Grocery smuggling: Curse or blessing?

Source: Grocery smuggling: Curse or blessing? – The Zimbabwe Independent

BY TATENDA NYAKUFA

The sands have shifted in the broad grocery markets in the country. Although it would have seemed anathema a few decades ago to have cross-border traders occupying swathes of Central Business District territory, this is now the norm in downtown Harare and to the daring ones even uptown.

Zimbabwe has over the years slithered into a largely informal country. With incomes no longer guaranteed on certain days of the month for a large part of the populace, the grocery buying patterns for such have also evolved.

Whereas in the past it was a common sight to see a family pushing trolleys purchasing groceries that would last them till the next pay-day, this spectacle now by and large belongs to the museum of yesteryear relics.

A very good number of people in the country who are doing informal work, can only guess how much money they will make today, tomorrow or next week.

However, for all the lack of surety on income, there is one definite need they have. They need to eat! Grocery merchants have waltzed in to attend to this need and for every mouth that needs food, they have created a market to suit not the size of the mouth, but rather the pocket.

Downtown Harare is now a line of small tuckshops catering mainly for bulk purchases.

Preference is made for purchases of cases and sets of products.

The transactions are all cash-based and no ATM card swipe machines exist in this world. The government loses out on the 2% IMT tax flat out. Not a dime, not a penny slips into the tax base from these grocery purchases.

For the poor of the earth, those in need of a cup of rice, a spoonful of cooking oil or a couple of slices of bread from a loaf there is also a market for them. The Jambanja and Tsaona markets and many others dotted across the country enjoy brisk business towards supper time daily and just as is the case with the downtown shops, the markets operate strictly on a cash basis as well.

Such has been the way of life for a number of Zimbabweans in need of groceries. However, a common denominator in all these cash markets is that the imported groceries would have mostly been smuggled or under-declared at the borders.

Questions have always been asked as to why most retailers prefer to engage in smuggling activities rather than paying due duties and taxes to the authorities.

The grocery business is a tight-rope venture, with wafer thin margins where the proverbial pennies all count. For merchants to turnover volume, they are always trying to lure clients by providing low prices on products.

A sizeable number of grocery retailers feel that the requirements to formally import basic necessities are excessive. The duties are high and getting the requisite import permits for some products is a cumbersome process.

They have consequently played cat and mouse with the tax authorities smuggling their groceries in trucks and buses across the borders.

Some people in the diaspora, realising that the purchasing power parity theorem does not really apply in Zimbabwe, have opted to send groceries instead of money to their beloved back home. The purchasing power parity theorem simply states that what you can buy with say R100 in South Africa should buy you the same amount of goods in Zimbabwe in the dollar equivalent.

Authorities, realising that smuggling is now rife at the borders have come out guns blazing. A number of teams have been dispatched to the border towns to thwart the smuggling of groceries and other illicit goods.

The teams are rotated regularly to avoid over-familiarisation with people in the areas they operate in. The teams are well equipped with vehicles that even include helicopters in their operations. A good number of trucks and buses have since been seized and ordered to pay the required duties.

Most of the people obtaining groceries from South Africa and Botswana belong to the middle to lower income brackets. The bulk of them being the poor section. It is not a question of them being aligned to crime that they avoid paying duties. They simply cannot afford the tariffs. Government should take time to listen to their concerns.

For as long as tariffs and import license requirements remain high, government and importers are waging a pyrrhic war. The amount of revenue that will eventually trickle into government coffers will be offset by the costs of maintaining the blitz operations to contain the smuggling of goods into the country.

A concise review of all duties and tariffs, as well as the limits on the number of items a person can import is required in order to find a lasting solution to stop this cancer of smuggling permeating through the country.

If duties and tariffs were to be lowered and penalties increased a lot of people would opt to pay duties for their goods rather than risk paying penalties.

It would also be prudent to raise the levels of technology at the border. The number of baggage scanners needs to be increased. Physical searches are prone to abuse. Money can easily exchange hands during physical searches and what is then written in the books might not precisely match what has been observed.

Having several blitz teams in operation at the borders is not a sustainable solution. Granted, some of the personnel deployed actually have their own businesses that retail the same groceries they are supposed to stop the smuggling of. If not them, then their wives and close relatives.

They are human and might be empathetic to those related to them and the state will lose out eventually. There is also a big possibility of them being enticed to accept bribes.

Humans are by nature greedy creatures and no amount of them being well remunerated or compensated would make them immune to bribery. There is always a chance that someone might accept a brown envelope in order to look the other way.

The solution to arresting smuggling also lies in technology at the borders. The number of CCTV’s also needs to be increased. If everyone were to be aware that Big Brother is watching their every move including when conducting physical searches, the incidents of false-declaration or even non-declaration would subside.

A one-size-fits-all big hammer solution to thwart inbound grocery smuggling might inadvertently result in pushing up the overall costs of food in the country exacerbating the suffering of the poor. Efforts should also be pinned on a greater evil, the illegal smuggling of precious minerals and tobacco outwards rather than putting much focus on just inbound buses and trucks carrying washing powder and cooking oil.

Nyakufuya is a businessman and an ex-banker.

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