US$ bn lost through fuel smuggling . . . Practice spirals out of control
THE omission of debate on smuggling at the country’s ports of entry belies the wholesale and industrial scale with which goods are being dumped on the local market.
IT IS nothing short of jaw-dropping.
Every year, the country is losing more than US$1 billion from fuel smuggling alone, according to latest statistics from the Zimbabwe Revenue Authority (Zimra). And at US$1 billion, smuggling from only one sector of the economy makes up almost 36 percent of the country’s exports last year (US$2,8 billion).
“Since smuggling is done clandestinely and most of it goes undetected, it is difficult to quantify, but the cost could run into billions of dollars,” said Mrs Willia Bonyongwe, Zimra’s board chairperson, to
The Sunday Mail Business last week. “But just to give a rough indication, in our discussions with Zinara (Zimbabwe National Road Authority) as the Zimra board, and for traffic through designated entry ports, it has been estimated that only 40 percent of all trucks claiming to transit through Zimbabwe actually do so. . .
“These trucks could be carrying vehicles, electrical goods, consumption goods, clothing et cetera.”
Worryingly, this seems to have been happening for a long time.
According to the taxman, after the introduction of 100 percent sealing of all fuel tankers a fortnight ago, only 40 percent of normal transit fuel trucks were processed, while “others returned to Mozambique; others up to now have not presented their documents for clearing”.
“We have been told others have indicated they are no longer transiting and have paid their duty,” added Mrs Bonyongwe.
But this is just one shade of a seemingly well-orchestrated racket involving goods such as basic commodities, household goods, blankets and clothes.
The sheer scale of this scam is however frightening; it is not just small-time mules, but huge haulage trucks that are used to smuggle goods, particularly at Beitbridge Border Post.
The Sunday Mail Business last week witnessed, first hand, countless vehicles in South Africa’s border town of Messina loading an assortment of goods - currently restricted under Zimbabwe’s law - for onward smuggling into Zimbabwe through undesignated entry points.
More than 42 goods were removed from the open general import licence, which allows goods to be imported freely, through Statutory 64 of 2016.
Unsurprisingly, these are the same goods that adorn pavements of various cities during the night.
But street markets have one major draw-card as compared to conventional brick-and-mortar shops: Their prices are ridiculously cheaper.
Most downtown retail shops also serve as conduits through which some of the smuggled goods are sold, but only on a strictly cash basis.
It is a well-organised parallel market and economy; well beyond the reach of market watchers.
Blankets, cooking oil, coffee creamers and body lotions are some of the goods that are smuggled the most.
So big has the business become that it is now even threatening the recovery of local industries.
Other ports of entry affected as well
But while smuggling is rife at Beitbridge Border Post, which provides a gateway to Africa’s biggest economy, South Africa, the problem is affecting almost all the country’s entry points.
Mrs Bonyongwe said: “Yes, the issue of smuggling using undesignated points is a serious one at Beitbridge, and we are all concerned about it. People are using the old bridge and the Limpopo river bed as a way to smuggle goods into Zimbabwe.
“The border fence is also broken. We have received reports that the malaicha are offloading 30-tonne trucks of goods, especially those which fall under SI64 from the South African side and in an hour load it to another truck on the Zimbabwe side through the old bridge without going through immigration or Zimra . . .
“At Forbes from the border post you can see smugglers using side roads carrying 200-litre containers of petrol or diesel, bales of clothing et cetera. “Besides there are cars which pass through Mary Mount (it has the activity of a border post). Also fuel trucks through Penhalonga, Burma Valley, along the Plumtree border.”
Beyond Zimra’s capacity
She noted that while all these challenges are known, they are beyond the capacity of Zimra alone.
What is however alarming is that it is not known what all these trucks are bringing into Zimbabwe.
Though the Authority has steep penalties against offenders, which include recovering duty forgone plus penalties, it is believed that the incentives and rewards for successfully disregarding the law are even higher. More, it seems, still needs to be done. It is believed that “drastic solutions” are now needed to tame corruption, which has become so pervasive.
Cross-border traders blame Zimra
Zimbabwe cross-border traders however think differently.
Last week, president of the Zimbabwe Cross Border Traders Association (ZCBTA) Dr Killer Zivhu said interminable delays at border posts often force traders to skip immigration and tax formalities.
“Zimbabweans are generally law abiding by nature and would ordinarily want to pay tax,” said Dr Zivhu.
“But the problem we have is with the frustrations we get from the tax payer. Let’s take the Beitbridge case, for example, people are subjected to serious delays at that port of entry and at the end of the day they end up smuggling and or bribing their way out because they can’t endure the delays.
“Zimra wants to search each and every traveler one-by-one, yet they don’t have enough manpower to conduct those searches on time.
“Then you have cases where a trader goes at length in search of the cheapest products internationally and when they come to our ports of entry, the tax collector says ‘no, your receipt is fake; we therefore can’t accept it but rather we check the correct value on the internet’.”
National Ports Authority
Government is currently working on the establishment of a National Ports Authority (NPA) as a way of improving efficiency at the country’s ports of entry and curbing smuggling.
Transport and Infrastructure Development Minister Dr Jorum Gumbo indicated at the beginning of the year that the law that will give legal underpinning to the envisaged entity is currently being drafted.
South Africa has an equivalent of this authority and its mandate is to take a lead in sustainably running ports of entry affairs and coordinate state stakeholders.
The Department of Immigration; Zimra; the police, Ministry of Health, the Environmental Management Authority and security agents are some of the state actors at all the country’s ports of entry.
It is understood that the NPA will play a supervisory role over these actors to improve efficiency.