The Minister of Finance, Patrick Chinamasa, presented the 2017 mid-term budget review to Parliament on the 20th of July 2017. The budget statement review, put to the acid test, points to the untenable situation of a Zimbabwe in a deep-seated economic crisis. It also points to a weak government and state that pursues short-term, knee-jerk policy interventions to problems that require a long-term strategy to arrest the economic meltdown and the subsequent breakdown of the national social fabric due to failing service delivery.
The presentation by the Minister of Finance came up short of being a statement of surrender on the part of government pertaining to its central mandate in performing both the distributive role and of creating an enabling environment for various stakeholders to fail or thrive on their own.
In our view, the central government should realise that it is putting the country at risk when it fails to control its run-away appetite to borrow and consume what it does not have. The national debt shot up to USD 11.3 billion from 9.4 billion in 2015. This is a very bad tag on the national ‘balance sheet’. It is a negative dent on the credit ratings as no level-headed lender will extend credit lines to such a country, suffocating in debt.
Domestically, the government has borrowed more than half of the budgeted-for revenue in 2017 through the issuance of Treasury Bills, which were pegged at 2.1 billion in 2016. When the government exerts itself strongly in the domestic sector through excessive borrowing, it stampedes the private sector out of the borrowing market. This, in turn, threatens the viability of the private sector, as it will have limited access to borrowing for investment purposes, while the government borrows for consumption.
The Minister also highlighted that food imports rose to 634.4 million from 586.3 million in 2015. This is a clear indicator that the country has continued on an unsustainable path of being a ‘receiving economy’ with limited resources in manufacturing and industrial sectors to gear economic growth from within, mainly because the government has literally ‘chewed’ the biggest chunk of the credit cake through its excessive borrowing.
The economic meltdown is exacerbated by the fact that Zimbabwe has an unsustainable trade deficit, which has resulted is a poor balance of payments for the country. In addition, there are serious revenue collection leakages due to unbridled corruption running across the entire government establishment. This has resulted in the most biting liquidity crisis of our lifetime.
In the first quarter of 2017, it is reported that eight more companies registered agreements to let go a whopping 160 employees with the Retrenchment Board citing viability challenges. These, among others, are the symptoms of the intensity of the crisis, which defines present day Zimbabwe.
Given the ‘statement of surrender’ by the Minister of Finance, it is critical that we assess the implications of such a business as usual approach under such a dark cloud.
Our first observation and recommendation are founded on the fact that we are only as good as the quality of the leadership of a country. The current crop of leadership has taken us on the path to ruin through failing policies and leadership inconsistency. We therefore call upon the political parties in this country to appreciate the gravity of the current man-made crisis in order to put their respective best foot forward in the coming 2018 elections. Zimbabwe requires strategic leadership with the ability to transform the country away from the current precipice and to leapfrog it into sustainable economic growth for future generations. This requires a forward-looking leadership that can define and mobilise the country with competitive goals that will outlive us and jump-start the next generation on a sound and solid foundation. In addition, the citizens of Zimbabwe must register to vote and direct the political order of the country towards the envisaged future.
Secondly, the current obsession with the mantras of ‘ease of doing business’ and ‘special economic zones’ will not yield any results until and unless the issues of political leadership are addressed. The thorny issue is mainly that of security of investment in the face of an ageing leadership in the ruling party. In addition, there is need to review and repeal ‘dangerous legislation’ that threatens investor confidence as part of creating a solid foundation towards attracting genuine investment.
Thirdly, Zimbabwe should upgrade its ageing infrastructure, which has rendered our country unattractive for investment. There is need to think of the country as a coordinated centre through heavily investing in the new industries borne out of the internet revolution and the dramatic changes that it brought and will bring. This requires a review of the national education curricula, an audit of the new forms of industries (Creative Industries), the skills gaps and a policy position of the means to address these strategic issues.
Lastly, the transformation of the government/state towards its conventional role of being the holding centre of national development and competitiveness. This requires a zero tolerance to corruption and other support hemorrhaging factors that have led the state being reduced to a coordinated centre for cronyism, ‘tender-prenuership’, and the party conflating itself to the government and state. This is why the government has been stuck in perennial deficit mode, thereby squandering and mortgaging the future of the next generations. This requires the tightening of controls and sanctioning of the cancerous elements in the government and those that are complicit in such vices.