Inculcating Zambian Motorist on Tolls and other Road Users charges

Toll Road

Toll Road

By Edwin M Hatembo Jr.

Starting the engine

I begin this article blowing caution to the wind based on the fact that there are a lot of issues that need to be clarified to the Zambian motorist that I took for granted.

In this article I continue with the issue of toll roads with an emphasis on other misinterpreted Road User Charges (RUCs) like Road and Carbon Tax and also the pressing issue of Fuel Tax.

Road Tax and carbon tax in Zambia

Currently, there are two other directly attributable costs that are being charged to the Zambian motorist; road licences and carbon tax.

Road licence,commonly known as “musonkho”, is a statutory requirement in terms of the Road Traffic Act of 2002. A percentage of the fees collected through this are paid into the road fund. This percentage varies from time to time depending on other factors such as operational costs of the collecting body, RTSA.

These funds can be used for other non-tolled roads and municipal roads. Carbon tax on the other hand is charged on vehicles to mitigate the effects of climate change. Given the nature of the majority of the vehicles on the Zambian roads (second-hand Japanese vehicles without catalytic convertors), it became an inevitable eventuality that the cost of climate change would be passed on to the road user.

This is not going into the road fund as this is not the intended purpose but is being used to fund environmental programs such as tree planting. The effectiveness of this tax is dependent on the number of cars without catalytic convertors being driven but this is a story for another day.

Lets learn about fuel levy

Through the years, subsequent governments have tried to implement the road tolling but this has never actually taken off. In 2011, Cap 465 was repealed and new tolls Act No. 14 of 2011 enacted.

This new Tolls Act designated the Road Development Agency (RDA) as the toll authority. Thus, the legislature identified RDA as the rightfully placed Agency to operate toll roads in Zambia.

To summarise, fuel levy and other traditional tax-based revenues allow Government to provide services to all citizens. Fuel levy has a component of excise duty (An excise or excise tax is an inland tax on the sale, or production for sale, of specific goods or a tax on a good produced for sale, or sold, within a country or licenses for specific activities) and is not entirely road levy.

Road maintenance cannot be sustainably financed through fuel levy. In the US and Western Europe, fuel levy exists to finance broad government projects and not exclusively road construction.

Take a look at several users who pay for fuel levy yet do not stand to benefit, directly or exclusively: the Rail industry, locomotives use diesel or gasoil engines yet the popular belief in ZAMBIA  has been that fuel levy is for road construction and not rail road maintenance.

Understating the issue of fuel levy in Zambia before jumping the gun on Toll Roads

There has been a misconception that fuel levy is for road works alone. Even if it was 100% for road works, it would be not enough for the volume of road works available. While Fuel Levy is by far the largest form of Road User Charge (RUC) in Zambia, It is important to point out that given the Zambian government previous untraceable record of funding for road maintenance, adoption of a fuel levy was only made as a condition for donor support of Road SIP.

Initially, in 1994 the levy was set at about 1 US cent per litre for petrol and diesel, increasing to about 4.5 cents in 1996. Since then, part of the excise duty on petrol and diesel (up to a maximum rate of 15% of the wholesale price) collected by the Zambia Revenue Authority (ZRA) has been designated as Fuel Levy.

It is paid into the Zambian government consolidated fund (‘Control 99′) along with all other ZRA revenue, but is earmarked for routine road maintenance.

The Budget Office then transfers funds to the National Road Fund Agency, although the amounts transferred do not necessarily match revenues, understandably because fuel levy has a component of excise duty which is levied on fuel to allow Government support other broad developmental programmes across the country.

While they have increased substantially in recent years, reaching USD 68.7 million in 2010, Levy proceeds are not based on – and have never been nearly sufficient to meet – Zambia’s road maintenance requirements. Being ad valorem, they fluctuate with world fuel prices.

So fellow Zambians as much as we drive cars and pay Fuel levy it is important to note that the volume of cars on our roads has increased over the years and the stress on the roads is too much.

It should also be rightly observed that levy proceeds are also subject to political decisions, such as the reduction in diesel excise duty from 30% (15% for Fuel Levy) to 7% in 2008 in order to reduce pump prices. As of April 2010 Fuel Levy was equivalent to 8.8 and 11.3 US cents per litre for diesel and petrol respectively, among the highest rates in the region.

Total fuel taxes (customs duty, excise duty and VAT) were equivalent to 23.0 and 39.1 US cents per litre respectively. While data is not available, it is widely acknowledged that international trucks largely avoid Zambian fuel taxes by filling their fuel tanks before entering and after leaving Zambia.

