South Africa’s recent ban on imported second-hand cars driving on South African roads is beginning to hurt the Zambian economy, which has traditionally depended on motor vehicle imports for a portion of its tax revenue.
After a protracted two-year legal battle in which clearing and shipping agents challenged the 2005 ban of used cars from using the roads, the Supreme Court of Appeal in Pietermaritzburg last month upheld the ban.
Importers of used cars from South Africa and beyond are now required to transport their vehicles on carrier trucks and cargo trains up to Beit Bridge before driving them into neighbouring SADC member countries.
Kingsley Chanda, former customs and excise commissioner with the Zambia Revenue Authority (ZRA), told the Mail & Guardian that the development would affect the ZRA’s revenue levels as motor vehicle imports are among its chief revenue earners. The current customs and excise commissioner, Muyangwa Muyangwa, declined to comment.
”Transporting cars by trucks will be expensive, will add to the cost of imported cars and might result in lower importation levels. The number of imported vehicles is likely to drop,” Chanda said.
Other import routes, such as from Beira in Mozambique, Mombasa in Kenya or Dar es Salaam in Tanzania, are possible alternatives but there are concerns about security and bureaucratic bottlenecks on these routes.
Sources within the ZRA told the M&G that the loss of revenue in the wake of the new development would be enormous. ”Durban has been the busiest and most popular source of imported cars. We have been clearing a minimum of 50 cars every day from South Africa through our main border areas at Chirundu, Kazungula and Katimamulilo,” said an insider who did not want to be named.
”It is a very sad development not just for ZRA but also for the whole country because it means that we shall soon see a definite reduction in revenue.”
Zambia charges up to 60% in taxes on all imported vehicles. Finance Minister Ng’andu Magande announced in his 2007 national budget earlier this year that taxation on ”selected motor vehicles [would increase] by five percentage points”.
Bernard Lungu, national treasurer for Self-Help Motor Sellers Association, one of the country’s largest car dealers, said that in addition to finding ”alternative cheaper routes”, his association’s members had been forced to slap an additional fee of between R1 500 and R3 000 on all imported cars.
”The increase has been necessitated purely by market forces. It has been necessitated by the increase in the importation of cars from Durban to Beit Bridge where we are now required to pay about $700 [R4 200] to transport a vehicle by truck. We are incurring more costs in the process and what we have done is to merely add the amount that the carriers are costing us [to the selling price],” said Lungu.
Trade experts are querying the South African government’s decision, saying that it might contradict the SADC trade protocols that seek to promote the free flow of goods and services. Both South Africa and Zambia are members of SADC.
A ministry of foreign affairs spokesperson, Mushaukwa Lubinda, however, advised Zambian motor dealers to respect the South African government’s decision, saying: ”The general public should abide by the ruling and refrain from driving vehicles from Durban to Zambia to avoid being inconvenienced. Buyers who have sufficient funds to put their vehicles on carriers or cargo trains may still buy imported second-hand vehicles from South Africa and beyond.”