The Sunday Mail
Dr Gift Mugano
Let me start by thanking Finance and Economic Planning Minister Patrick Chinamasa and the Parliamentary Portfolio Committee on Budget and Finance for the job well done.
I participated in budget consultations and am pleased that a number of policy measures which we submitted were taken into account.
The National Budget Statement was pregnant with a number of policy measures aimed at stimulating the economy.
Major policy measures that were enunciated and can take us to Canaan are fiscal consolidation initiatives, dealing with corruption, amendment of the indigenisation law, policy measures aimed at the agricultural sector, parastatal reforms, and measures aimed at addressing the budget deficit.
Minister Chinamasa was bold to deal with budget deficit, a disease which largely contributed to the cash crisis through expansion of liquidity that is not backed by hard cash.
He presented measures such as retrenchment of over 3 000 youth officers, abolishment of unnecessary foreign trips, reducing foreign missions, calling for early retirement, cuts in packs given to senior Government officials and restructuring the overall Civil Service in line with a leaner Cabinet.
These measures will go a long way in reducing Government expenditure.
Dealing with corruption
Here, the minister tackled corruption from two angles.
First, he emphasised enforcement of the ultimatum given to individuals who externalised money to return it back within the stipulated 100 days or face the full wrath of the law. This measure, together with the same ultimatum given to cash barons to deposit the monies within 100 days, will help us in dealing with the cash crisis once and fall.
In my view, if this measure is successful, which is most likely, we will see the three-tier system collapsing within the coming three months.
Second, the minister went on to announce measures aimed at capacitating institutions dealing with corruption such as the Judiciary, Zimbabwe Anti-Corruption Commission and Ministry of Home Affairs.
This move is excellent considering the fact that we need to deal with corruption in all its forms; ranging from bribes, money-laundering, transfer pricing, tax evasion and theft of public monies or assets, just to mention a few.
The capacity of these institutions, together with the political will to deal with corruption, which I am convinced that under this new dispensation is there, means Zimbabwe is in the business of eradicating corruption.
Minister Chinamasa spoke in line with President Emmerson Mnangagwa’s inauguration speech on guaranteeing safety for investments. Indigenisation was used, in some respects, as a framework aimed at expropriation of companies, thereby dishonouring the country’s commitments on bilateral investment agreements.
Now, the policy will apply to platinum and diamond sectors and reserved sectors; again with flexibility on reserved sectors.
Indigenisation will no longer apply to the rest of the sectors.
This is sweet music.
We must actually have a memorial service for the indigenisation policy. This very same policy was quite significant in starving us of foreign direct investment and associated jobs.
However, going forward, there is still scope to review the policy in the platinum sector.
Hopefully, Government can consider the sector’s support to the local content policy and value-addition and beneficiation as a form of indigenisation.
However, it must stay like that in the diamond sector.
On initiatives to support the agricultural sector, the minister announced measures such as the local content policy, Command Agriculture, financial support to soya bean production and cotton, and dealing with security of tenure in agriculture.
He put aside US$52.7 million towards growing soya beans on 60 000 hectares of land.
If one takes an average yield of five tonnes per hectare as a minimum, it means this country will produce 300 000 tonnes of soya beans.
This is before we take into account the fact that soya bean production is also on Command Agriculture as well as individual and contract farming efforts.
Therefore this means that by next year, we will move our national output from 21 000 tonnes to national requirements of 600 000 and save the US$250 million we were previously spending on soya imports.
Local content policy
This policy will come up with measures aimed at rewarding companies supporting local production, small and medium enterprises development and value chain development through tax incentives.
Minister Chinamasa undertook to provide these tax incentives.
International experience has shown that local content policies are a panacea to trade deficits if well instituted.
Clearly, we have an opportunity to deal with trade deficits and we can do it.
Security of tenure, Command Agric
The move to offer security on land will help farmers unlock finance. Right now, our land is dead capital because you can’t use it to secure funding.
In the same vein, contentious issues regarding land such as compensation, productivity issues and multiple-farm ownership must be addressed.
Finally, on Command Agriculture, I don’t want to further elaborate because we have seen how the programme has helped us to move from food insecurity to self-sufficiency.
Considering that Minister Perrance Shiri, who was commanding the programme, is now the Minister of Agriculture, Lands and Rural Resettlement, we are certain that we are in big business.
I call on Zimbabweans to remain focused and committed to resolving our problems as one regardless of political affiliation.
Whilst it is true that the National Budget cannot make everyone happy, this budget statement is the best this country has had since lndependence.
Schools of thought that are downplaying this budget are either ignorant or have no clue of basic economic reasoning.
Dr Gift Mugano is an economist and the Registrar at Zimbabwe Ezekiel Guti University. He wrote this article for The Sunday Mail.