HomeOpinion & AnalysisColumnistsDelays in banning second-hand vehicles welcome

Delays in banning second-hand vehicles welcome

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The plan by government to delay by another 12 months the ban on the importation of left-hand drive cars and second-hand vehicles that are more than five years old is both considerate and progressive.

Considerate, in the sense that Zimbabwe is a low-income country.

The country is coming from a decade of economic meltdown which eroded the savings of every economic agent, from government and companies to ordinary people.

Companies were worried because the bulk of the haulage and delivery trucks they use are left-hand drives.

In fact, a survey by Saxum Actuarial (Private) Limited showed that the country has 3 000 left-hand drive vehicles, and 2 000 of these are from the Transport Association of Zimbabwe.

The Zimbabwe National Chamber of Commerce has noted that it costs as much as $39 000 to convert the vehicles to a right-hand drive system, as this service is currently not available in the country.

This means companies would either have to take the vehicles out of the country for fixing or import the necessary parts to have them fixed locally.

Besides, a majority of the people of Zimbabwe cannot afford new vehicles both for personal use and for business because their incomes are relatively low.

According to the World Bank, Zimbabwe’s GDP per capita (income per person) is still less than $300 per year. This means that the country’s savings propensity is too low to support the acquisition of costly assets such as cars, let alone new ones.

Although granted in bad faith, the extension of the compliance deadline will give the economy some breathing space to rebuild its savings base and reintroduce a credit market for cars.

The move is also progressive in the sense that the ban would have to be preceded by the establishment of a viable and efficient vehicle manufacturing or assembly industry to serve the local market.

Technically, Statutory Instrument 154 of 2010 (Road Traffic Construction), which provides for these changes falls under what are called safeguard, anti-dumping and countervailing measures passed under the World Trade Organisation.

The question is: What is the country protecting by these instruments when it hardly has any local auto-industry?

All but two automakers that had assembly plants in Zimbabwe pulled out at the height of the country’s 10-year recession.

Lately, however, leading global automakers such as Mitsubishi, Tata, Hyundai and others have expressed a strong interest in opening assembly plants in the country.

But these also have capacity problems resulting from the international credit crunch which had a devastating impact on the car manufacturers.

But even if they were to be done today, such investments are long-term in nature.

By implication, while the country bustles about rebuilding this critical domestic industry, companies and individuals need to be driving around.

Unfortunately, given the income level of the country, the imports of second-hand cars are inevitable.
Business leaders also think that the ban on left-hand drive vehicles must be extended by at least 20 years because of cost issues.

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