Diesel prices are significantly higher in Zambia than in neighbouring countries. Reducing diesel prices through liberalising fuel imports would reduce the incentive to purchase diesel outside Zambia and should lead to increased Fuel Levy collections.

The African Roads Maintenance Funds Association (2011) indicates that ideally the Zambian government treasury is for road upgrading, new roads and rehabilitation; Fuel levy is for Routine and Periodic Maintenance; and External Funding from Cooperating Partners normally finances Periodic Maintenance and Rehabilitation.

Clearly, the fuel levy in itself is not sustainable to finance road maintenance and thus it is crucial to introduce innovative and sustainable ways to finance routine road maintenance and rehabilitation programmes.

The need to introduce user pays principle in financing road maintenance and rehabilitation was realised as early as 1983 through the enactment of Cap 465. As early as that time, the Government of the Republic of Zambia had seen need to broaden financing base for road construction and rehabilitation. Toll sites were identified, toll booths constructed, unfortunately tolling never took off.

The current state of affair in Zambia that needs to be understood

The Zambian economy is forecast to grow between 7.5 and 8 percent annually over the next five years. To sustain this growth, Zambia needs to upgrade its transportation infrastructure.

Zambia, being a landlocked country lies in the center of the Southern African Region and to this effect heavily relies on her neighbors for vital routes to various import and export destinations. Transport infrastructure covers: roads and bridges, railways, airports and aerodromes and maritime and inland waterways.

The state of transport infrastructure, however, remains inadequate to sustain and match the desired levels of growth due to weak structural and management capacity resulting in over commitments, high cost of construction and low investment.

The Toll Roads and the kind of expertise involved

There are priority toll routes that have been identified by the stake holders and these comprise the backbone of Zambia’s national road network  including: Solwezi to Kazungula (with a spur to Kasumbalesa); KapiriMposhi to Nakonde; and Lusaka to Mchinji via Chipata. Developed and managed properly, this project could make Zambia a transportation hub for Southern Africa.

The RDA has invited world-class American road construction project management companies to take part in this growth opportunity. A South African firm, Aurecon, and NRFA signed a contract for tollgates feasibility study and the agency  was expected to hold a stakeholders’ workshop to look at the final report.

Payments on Toll Roads

To understand toll roads, one needs to know that not all cars will pay the same amount, in most countries, cars are classified into the following categories and charged differently:
•    Class 1 = Light vehicles
•    Class 2 = Medium heavy vehicles
•    Class 3 = Large heavy vehicles
•    Class 4 = Heavy-duty vehicles

Fellow countrymen, this is as simple as it can get, if you are using a private vehicle or a public transport operator travelling from point A to B, all you need to know is how many toll roads you will pass going one way and coming the other way and put money aside
Factors That Affect Pricing on Toll Roads

Vehicles are classified into four classes. Class one includes all light vehicles with or without trailers. These include motorcycles, motorcars, minibuses and light-delivery vehicles.

Medium heavy vehicles fall under class two. These are two-axle vehicles which are designed to seat more than 16 passengers. It can also be defined as a vehicle which has an axle that is fitted with tyres with a bead diameter larger than 406.4 mm.
The large heavy vehicles or vehicles with three or four axles fall under class three.

On the other hand, the extra-large, heavy-duty vehicles are classified under class four. Vehicles with more than four axles fall into this category. On the off chance that you are in something this intimidating, you’ll pay a bit more than average. Most travelers drive in light vehicles.

What additional benefits Toll Roads come with

In my first article, I outlined why Zambia needs toll roads. In this article I take a step further by talking about some more additional benefits that come with toll gates. I will not take it for granted that readers know what I am talking about and leave any loop holes.

(a)    Financial Benefits: “In light of the free trade area that the country has signed with the Common Market for Eastern and Southern Africa (COMESA), toll gates will render the agriculture sector to be more and more uncompetitive.” This is a statement written by Cynthia Mwale in the Zambia Daily Mail of 1st November, 2013.

Now let us get this straight, this is not a bashing competition but merely a forum to learn from each other. First, as a member state of COMESA we export and import products free between member states at no fees charged. That’s a Free Trade Area. Let’s us look at a country like South Africa with a highly efficient toll road system.

If South Africa brings produce with heavy duty trucks to Zambia, they bring that produce free because of the Free Trade Area, the South African trucks use Zambian roads for free. Now, let’s look at Zambia taking products to South Africa. Zambia won’t pay tax like South Africa because of the Free Trade Agreement BUT Zambian trucks will have to pay toll user charges for utilising South African roads.

