2019 National budget: Why Zimbabwe will fail

Finance and Economic Development Minister, Mthuli Ncube on November 22, 2018 presented his $8 Billion budget for the 2019 Financial Year.

Mthuli Ncube

The budget presentation came on the backdrop of price hikes and acute foreign currency shortages that have resulted in shortage of fuel and basic commodities.

Crisis in Zimbabwe Coalition acknowledges Minister Mthuli’s remarks that revival of the economy should be anchored on good governance and democracy.

The move to weed out ghost workers is welcome and we also appreciate efforts by the Minister to kick-start the devolution process after he allocated $310 million towards the process. However, we can only assess the soundness of these pronouncements on the strength of implementation.

We are however concerned that the 2019 budget will pile more pressure on the already tax burdened public after Minister Ncube increased excise duty on petrol and diesel, a situation that will lead to price hikes.

Minister Ncube announced that excise duty for petrol will go up by 6,5 cents while duty for diesel will increase by 7 cents.

CIZC takes with great exception the fact that the government of Zimbabwe continues to abrogate on its social protection role and has turned into a commercialized State in which the poor are left exposed.

We are concerned that ill advised economic policies continue to worsen the burden on ordinary Zimbabweans, most of whom are living far below the Poverty Datum Line.

The measures announced by Minister Mthuli do not instill hope that the government of Zimbabwe has capacity to revive the economy and deliver on its pledge to transform the country into an Upper Middle Income Society by 2030.

Our position is based on the following;

Good Governance and Democracy– Minister Mthuli admitted that revival of the economy must be anchored on good governance and democracy and these fundamental pre-requisites remain alien to Zimbabwe despite assurances of a ‘new dispensation’.

Plunder of national resources remain the norm and the country has failed to realize benefits from its abundant resources while public services continue to deteriorate.

The ‘new dispensation’ has also failed the democratic test and has instead moved to militarize key state institutions while party-state conflation has also taken a gear up. Persecution of opposition and civil society activists has continued even though President Mnangagwa promised to do away with ‘the dark past’.

There has not been concerted efforts to strengthen institutions that support democracy. The institutions have rather been weakened by parallel institutions that are largely partisan and compromised in nature.

International Engagement– Zimbabwe’s engagement with the international community is based on a return to democracy and respect for fundamental rights as enshrined under the country’s constitution.

Respect of the constitution and principles of democracy is alien to the current regime and the country continues to tread on the path of disputed elections. The legitimacy crisis on the part of the current government is a very big inhibiting factor in as far as engagement with the international community is concerned. The legitimacy crisis also poses as a huge obstacle to efforts to attract international investment.

Corruption– Minister Mthuli highlighted that fighting corruption and abuse of national resources is critical for economic revival yet the current government has failed to walk the talk in its pledge to fight corruption. Zimbabwe has rather witnessed a clampdown on perceived and known opponents of President Emmerson Mnangagwa disguised as a fight against corruption. Individuals who have been deemed to be politically correct have been distinguished as sacred cows while little effort has been made to bring high level corruption cases to logical conclusions.

The government has also failed to act on recommendations from the office of the Auditor General

Attracting Foreign Direct Investments– Political instability, failure to fight corruption as well as the legitimacy crisis on the part of President Mnangagwa’s government limits the country’s capacity to attract meaningful Foreign Direct Investments

Equitable access to means and outcomes of production– Zimbabwe’s economy remains captured by a few elite and politically connected individuals who have emerged as the major culprits of the plunder of national resources at the expense of the suffering public

Deployment of the army on the country’s roads– This serves to buttress our position that Zimbabwe is now a fully fledged military state (following the November 2017 military coup) with little capacity to transform the economy or attract meaningful local and foreign investments.

CIZC reiterates that Zimbabwe’s precarious economic state has been worsened by the professional decay of state institutions, failure to democratize the politics, breakdown of the rule of law, disregard of property rights, weak enforcement of the constitutional Bill of Rights, poor political leadership characterized by the will to power rather than the will to transform (in this regard we reiterate that without a functioning constitutional democracy, sustainable economic development is not feasible)

Key recommendations

While we urge the government to strengthen its economic reform measures, as CiZC we are advocating for the following based on our alternative economic blueprint, the Zimbabwe Social Market Agenda for Recovery and Transformation (ZimSMART);

–          Macro-economic stability that is pro-poor, inclusive and human centered with increased fiscal space, a high degree of competitiveness, a conducive environment for domestic and foreign investments, a strong export economy and high degrees of innovative capability with the State effectively playing its role in the economy by enhancing real sector performance, currency stability and ensuring the financial sector is stable.

–          CiZC further implores the government to  implement sustainable taxation reforms,

–          Revival of the productive sector with Small to Medium Enterprises being prioritized given their dominance in the economy. This calls for the government to do away with Iron and Fist policies, but through coordinating, facilitate and provide focused subsidies and start up finances to rejuvenate the sectors.

–          A highly devolved, functional and modern infrastructure that forms the engine of economic growth. Rehabilitation of roads, rail, air, water and sanitation, energy and ICTs should be the government’s priority

–          Creation of professional, transparent, accountable and globally competitive economic institutions

–          Creation of a modern, equal, peaceful, open and pluralist society where everyone enjoys equal opportunities in life

CiZC reiterates that in resolving the Zimbabwean crisis, there is need for a multi stakeholder dialogue aimed at coming up with economic solutions that are pro-poor.

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