
Anyone anywhere who has tried to import materiel knows that paperwork is essential. Where you are depends on how tedious it all is. In Zimbabwe three import permits are required for plant material; a Plant Import Permit, a Control of Goods Act Import Permit and a National Biocontrol Authority Import Permit. So when I need to import the coir pith (coco peat is the trade name) that we use in the nursery as a propagation medium, I am filled with a sense of dread and resignation. It can be a tedious process, really tedious.
Compounding the issue is the Covid crisis. I have had an order in with my supplier in India for eight months now. Finally he said that he could source a container but it would have to come in via Durban in South Africa, not the shorter land route via Beira in Mozambique. I have had to use this route once before in 2014 so went back through my file; the C & F (carriage and freight) price to Durban had increased 200%. I don’t know how much of this was the container but I do know that thanks to Covid prices of containers have skyrocketed. There was nothing to be done about that; the imported medium is much better quality than the local medium, so I got on with the application process.
The Ministry of Agriculture building where two of the permits are to be applied for is quite close to where I live and fortunately well out of the CBD. It’s also had quite a makeover since I was last there just over a year ago for another purpose. The gardens have been spruced up and the parking lot and entry and exit made less hazardous off the busy Borrowdale Road that passes it. I suppose it’s a small expense compared with fixing up the disastrous state of the roads and public hospitals but I do feel it shows where the interest in spending money lies.
In order to start the process I had to provide a number of other documents. Several were company registration documents and easy to get copies of them from the accounting firm where they are kept. Another was proof of membership of the Agricultural Marketing Association (AMA) and despite the name I’ve yet to ascertain exactly what it does apart from take US$350 per year off me. I did notice that they had gone some way towards making applications entirely online.
They young man in the AMA office was pleasant and chatty. He took the completed forms off me and put them through the very large scanner/copier/printer in the corner of the room. “We are making every effort to go paperless” he commented. When I pointed out that it was a very large and new printer he did admit that it was a bit ironic. He was well informed and actually did know what coir pith was and what it was used for. The actual registering online took a bit of tweaking over the phone but I’ll admit to being impressed that it actually does work even it it’s not very intuitive. Zimbabwe is progressing in very select areas!
The permit application process at the Ministry of Agriculture was also surprisingly painless. The Plant Import Permit was ready within three working days and the Control of Goods Act permit two days after that. I didn’t have to queue long either! The Biocontrol Permit needs a declaration from the coir pith supplier but that can only be had once the coir is packed in the container and ready to be shipped. Apparently I can also apply for that entirely online. We’ll see. Of course fuel prices have increased markedly in the last month which was after I got the original quote so I haven’t dared to inquire what the new transport costs from Durban will be.

The long reach of the Ukraine – Russia war has got to Zimbabwean agriculture. At the annual ART (Agricultural Research Trust) Farm open day, held close to my nursery, the Deputy Minister of Agriculture exhorted the audience to grow lots of wheat this coming season. It seems that we import nearly 50% of our wheat requirement, mainly from Russia. No doubt this influenced Zimbabwe’s abstention at the UN meeting on the Russian invasion, as did Russia’s support of Joshua Nkomo’s ZIPRA faction in Rhodesia/Zimbabwe’s civil war that culminated in Zimbabwe independence in 1980. It was probably not lost on the audience that we wouldn’t be so dependent on wheat imports in the first place if the government would just get on with making land tenure a reality so that farmers would have collateral against which to borrow. Banks have made it clear that loans will not be forthcoming any other way. I guess there will be a bread shortage later this year.
Taxed if you do, taxed if you don’t
27 06 2022Zimbabwe’s dollar is crumbling for the second time. It last fell off the charts in 2008 so you’d think our finance ministry would know better. Apparently not. Inflation in local dollar terms is back in triple digits and, like the rest of the world, inflation in real money is also a problem – but one we can live with. The real problem is tax.
Given the problem with the local currency the reader would be correct to assume that those who can export products to bring in hard currency would do so (the breakfast bowl of fruit above were probably not export grade but they were delicious!). However, keeping the fruits of one’s labour is a bit more difficult. The government takes 40% of these export earnings and pays back the exporter in Zimbabwe dollars at the official exchange rate. As things stand the official exchange rate is around 360 Zimbabwe dollars to one US dollar whereas the unofficial rate, the one nearly everyone uses to price what you see in the shops, is about 650:1. So exporters are losing about 20% of what they get in as hard currency. If they then use this hard currency in an electronic transfer the receiver is also subject to handing over a portion, in this case 20%, to the government at the official rate.
One doesn’t have to be an exporter to have a Foreign Currency Account (FCA). My company holds one and I have received US dollars into it for some time now from a company for whom I grow gum tree seedlings which will, when mature, be cut for firewood for curing tobacco. They get US dollars in the form of a levy from tobacco exports. Yes, I can even go to the bank and draw out the money as cash though again there is a 3% levy on this which the government takes. Naturally people prefer cash deals which are not then banked though there is only so much one can “hide under the mattress”. Safe deposit boxes are a preferred option to the former but at the moment they are at a premium.
These FCAs also existed under the Mugabe regime but on two occasions during our hyper-inflationary period of the local currency they were raided by the central bank and the owners were paid out in Zimbabwe dollars which very quickly became worthless. The inflation in October 2008 was estimated at 4.3 million percent for that month. This is not so long ago that people have forgotten and there is a steady queue of customers in my local bank withdrawing hard cash, risks and levies notwithstanding.
Of course not all transactions require US dollars. The local currency is still used and indeed, the government has stipulated that customers must be allowed to use it if they want. Of course everybody makes it very attractive to pay in US dollars by offering a rate heavily stacked against the Zimbabwe dollar. One hardware outlet is well known for offering a discount on top of this, so they can say to any inquisitive official that they are using the official rate, but only if you actually ask the checkout person.
VAT is not particularly high at 14.5%. However, transactions over 500 Zimbabwe dollars (less than a US dollar) attract a tax of 2%. A number of transaction types are not taxed. These include tax payments (what, no tax on tax?), wages, insurance payments, medical aid payments and various others. One bank I deal with has a comprehensive list of non-taxable transactions, the other has a very short list for no reason that I can discern.
The Zimbabwe banking system is surprisingly sophisticated in some respects and dismal in others. Everything can be paid for online, taxes, transfers, insurance, social security. It doesn’t all work very well though and as a part-time programmer I am constantly irritated by lazy design and weak code. It is even possible to buy car licences online and the government can see from a database that one’s vehicle insurance is up to date. The paper discs for display on the vehicle are then delivered by courier to one’s address which rather spoils the efficiency.
Like nearly everywhere else in the world we have been affected by the Ukraine/Russia war. At the beginning of the year fuel was around US$1.25 per litre (it is ONLY available in US dollars!). Now diesel is $1.87 per litre and about 40% of that is government taxes and levies. No small wonder that inflation is running rampant. I saw a Reserve Bank announcement last week that the Zimbabwe dollar lending rate had been increased to 200% in an attempt to block speculative borrowing. It will have little effect – you read that here.
I have been paying my staff in a mix of local and US dollars for some time now. This month they approached me to increase the US dollar proportion. It wasn’t difficult to say yes given that my local currency accounts will hardly cover my own salary let alone their wage. Clearly they don’t have faith in the local dollar, unlike the President who is insisting it’s here to stay. For those with a bit of time on their hands try typing this into Google: “zimbabwe multi currency system to stay herald” (exclude the quotes). It’s farcical. Note that The Herald is the government-owned newspaper, so it parrots the state line.
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Tags: tax
Categories : Agriculture, Business, Social commentary