Economists say the Zimbabwean government’s proposal to allow civil servants to import a vehicle free of customs duties starting in January is ill-conceived, warning that the program is an invitation to corruption and will seriously cut into customs revenues the country badly needs to boost the recovering but still-fragile economy.
The economists said the scheme may seem a noble gesture to help economically struggling state workers who are earning well under the official poverty line. But they say the main beneficiaries will be senior officials set to receive official loans for cars.
Economists said some civil servants will end up serving as so-called straw men buying duty-free vehicles on behalf of family and friends.
Even if not all of Zimbabwe's 235,000 civil servants import cars, the Treasury is expected to lose millions revenues as vehicle import duties range from 60 to 100 percent.
Economist John Robertson said the duty-free vehicle scheme if implemented will become an institutionalized form of corruption. “It will certainly certainly divert scarce foreign currency towards things which are not going to be productive and might slightly increase earnings of people who are not very productive,” said Robertson.
Economic commentator Rejoice Ngwenya said there is no way the government can come up with a mechanism that will prevent abuses of the program.
The government proposes to offer senior civil servants loans of US$7,000 apiece to buy vehicles, which many Zimbabweans have complained is a further inequity.
The proposal by the government closely follows warnings by Finance Minister Tendai Biti that wrangling in the unity government and the uncertainties of an indigenization drive will put a drag on growth with the economy seen slowing to a 7.8-9 percent rate in 2012.
Biti said growth was also vulnerable to a dip in commodity prices.