eBusiness Weekly
The Zimbabwe Revenue Authority (Zimra) says the country should not fear losing revenue when it starts implementing the Africa Continental Free Trade Area (AfCFTA) protocol as it will still be levying other indirect and domestic taxes besides import duty.
The AfCFTA agreement came into force mid-last year, becoming the world’s largest free trade pact since the establishment of the World Trade Organisation in 1994.
The pact seeks to create a single market for goods and services, free movement of people and eventually a Customs Union with a common tariff for the continent.
It is expected to create a market of over 1.2 billion people with a Gross Domestic Product of $2.5 trillion.
Zimbabwe had initially asked for a waiver to implement the agreement until after 15 years to give its economy time to prepare and re-industrialise following sanctions induced hardships faced in the past two decades.
But at the recently held African Union Summit President Emmerson Mnangagwa said the country would immediately start implementing the agreement in the spirit of ensuring the continent achieves its objectives.
Zimra Commissioner General, Faith Mazanhi said while the country would lose out on revenue as some goods would be coming in duty free or at reduced levels, it would still benefit through other indirect taxes.
“The revenues that are forgone in terms of import duties and taxes on inter-Africa trade will be replaced by other taxes such as indirect taxes and other domestic taxes,” she said at a tax review meeting.
“The overall impact of AfCFTA over the long term is expected to improve Africa’s economies as well as the health of businesses operating within the region.”
Zimra is the sole funder of the government budget as Zimbabwe, unlike other African countries, is not getting any external budgetary support.
Mazanhi said the country needed to position its industries to be able to compete in a wider African market if the economy is to benefit from implementing the continental trade protocol.
She said Zimbabwe, through ZIMRA and other stakeholders, had started to position itself to take advantage of the AfCFTA by accelerating infrastructure development at its border posts.
The government has also announced intentions to develop dry ports in Bulawayo, Makuti, Masvingo and Mutare.
“Initially, the dry ports will assist in decongesting our border posts, but ultimately they are meant to provide accessible markets of goods imported from Europe and Asia for our neighbouring countries up north,” she said.
Existing border posts including Beitbridge and Chirundu will be upgraded into one stop border borders to improve efficiency in facilitating trade Zimbabwe and its neighbours. – New Ziana