Import ban: Catch 22 for ZIMRA


The much-needed revenue, collectable through ZIMRA hasdwindled terribly

By Kapeza Kapeza

GOVERNMENTS obtain the bulk of their revenues from tax collections and returns made from State enterprises.
In our case, it is the duty of the Zimbabwe Revenue Authority (ZIMRA) to do the collection on behalf of government.
Taxes take various forms that include import duties, employment taxes and corporate income taxes. A functioning economy makes for a great revenue source.
In return, government needs to ensure that appropriate infrastructure and economic policies are in place to create, improve or enhance economic activity.
The Zimbabwean economy, for a while, has been a case study across the globe, chiefly for the wrong reasons.
Across the globe, the plummeting of gross domestic product per capita, record breaking hyperinflation and poor, if any, property rights are not a good sign of a thriving economy.
Closer home, we are heaving the weight of rampant unabated corruption that does not spare the custodians of government.
What is worse, lately it has even become somewhat fashionable for senior government officials to brag and be unapologetic about wasting State resources and indulging in wasteful unethical behaviour.
All these are reasons why Zimbabwe remains an unattractive investments destination.
Poor investments inflows into the country contributed to the crumbling of industry and commerce.
In the absence of assuring and consistent policy, it is common business sense not to invest.
And so the economy suffers, the government takes a limp, too.
The much-needed revenue, collectable through ZIMRA dwindled terribly.
There is no meaningful manufacturing and other industrial activity.
The reason why unemployment is rife and informal sector was almost thriving until recently.
As a concession, Zimbabweans attempted to bridge the gap created by the dying industry by largely supplementing commodity shortfalls.
In isolated instances, the local products would not compete due to price disparities promulgated by inefficient and antiquated local manufacturing equipment and processes.
With a shrunk industry struggling to compete on a regional scale, the revenue authority naturally suffers poor revenue collections since company performance is affected in one of two ways.
Either the volumes are so low as a result of price competition against alternative imports or the old production processes makes it impossible to turn a profit on commodities that may have otherwise been made at even lower costs.
Either way, the outturn is poor contributions to the fiscus.
However, the imports had presented a ‘false’ relief to the authority in place of the lost revenues.
It is common practice that governments protect local industries in order to sustain economic fundamentals such as employment.
What is important is to note that all other variables need to be equally attended to.
Focusing on just one variable will not do the magic, more so, when it can be perceived to be for selfish gains. Our current industry needs more than protection. It needs an enabling environment with clear and pure business policies. Sincerity, too.
These are the key ingredients that are so glaringly amiss.
Not to mention that even ministers sometimes come close to fist fights when they fail to interpret the same policies and laws that are supposed to make sense to an investor.
Meanwhile, the coffers are dry.
The small duties and taxes collectable at borders are swept away.
To the taxman, the tax targets remain set and high against even fewer options.
The sad part, the rules and instructions come from the same master, the government. No easy way around this paradox for ZIMRA.
A senior minister, recently, is on record alleging the protection is meant to protect, as is the case the world over, the local industry.
This could be genuine misapplication of economic fundamentals to an inappropriate environment.
Worse, it could be sheer masquerade of ignorance or convenient pretense of economic principles.
Sadly, these fundamentals cannot be controlled by being loud mouthed or false economic intelligence, or lack thereof.
The market fundamentals provide a sound basis of such evaluation of policy. In such economic principles and sound governance ignorance bliss, objectivity and genuine market reaction has been misconstrued to be a political drive.
Meanwhile, revenue statistics as well as other economic variables continue to reflect a sad trajectory. ZIMRA keeps missing revenue targets.
Government has inadequate revenues to meet recurrent expenditure, not to mention capital projects. The ‘protected industry, at best, barely turns a profit.
Desperate for survival, government and the populace lock horns at every turn. Innumerable police (‘revenue’) roadblocks, ridiculous statutes, taxes and duties are imposed and enacted, probably without due and relevant consultations.
As argued before, the market has its own way of responding to such economic stimuli.
No wonder, the recent past has been marred with unpleasant incidences triggered by paradoxical economic fundamentals misinformed by arrogance born out the know-it all attitude.
One thing is certain; the market always has and always will respond to economic stimulus.
The same reaction is almost always a direct dictate of what hits the fiscus.
In our land, the statistics are loud enough even for the ‘economics illiterate.’

Kapeza Kapeza is a senior business consultant with Franlink Consultants, registered public accountants and auditors. He can be contacted at or
Follow us on Twitter @FingazLive and on Facebook – The Financial Gazette