they expect me to return to the field” mantra did not save them.
So they renounced the ‘wicked’ tobacco this year. Now TIMB says only 89,559 hectares is under tobacco this year, compared to 93 419 hectares from last year, with the number of farmers registered to grow the crop also declining by 20 percent.
Some are probably now trying cotton, being lured by the free inputs that were being dished to those growing the white gold and perhaps having heard prospects of the Cotton Marketing Board.
Such kind of selfish speculation will only trap us in the vicious cycle of poverty. Let’s do away with it.
We need to develop sincere passion and think about delivering quality before money is delivered to us.
Later folks!