There is no way the agricultural sector will become less competitive because, South Africa has got to get its produce to South African companies in Zambia like your Shoprite, Pick-n-Pay, Spur just to mention a few. In fact if we in Zambia have an efficient road system, farm products will get to their designated places earlier and incurless damages in the case of perishable products.

(b)    Safety and security Issues: In Southern Africa, we have a high rate of vehicle theft. To illustrate this, in 2009, there was an automobile theft ring operating in South Africa, Mozambique, Zimbabwe, Botswana, Zambia and Democratic Republic of Congo (DRC). Cars were recovered in DRC being operated by rebels. Cars on the hit list included heavy utility trucks, Light utility trucks and four wheel drives because these cars can be used in the rain forests by rebels. One way, South Africa tracked down these vehicles was by using International Police (INTERPOL). The other way, the cars were tracked down was by the use of Toll gate cameras. This is a safety issue.

Furthermore, some toll roads have automated toll enforcement systems that take photos of drivers and their licence plates for people who do not pay the tolls these non-payers typically get the toll bill along with a fine. Cameras will also monitor speed of cars hence lessening accidents.There is also the issue of Ambulance and rapid response systems at toll roads in case of accidents this is a problem on Zambian roads where these services take time to arrive on the scene of accidents so this is a good thing at the end of the day.

(c)    Corruption: The way toll roads operate is that, we need to see a good road network at the end of the day. Corruption is endemic in not only Zambia but the world over. Toll Road implementation in Zambia has got to be well handled delicately because if it is not, it will open avenues for corruption. To illustrate this, a practical example of how the South African system works.

(d)    Reduction of Traffic: This is a very welcome advantage in that the levels of traffic will be greatly reduced. People can no longer just get into vehicles to go joy rides as they will be forced into making only necessary movements. This will inadvertently contribute to the reduction of road traffic accidents and greenhouse gas emissions from our beloved salaula cars.

The South African National Roads Agency Limited or SANRAL is a South African PARASTATAL responsible for the management, maintenance and development of South Africa’s national road network.

SANRAL was created by The South African National Roads Agency Limited and National Roads Act, 1998 as a corporatized successor to the South African Roads Board, which was part of the Department of Transport. It was registered as a public limited company on 19 May 1998.

History: In 2011, SANRAL became the target of popular resentment as tolling was about to commence on many of SANRAL’s freeways in Gauteng, in order to finance their soon to be completed expansions, as part of the first phase of the Gauteng Freeway Improvement Project. The Gauteng Freeway Improvement Product was instituted to deal with the severe traffic congestion in Gauteng’s freeways.
Governance: SANRAL’s only shareholder is the state, represented by the Minister of Transport. The agency is governed by an eight-member Board of Directors.

Five voting members – the chairperson and four others – are appointed by the Minister of Transport for a term of three years. Two government officials are non-voting members, one from the Department of Transport and nominated by the Minister of Transport, and the other from the National Treasury and nominated by the Minister of Finance. The Chief Executive Officer, who is appointed by the Minister of Transport on the recommendation of the Board, is ex officio a non-voting member of the Board.

Operations: As of 2009 SANRAL has 178 employees. They are divided between the head office and four regional offices: Northern Region (Gauteng, North West, Limpopo and Mpumalanga); Western Region (Western Cape and Northern Cape); Eastern Region (Free State and KwaZulu-Natal); and Southern Region (Eastern Cape).

The agency manages a total of 16 170 kilometres of roads.

SANRAL’s operations are divided into two broad categories: toll roads, which are self-funding; and non-toll roads, which are funded by transfers from the Department of Transport.

Some toll roads are concessions, privately funded and managed with supervision from SANRAL; these include the Platinum Highway (N1/N4), the Maputo Corridor (N4) and the N3 Toll Concession. Other toll roads are owned and operated directly by SANRAL; these include the Huguenot Tunnel, the Tsitsikamma Toll Road, the N2 tolls on the KwaZulu-Natal coast, and the N1 tolls in the Free State and Limpopo.

Way forward

Going forward, I foresee a situation where once implemented, the toll roads will become a self-sustaining organism. They will be self-maintaining, revenue generating and contribute directly to the national economy through revenues and jobs that will be created as a result of their establishment.

As Lusaka expands into the greater Lusaka Metropolitan area comprising Lusaka, Chilanga-Kafue and Chongwe, inner city e-tolls may be contemplated and the introduction of ring roads will result in a much more improved transport network and improve the development of the country. This should stoke some serious thought in the minds of all well-meaning Zambians.