Zimbabwe’s Fiscalised Electronic Devices Program

About 3 weeks ago, Zimbabwe’s Ministry of Finance and the Zimbabwe Revenue Authority (ZIMRA) launched fiscalised electronic registers and fiscal memory devices. The devices are a new legal requirement for all businesses with an annual turnover threshold of $240,000 and the deadline for implementation is 1 October. Some 25 days from now.

Basically, the devices replace POS printers and where an organisation has been issuing receipts and invoices the memory devices keep a record or all the transactions made and transmits this information through GPRS to ZIMRA.

Two operators have been authorized to sell the gadgets in Zimbabwe; Axis Solutions (whom we’ve covered here before) and First Computers an IT solutions company  we came to know a few weeks ago.

Last week Tuesday, we had the opportunity to attend a presentation on this subject organized by the Computer Society of Zimbabwe. The Axis managing director, Mr. Brian Mukudzavhu  and a representative from First Computers, Mr. Pardon Gorova made presentations at the event.

Most of the people attending the presentation were clearly not happy about a number of things. We noted the following:

1. How the two companies were selected to exclusively sell the devices in Zimbabwe
2. That ZIMRA is not creating a level playing field for other ICT businesses by approving only two suppliers
3. That the deadline for implementing the devices was unrealistic
4. That the two suppliers did not have the capacity to meet the demand for the devices by the said date
5. That ZIMRA is unfairly burdening business with the changeover costs
6. That the devices are too expensive

The reaction to the exclusive authorization of the two companies was predictable. We got a price schedule of the First Computers’ devices and all the devices on the list are being sold for no less than $500. Some as high as $2,500. I heard murmurs like “vakomana vaita mari ava…” (Shona for “these guys have hit jackpot”) a number of times at the event.

The size of this project (and indeed the money) is huge and the kind that draws remarks of cynicism from those left out. It’s understandable for any business person to wish they were an authorized supplier too.

In their defense ZIMRA pointed out that the Ministry of Finance issued an advert in the local press inviting suppliers to submit proposals for the project. Apparently, of all the ICT companies that responded, only these two made the grade. We have no idea what criterion was used and that discussion is not for us to make.

A ZIMRA commissioner at the event, Mr. T.G Chiradza assured the computer suppliers that there is room for more players and that interested suppliers can approach ZIMRA.

Techzim agrees that the deadline of 1 October will be hard to meet. Even First Computers itself agrees. Mr. Gorova admitted that it takes about four weeks to have the devices delivered once ordered. And considering most companies are just starting to order now, the deadline extension should be announced already. Again ZIMRA wasn’t hard and fast on this one. Mr Chiradza said there is provision for a one month extension.

As for capacity, we cannot say whether the two companies have it or not. We just don’t have that information. But yes, a few more companies would help the situation. Kenya for example has 16 authorized operators (yes, the size and structure of our economies are different).

On why the government is burdening business with the sudden acquisition costs of these gadgets, Mr. Chiradza explained that businesses can claim 50% of the cost of the acquisition of the devices as input VAT. We can imagine thought that this will still be a huge sudden cost then for any company requiring a huge number of the devices. Whether this is fair or not again is another story.

To take the Kenya example again;  when Kenya Revenue Authority implemented a similar system 5 years ago it shouldered the cost of implementation. A FAQ page on the KRE website has the following:

You can read more about the Fiscalised Electronic Registers requirements here on the ZIMRA site.

Strangely, the First Computers website is apparently still under construction as the url we got opens a parked webpage. We also noticed that Pardon Gorova, its representative at the event, is listed on LinkedIn as Head of IT at Innscor Africa. We asked First Computers CEO, Mr. Ian Joule about Mr. Gorova and he explained that he just did the presentation on behalf of First Computers leadership. He says Mr. Gorova is just a business associate.