I HAVE gone through Zimbabwe’s 2012 budget a couple of times, but unfortunately I do not see enough indications of key levers that will propel us to the desired heights.
Metaphorically, Zimbabwe is like a dingy that has been rowing backwards on auto along the Zambezi before suddenly coming to life and speeding full throttle right ahead. It picks up speed and we jump up and down with delight. Forward is good, at last Zimbabwe is making progress!
But as the dingy glides down the Zambezi, have we defined the destination? By when should we get there? What speed do we need to travel at to get at our destination in the given time line. Should we be even on the Zambezi or perhaps we should have considered the Limpopo to take us where we have to go?
A 9% growth may look good but it is coming off a very low base. Even Mozambique when it came out of the civil war with Renamo mustered a couple of 10% growth rates per annum. If you are coming from the bottom, getting to the top requires persistence consistently for long.
Some 35 months ago when the unity government was formed, we all celebrated and felt we should give them time to sort things out. We have given them enough time to do so. Now is the time to move ahead with a proper plan.
Where do we want to see Zimbabwe 10 to 20 years from now? This is what should drive our budgeting and planning. If we all put our heads together, it is possible to get Zimbabwe in the middle income league in 20 years’ time.
The present is important, but it is certainly not more important than the future. Unfortunately, our budgeting, like the biblical Esau, is seized by the needs of the present day stomachs, particularly of the underfed civil servants. With 63% of our budget going towards salaries of government workers, future personnel allocations need to be based on increased productivity of the work force.
Unfortunately, we are dealing with politicians with a shelf-life of about five years. To get where we need to go, we require politicians who think outside the box with a vision beyond the next election. Democracy alone will not sort out what is required in Zimbabwe. If it was enough, then we would not have witnessed the calamitous debt levels in Greece, Italy, Spain, Portugal and Ireland as all these countries regularly have elections.
We should not make democracy a decoy of what we have to and must do. In reality, communist China is giving a better guidance on how to sustain and manage annual growth around 10% for more than 10 years.
There are aspects of the budget I like such as the agricultural support starting with the US$45 million Subsidised Agriculture Inputs Support Scheme which included the US$8.1 million inputs facility for 100,000 vulnerable farmers and US$50.2 million towards grain procurement for the GMB, with the intention of building up the Strategic Grain Reserve up to the stipulated 946,000 tons.
The US$16.6 million towards Research and Extension Services, the US$20.3 million Communal Farmers Subsidised Agriculture, the US$17 million A1, Small Scale Commercial, Resettled & A2 Farmers Support Facility and the US$30 million Grain Input Swap Facility are also positives.
There is space for a committed private sector to be involved such as the Old Mutual supported US$30 million Youth Empowerment Fund, and the proposed US$20 million which has been provided by Stanbic Bank for the Jobs Fund. The Distressed and Marginalised Areas Fund (DiMAF), a five-year collaborative facility with a seed capital of US$40 million from the government and Old Mutual Zimbabwe, of which both parties are contributing US$20 million each, is a good example of public private partnership.
While the minister spoke of “re-formalisation of the economy through deliberate awards of contracts to competitive and deserving SMEs, as well as promotion of business links with large corporate firms for outsourcing and sub-contracting, that way promoting the empowerment programme”, there does not seems to be resources to support this.
The minister identified development clusters such as diamond processing, cutting and polishing; soft and hard wood cluster; resources base; livestock cluster; cotton, sugar and ethanol clusters; iron ore cluster; energy and hydrocarbon clusters; gold; tourism cluster and offshore financial hub; and horticultural hub. Without resources, it sounds like hot air.
If we facilitate Hwange 7 & 8 construction at the cost of US$1 billion, and expansion of Kariba South at an estimated cost of US$400 million resulting in additional 900 MW, then we will have power to support the start of the economic growth. If an investor is found for Lupane’s coal bed methane gas reserves which is estimated to produce about 300 MW, and a concerted effort is taken on Gokwe North, then our power needs are catered for.
It is a shame that mining royalties amounted to a paltry US$44.1 million, compared to sales of US$1.7 billion. I fully agree with his proposal to increase the royalty on gold and platinum from 4.5% and 5% to 7% and 10%. There is nothing to apologise for as this is the trend across the whole world.
Australia has been running rings around BHP and Rio Tinto to extract more from their mining profits. Investors may throw their toys around but sooner rather than later they will calm down when they realise that platinum is largely under the ground of south Africa, Zimbabwe and Russia.
If we analyse the revenue, it is clear we are not getting enough direct taxation. The gap between formal and informal economy has widened. Unfortunately, the budget does not signal sufficient strategic intent to create an environment to support new enterprises development.
Next week I will dwell more on what the minister should do to create that space.
Tafirenyika L. Makunike is the chairman and founder of Nepachem cc (www.nepachem.co.za), an enterprise development and consulting company. He writes in his personal capacity