eBusiness Weekly
Gertrude Mawire
On January 26, 2018, the Minister of Finance and Economic Development promulgated Statutory Instrument 9 of 2018 in an extraordinary gazette. If my memory serves me right, this was a fire fighting measure after chaos had reigned at the borders.
There were long queues stretching kilometres into the South African territory in Beitbridge and well into Zimbabwe in Chirundu.
As far as this author was concerned, this chaos was a result of the Zimra’s Asycuda World Automated systeam failure. The local press reported that Zimra had been operating using servers well below capacity and finally the pressure of increased year-end transactions likely resulted in the failure. There were issues regarding the bureaucratic nature of the procuring processes for the servers as well.
In an effort to correct the situation, it was concluded that the current Statutory Instrument 154 of 2001 Customs and Excise General Regulations pre-clearance provisions were not adequate or appropriate for the resolving of the problem at hand. SI 9 of 2018 therefore made it mandatory for all imports coming by road to be pre-cleared. Imports coming by any other mode of transport like rail or air could also be pre-cleared.
On the ground, this legal arrangement never really materialised. This was because of various reasons which we will touch on in this critique of the latest Pre-clearance regulations Statutory Instrument 260 of 2018.
Again the disorganised nature of our Zimra processes had resurfaced. Around the week ending October 27, there were queues of trucks going up to 16km into Mozambique at Forbes Border Post. The congestion was apparent and a lot of dust was raised.
The Minister of State for the Manicaland province made an ad lib visit to the border and was told that importers and agents were not making use of the pre-clearance facility according to a news report titled “Government cracks whip on clueless Forbes Border Officials” on the 25th.
The Agents blamed Zimra’s long processes for the long queues.
The minister was quoted as having said; “Those who do not want to pre-clear should be fined or something. Make it a condition that people should utilise the pre-clearance facility before they come so that we ease our ways of doing business.”(sic).
A month later SI 260 of 2018 came through. We only needed a single parliamentary sitting to address the lack of use of the pre-clearance facility. Nothing was done to address the long Zimra processes? Or maybe it was in a rather strange way? Trucks were put on embargo and sent to the GMS facility.
For me, this was yet another extension to the process because this implied that a physical examination would have to be conducted on the truck.
At least the minister would not have to be subjected to the long and offensive queues which would taint our image as a country.
Only the importers and their agents would have to endure a longer clearance process and dollar haemorrhage in payments to GMS. Other trucks were also placed on embargos to Harare container depots. More costs to the importers, transporters and agents. Talk about facilitation of trade.
With the coming of SI 260, pre-clearance is now “more” mandatory for all road imports. Failure to abide, the importer/agent will face level seven fine (currently $400) or a six month imprisonment or both!
Does penalising importers and their agents for failure to pre-clear shorten the length of queues? Is the operating environment conducive for pre-clearance?
Before SI 260 came Zimra continued to send trucks to GMS whether they had been pre-cleared or not. Its internal procedures require 100 percent physical examination of all pre-cleared shipments. This shortened the queues in the border area, but did not ease congestion for Zimra. As one clearing agent put it, it is simply moving a problem from point A to point B.
As I write, the congestion at Forbes Border Post is still there despite the submission of pre-clearance documents by the Importers. The threat of fines and imprisonment to Agents has unfortunately not translated into more efficient processing of documentation by Zimra. This author acknowledges that pre-clearance if properly implemented is quite a boon for trade facilitation.
It would certainly ease congestion. But if a pre-cleared truck still has to go for a physical examination and as one agent said “after a PE, you can wait the whole day for the PE results then pre-clearance becomes useless. You will still have to do other processes in order to secure release of the shipments resulting in clearance delays. There is therefore absolutely no incentive to pre-clear except the fear of being penalised.”
The current compliance environment does not fully support pre-clearance. The importer has too many variables to put in place before bringing in the goods which means they need a lot of time to plan for importation. The longer the planning time, the riskier it is as lot of variables could change. Pre-clearance becomes inappropriate in such cases.
For example, take product like butter. Of the importer’s worries (assuming no origin preference is being claimed) very high duties have to be budgeted for made up of 40 percent duty plus 25 percent surtax and VAT of 15 percent.
Other minimum compliance payments include permit fees for veterinary permit ($25); import licence ($30), AMA support letter, biotechnology permit ($30) and agriculture permit ($30). The time taken to put together all these permits can be up to two months.
It is also not guaranteed that all the permits will be obtained; there may also be reductions in approved quantities. The importer has to worry about the transport issues as well. Zimra and other government departments also need to note that these documents have expiry periods too.
A lot of things could change such that pre-clearance documents might be completely different from the final shipped shipment. To make matters worse, Zimra will fine you heavily if any discrepancy is then found during a physical examination.
To top it all the Asycuda World system is very inefficient when it comes to making changes to an already registered bill of entry. Documents take long to attach or fail completely.
Importers and their agents really should be left to decide on whether to use pre-clearance or not until Zimra has refined its operating procedures. Harsh fines are not necessary at all. It should not be mandatory to conduct PEs on all pre-cleared shipments.
Importers and agents should desist from corrupt tendencies, learn so that they improve the quality of declarations to Zimra to minimise queries. Offering bribes to jump the queues causes confusion and discontent among the importers.
The use of Zimra structures in resolving challenges at the borders is OK, however, if overdone there is a level of underhandedness and inherent corruption in it. Not everyone will have access to the higher offices.
We need to remember that this is business, Zimra clients (importers/agents) should not have to suck up to senior Zimra officers in order to get a good service. Importers and their Agents would choose pre-clearance if the environment was conducive.
Disclaimer: This Article is not meant to create a consultant/client Relationship. Readers are advised to consult their Consultants for specific advisory services.
About the author: Gertrude Mawire is a Fiscal Compliance and Investment Advisor based in Harare. She writes in her personal capacity. Gertrude, a member of ZNCEE ( customs & excise experts) holds an MSc in Finance & Investments (NUST) Bachelor of Business Studies (UZ), IOBZ Diploma various other Certificates. She can be contacted on [email protected], 0712 437 256, 0772 336936.
