‘DUBAIS’ BAN: RAILWAYS FACES 70% LOSSES

MBABANE – As the debate surrounding the new law on import cars rages on, one of the country’s parastatals stands to lose big.

Rated as one of the best railway companies in the Southern African Development Community (SADC) Region in terms of transport services for import and export commodities as well as transit cargo, the Eswatini Railways (ESR) stands to lose a lot if government goes ahead with the Used Vehicles Import Permit Specification Notice, 2020, which stipulates that import vehicles would no longer be permitted to enter into the country if they are more than seven years old.

This is because more than 70 per cent of Eswatini Railways’ trains transport import cars’ containers.

Transported 

Businesspeople in the import cars industry reportedly procure from 500 up to 1 000 automobiles per month, which are then transported into the country through the ESR.

This publication has gathered that there were instances where an ESR train would carry 44 containers, with 40 of them being import cars.

Also gathered is that to transport a vehicle from Durban to Eswatini through a rail costs about E1 600 per container.

Each container reportedly carries between four to six cars.

Eswatini Railways is a parastatal that provides transport services for import and export commodities as well as transit cargo. 

According to its website, it links main industrial centres with the railway systems of South Africa, Mozambique and other SADC countries that trade with overseas markets. 

The parastatal owns and maintains the infrastructure, rolling stock and operates a 301km rail network.

Concerns 

Several members of the public, including politicians and those experienced in the transport sector, have raised concerns about the parastatal, saying the new law would be a big blow to its revenue.

One of those who raised a concern was Siphocosini Constituency Member of Parliament Mduduzi Matsebula.

While the issue was recently debated in the House of Assembly, only a few MPs got a chance to make their opinions known.

In actual fact, only three MPs were able to make submissions and this is despite the fact that over 20 of them had stood up signalling their interest to have their views known.

This was due to the fact that the MPs unanimously voted for the passing of the motion calling for the Minister of Finance, Neal Rijkenberg, to review the seven years to 12 years.

This publication sought an interview with Matsebula to hear his opinion on the matter and he made it clear that Eswatini Railways would be one of the major casualties.

 “There is a need for our government to make a lot of changes to maximise our share of SACU receipts and domestic taxes. Instead of prioritising restrictions on import vehicles, government should focus on creating more taxable jobs and creating a more conducive environment for investors by reducing barriers to trade. Government should also review the types of loans that we get, it looks like most of them come with unfavourable conditions such as being required to purchase more than 60 per cent materials from the country giving us the loan and I believe that alone has contributed immensely to the decrease of SACU receipts in recent years,” said the legislator.

He mentioned that government needed to consider the negative effects the new policy would have, especially on parastatals like Eswatini Railways.

Matsebula said government also needed to consider that everyone would like to drive a new car from the local dealers, but unfortunately, most of emaSwati could not afford.

Import

 “So it goes without saying that even if you stop the import of the grey cars, they will still not afford to buy the local cars,” he said.

Asked on how government could have best handled the issue, the MP said before enforcing such changes, it (government) was supposed to institute an investigation on tax-on-profit before drawing a conclusion that the changes would bring more revenue for the country. Furthermore, he said government needed to listen to the public outcry on credit given to emaSwati and issues of mileage being allegedly reversed on the aforementioned vehicles.

Also, the MP said there was a need to consider that neighbouring South Africa was one of the major suppliers of the so-called grey cars in the region through its bonded warehouses in Durban.

Another MP, who spoke on condition of anonymity, said he was also worried about entities like Eswatini Railways.

“Firstly, we need to bear it in mind that we are in a time where government is trying to revive the economy. The same government is encouraging parastatals to sustain themselves and not rely on subventions. You cannot expect Eswatini Railways to sustain itself if you implement laws that will not boost its revenue. So this law needs to be reviewed, otherwise the country will continue to struggle,” he said.

Eswatini Railways Corporate Communications Manager Sive Manana confirmed that the parastatal would be affected by the new law.

“ESR is very much aware of the reasons government wants to implement some changes in the importation of grey cars. We are confident that they are very important for the survival of government and its capacity to deliver public services,” he said.

Manana said ESR was the biggest transporter of import cars through containers destined for the Matsapha Inland Clearance Depot. 

“About 70 per cent of import containers are made up of grey cars. Changes will indeed affect revenue if they result in the reduction of volumes. ESR is hopeful though that the sector will not collapse and we will continue to use our service. ESR always supports government initiatives aimed at growing the economy of Eswatini,” he mentioned.

Communications Officer in the Ministry of Finance Setsabile Dlamini said, “The ministry is not in a position to comment on the issue of Eswatini Railways unless the parastatal’s business was 100 per cent transporting second-hand motor vehicles from outside SACU. A bigger chunk is transported by road.”

Target 

This publication had asked her if government had considered business entities and parastatals like the ESR when implementing the new law. This publication also asked her to state government’s target in terms of percentage of intra-SACU trade and she said; “Our current intra-SACU imports is currently just below nine per cent and the aim is to improve our share.” On another note, asked whether government would consider the submission by MPs for a review to at least 12 years instead of the seven years when it comes to import cars, she said the response to the motion would be presented in Parliament.

It should be noted that the ESR is currently working on the Eswatini Rail Link Project, which is a collaborative effort with Transnet Freight Rail and to construct an approximately 146km railway line which will run from Lothair in the Mpumalanga Province of South Africa to Sidvokodvo.

This is expected to be the biggest rail infrastructure between Eswatini and South Africa at a cost of about E17 billion.

The new law came into force through a notice issued on August 28, 2020 and it revoked Legal Notice No. 80 of 2012 and signatory to it is the Minister of Finance, Neal Rijkenberg.

Its implementation resulted in import car dealerships being denied import permits to bring into the country automobiles they had procured prior to the pronouncement of the new legislation.

Meanwhile, during the debate in Parliament, mover of the motion, Siphofaneni MP Mduduzi Simelane, submitted that the Import Control Order of 1975, which gave the minister powers to change the law was clear that whatever the minister did should be in the public interest. 

He wondered if Rijkenberg had the public’s interest at heart when he removed the capped years from 15 to seven years. 

He further asked the minister if he was aware that 63 per cent of the people in the country lived below the poverty line. 

An economist, who spoke on condition of anonymity, said should Eswatini Railways lose 70 per cent of its business, it could be forced to shed off its staff.

“It’s a given that once an entity has less business and minimal revenue, it is then forced to retrench. We could see this happening if the new law is not reviewed,” he said.

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