On Thursday the government of Zimbabwe announced an extension of administrative transitional arrangement on motor-vehicle importation under SI89 of 2021, and this is pathetic. The statutory instrument in question took effect on April 2, 2021 and was announced on the same day.
It noted that the importation of second-hand vehicles aged 10 years and above will be prohibited effective the next day following the announcement. The directive followed forward guidance by the Minister of Finance when he announced the 2021 National Budget. Consequent to the promulgation of the statutory instrument, Zimbabweans who had already imported vehicles or even paid duty on or before April 2 but were still to get full custody of their vehicles, were required to apply for an import licence through the Ministry of Industry and Commerce.
As this article will show, Zimbabwe’s endemic corruption has entrenched and further propagated over the four-year rule of Mnangagwa’s new dispensation. Not only has corruption increased, the government’s lack of policy craftsmanship has perpetuated, further deferring the dream of a new Zimbabwe where economic stability and investor friendly policies drive corporate earnings up, attract new capital and ultimately drive national produce up. I have shied away from writing about this story for two months for fear of personal and professional conflation.
So many times writers and economic commentators suffer from a defective telescopic view resulting in them postulating personal struggles as national struggles. This is a form of expediency, which over the long term diminishes one’s status as a reliable commentator.
However the more I have kept silent the more I have fallen deep into thought over the last two months. Each time I sink into thought one thing becomes clearer. Zimbabwe’s chances of charting a new economic course are close to none under the present government. I am one of the people who got affected by the Statutory Instrument. On March 24 I purchased a vehicle which was 10-years old and paid for its duty on April 2, the same day the SI was announced and effected.
Three days later we were given guidance on what to do to secure import licences and by the 5th I started engaging the Ministry of Industry and Commerce in Harare. In Harare there were three-point people at the ministry and on submission I was told to wait three more days. For two weeks I kept checking for the import licence and daily there were scores of people all saying they submitted around the same day I did.
In a single day a few names relative to the total number would be announced. In the process I observed that all the three-point people at the ministry were involved in bribes. It would take two days or even one for those who paid bribes to get their licences. Up to a month later, nothing materialised. The question in mind was, if Zimra has historically cleared all vehicles in real time, why would it require a month (later two months) to clear only a few cars bought over a seven-day period. It defies logic.
Now early in May, the Ministry of Industry and Commerce announced that it has returned the responsibility to Zimra and that Zimra was no longer going to require import licences so that the process is expedited swiftly. Zimra officials at Beitbridge, unlike those at the Ministry of Industry proved to be more skilled in the bribery act and demanded higher bribery amounts to clear the cars despite the minister’s promise. They even took longer than the ministry and would go for days without clearing a single car.
On May 31, almost all the outstanding vehicles in Zimra’s custody were released, all at once. This means the vehicles were being held as a tactic to attract bribes, because it would not make sense how Zimra would miraculously clear so many cars at once when they failed to clear even a single vehicle on some days.
This ordeal I suffered at the hands of government’s functionaries at the Ministry of Industry and at Zimra is just one of many that ordinary Zimbabweans and investors face everyday. It is these experiences that form citizens’ perception about their government. The premiums reflected on the currency, the political divergence, the adverse international perception and the high country-risk premium, all tap from this undying crookedness in our authorities.
These behaviours are indirectly sanctioned by the superiors through poor craftsmanship. If the government would have simply allowed all who had purchased their vehicles prior to the SI to possess them with a free passage, these corrupt activities would not arise.
Government creates environments conducive for corruption, thus entrenching it. Government could have made the announcement at least 10 days prior to its effect thus reducing the jam. While this would have led to speculation and hoarding, it would create a temporary 10-day jam which would immediately clear without creating layers of corruption.
The moral of this story is very clear. The government of Zimbabwe lacks tact and acumen in policy crafting, particularly on the economic front. The controversial Black Empowerment Act ranks high as a clear example of failed policy and policy inconsistencies. It created room for corruption as government cronies lined up for freebies shareholding from foreigners seeking to establish businesses locally. It also positioned the country as discouraging foreign investments.
In recent years, the rushed de-dollarisation of the economy backfired, with massive inflation and exchange rate weaknesses. A decision was later taken to roll it back, following which the macro environment mildly stabilised.
The cost of poor policies and policy implementation has been too hefty. Looking at FDI data, the country has continued to lag behind the region in attracting foreign capital over the last five years. Countries such as Mozambique and Zambia are faring better off than Zimbabwe. Portfolio investments via the ZSE are also dwindling, coming from a high of 65% turnover contribution to just 9%.
Foreigners are effectively fleeing the local scene on the portfolio investment front. The cost of storage accruing to the government on the vehicle I bought swelled all the way to US$900, which inflates its costs. Assuming this was a company car, it would mean that the cost base of a company doing business in Zimbabwe inflates and thus ceases to be competitive on a regional scale. When investors evaluate return on investment in competing jurisdictions, these factors play a key role in determining where capital flows to.
These are simple deductions which the government keeps overlooking. Without economic reforms focused on institutional restructuring it is inconceivable that the economy will sustainably rebound. Government must restructure its ministries and entities as it promised in the TSP of 2018, with a view to streamlining operations, observe higher corporate governance standards which means appointing competent and young personnel, unbundle or dispose of some entities, pursue partial privatisation in some instances.
Gwenzi is a financial analyst and MD of Equity Axis, a financial media firm offering business intelligence, economic and equity research. — firstname.lastname@example.org