Largely because the Minerals Marketing Corporation was disabled by US sanctions, under pricing of exports has become endemic. The CEO of the Corporation was killed in mysterious circumstances and I am convinced it was because he was threatening illegal or under valued exports. The murder of the head of the Zimbabwe Investment and Development Authority was in similar circumstances.
Then there is the whole culture of corruption in every sector of the Governments activities. The news that a Clerk in a Ministry had used her senior signature to falsify imports of 3000 vehicles duty free, the loss to the exchequer must have been US$20 million. She has done a runner. In 2022 the State collected just US$484 million in custom duties at our borders, we imported US$1.4 billion in cars alone and over US$7 billion in all imports. Just do the math, the tax revenues should have been several times that amount.
It is well known that in certain Ministries if you want a decision of any sort, you have to pay for it. I was approached by a senior Civil Servant for a bribe to sign a letter, I said but surely that is your job. I was told ‘do you think we do this sort of thing for nothing’? I did not pay the bribe and did not get the letter. It has become a culture just as the former head of the Kenyan Anti-Corruption Agency wrote ‘it was our time to eat’.
This scrouge soon also infects the private sector. The statement by the Dubai Gold Exchange that in 2023 they bought nearly 450 tonnes of gold from informal origins in Africa. That is US$32 billion dollars’ worth, a third from Zimbabwe. No wonder we are awash in US dollars in cash. Right now, up to 700 000 small scale informal miners are out there mining gold to feed their families, that is why we do not really have a food crisis in what has been a disastrous season. But much of this huge flow of cash never comes home.
Add all this together and you can see why I argue we are a rich country, made poor by bad governance in both Government and the private sector. Just look at our informal sector, we are probably the most informalised economy in the world. That whole system does not pay taxes, does everything to avoid its obligations leaving the formal economy to support everything else.
But then also you have to try to understand why those companies who paid for foreign currency on the RBZ auctions have not been paid back after the auction was closed down. I understand all exporters are having 25 per cent of their gross export earnings liquidated, but no consequential payments in local currency are being made. How long can these vital companies to our economy survive? I simply do not understand this situation.
Surely also the State must understand that our tax system has far exceeded the level at which tax proceeds start to decline. The VAT on basic foods? Are we crazy? 30 per cent VAT tax on live cattle sales when the sellers (90 per cent rural peasants) do not have a current valid tax certificate? I think the young people rioting in Nairobi had a real case. The response by Ruto was measured and quick. We simply accept this totally unacceptable situation and go on with life as usual. Our Government needs to recognise that this situation simply cannot go on.
By Eddie Cross
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