Serious Issues Facing us in Zimbabwe

Source: Serious Issues Facing us in Zimbabwe

I have been involved in the Zimbabwean economy for over 60 years and have seen just about everything during that period. The Federation, UDI, the liberation war, the transition to Zimbabwe, the total collapse in the years up to 2008, the MAT in 2017. In this period, we have made many mistakes, some deliberate, others just because we felt we had to and others forced on us. However, right now some things need our attention!

Eddie Cross

 

Perhaps the first is corruption. Despite the formation of the Corruption Commission and many declarations, we still suffer from massive leakages of economic output and income. When I was in Parliament in 2012, I raised the wholesale theft of diamonds from the newly discovered Marange diamond fields. These covered nearly 100 000 hectares and in that year I estimated that we produced more carats than Botswana.

Production from this alluvial deposit started in 2006 and continues today. It was discovered by De Beers and then a small public company in London, was taken over illegally by the Ministry of Mines and then exploited by 6 companies, all linked to powerful elements in the Government, including the State President. My personal estimate is that Marange has produced nearly US$30 billion in raw diamonds since then. A third was probably absorbed in costs but the rest has disappeared. Mr Mugabe famously asked where US$15 billion had gone since mining had started. He knew the answer to that as I think he personally took US$1,3 billion.

Then the ongoing corruption in the fuel industry. This started soon after Independence with the formation of a State trading organisation for importing and distributing fuel. This was dismantled in the GNU from 2009 to 2013 by an MDC Minister but was reinstated soon after Zanu took back power in 2013. These corrupt practices peaked in 2014 to 2017 when world market prices tanked but prices in Zimbabwe were held at a higher level. During this period the President was again a major beneficiary.

Since the Second Republic, this network of corruption has largely been dismantled by the new Government, but if you are as puzzled as I am as to the hundreds of new filling stations opening up – all as independents and wonder why? I am told they are money laundering but I think there are millions of litres of fuel entering the country and not paying taxes or levies. The loss to the Exchequer must be almost as much as we spend on health each year.

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.

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