Finance and Economic Development Minister Patrick Chinamasa
FINANCE and Economic Development Minister Patrick Chinamasa has reneged on government’s decades-old promise to implement pro-poor interventions, when he unveiled his US$4 billion 2016 National Budget last week, which has nothing for the downtrodden.
The budget simply echoed previous statements, announced since dollarisation in 2009, which failed to combat worsening poverty and reignite economic recovery — exposing millions of Zimbabweans to hunger, disease and lack of access to decent education.
A scrutiny of the budget indicates that almost everything would be swallowed by administrative expenses and foreign travel by top civil servants, among other recurrent expenditures.
The budget projects that US$3,85 billion in revenue would be collected by the Zimbabwe Revenue Authority (ZIMRA) next year, with US$3,7 billion going towards recurrent expenditure.
Unlike in the previous budgets, this time around there will be almost nothing in 2016 for crucial capital expenditure, as well as spending towards social services like health, food, sanitation and education.
The effects will be dire for millions of poor and vulnerable members of society.
This comes when new estimates are revealing a worrying upsurge in the number of people facing starvation, which could rise to 3,3 million by the first quarter of 2016 from the current 1,5 million, in response to significant cutbacks in social protection.
With chances of a poor agricultural season now real, amid havoc on international minerals markets as prices plunge, Chinamasa could have done more to ring fence social expenditures so that vulnerable populations are not sacrificed through debt repayments.
Economists have warned legislators against just rubberstamping the budget through which government hopes to settle a US$1,8 billion international debt by the first half of 2016.
The minister had promised to address a looming humanitarian catastrophe highlighted by the swelling number of informal traders, who have taken to street vending after failing to secure formal jobs.
Chinamasa’s strategies, which ranged from intentions to pay US$28 million for inputs to 300 000 vulnerable cotton farmers, to taking over US$52 million debts from the run-down cotton dealer, Cottco, diverted attention from significantly expensive but lesser important votes like foreign missions, which will receive US$20,4 million next year, up from a projected US$18,1 million this year.
This demonstrates the effects of an expanding executive amid a shrinking revenue base.
An additional US$58 million in unbudgeted funding for 2016 would bankroll new ministries that were established during 2015, meaning more misery for a government with a bloated civil service that is already gobbling 80 percent of State revenues.
The poor prioritisation and “lack of justification of allocations” also demonstrated how ambitious the 2016 budget’s 2,7 percent growth projections were, in the absence of a concrete plan to ignite growth stimulating public service infrastructure projects (PSIPs).
Only eight percent of the budget was committed towards PSIPs, instead of the recommended 30 percent, according to economic commentator, Luxon Zembe.
Eight percent will be a drop in the ocean.
The African Development Bank said in June that Zimbabwe required about US$20 billion to restore crumbling infrastructure.
Last week, the United Nations Children’s Fund (UNICEF) said government allocated only 0,17 percent towards social protection in 2016, down from 0,76 percent in 2014 and 0,46 percent last year.
The continued slide has peeved the Zimbabwe Congress of Trade Unions (ZCTU), which said Chinamasa had failed to implement a “livelihood approach to budgeting that ring fences expenditures in such areas as water, sanitation, health, education, social protection and employment enhancement infrastructural investment”.
Chinamasa hoped his plan would extinguish the anguish and sorrow confronting most of the country’s 13 million people who are battling to find food, medicine, agricultural inputs, electricity, soap, cooking oil, and even water.
UNICEF estimates that 22,5 percent of the country’s population, or about 2,9 million, are now living under extreme poverty.
At least 2,3 million or 78 percent of the 2,9 million are children.
By an accident of birth, they have been caught up in the web of hunger, economic mismanagement, corruption and fraud in high offices, which has condemned them to unimaginable hardship.
If one adds unemployment levels, estimated to have since crept to above 90 percent, continuing carnage in industries, shrinking funding towards social safety nets and stunted growth in mines, a clear picture of a nation in dire straits emerges.
In a country ravaged by poverty, and where even those still in employment remain vulnerable, the budget has left the nation spellbound.
Expectations were that the Ministry of Public Service, Labour and Social Services, would receive higher allocations ahead of most ministries, but Chinamasa allocated US$173,8 million to the Ministry.
Instead, substantial funding will be channelled towards defence, which will gobble US$357,6 million, the Office of the President and Cabinet, which will receive US$179 million and the Ministry of Home Affairs, which will receive US$396 million despite the Ministry retaining millions of dollars raised by the Zimbabwe Republic Police through traffic offence fines.
A day after Chinamasa’s presentation, the ZCTU warned of difficult times ahead.
“ZCTU is shocked by the mediocrity of the 2016 National Budget that has nothing for the working people,” said acting secretary general, Enock Mahachi.
“ZCTU believes the budget framework is not pro-poor and pro-growth in terms of expenditures and incentives. It makes the same mistake as last year (2015 budget) of pegging unrealistic growth projections and focuses on arrear clearance and recurrent expenditure. It does not have an explicit developmental plan. The Minister gloats about firing of Ziscosteel workers using the three months notice period . . . The country is burning,” said Mahachi.
Chinamasa had capped the sombre afternoon by firing 3 000 Zimbabwe Iron and Steel Company (ZISCO) workers.
Their future had looked promising after government entered a joint venture agreement with Essar Africa Holdings of India in 2011.
The transaction could have seen Essar pouring in up to US$750 million in projects spanning from iron ore mines to processing at ZISCO, which has fallen from Africa’s largest integrated steel works to a scrap yard.
The deal collapsed after government backtracked on a commitment to settle ZISCO’s legacy debts, while red tap also slowed progress until plunging metal prices this year forced investors to develop cold feet.
With the budget not laying out a plan for ZISCO workers’ terminal benefits, the 3 000 workers are likely to spend another agonising festive season.
It would have been proper for the budget to allocate more resources towards the vulnerable, said social policy specialist at UNICEF in Harare, Chrystelle Tsafack, who further noted that it was worrying that in the past three years, funding towards social protection services had been dwindling.
She said the situation was made worse after considering that only about 30 percent of the 2015 budget allocations were disbursed.
“Most people (even those still employed) are very vulnerable and in case of shocks they will just fall under the poverty line. The allocation for social protection is decreasing. About 0,17 percent of the (2016) budget was allocated to social protection. When you look at the economy, where are the jobs?” she asked. “There are very few jobs even if people want to work. They used to have jobs, now it is not the case anymore,” she pointed out.
As part of a plan to revitalise agriculture and reignite growth in the manufacturing sector, Chinamasa announced a plan that includes funding cotton producers for the next three seasons, while accelerating the completion of dam projects such as Tokwe Murkosi Dam, which requires US$30 million to be completed.
The budget was silent of the compensation of the 3 000 families who were displaced when Tokwe Murkosi floods swamped their homes last year, forcing government to resettle them in the uninhabitable Nuanetsi Ranch in Chingwizi where they were left to fend for themselves in one of the driest parts of the country.
Although the Ministry of Primary and Secondary Education received the highest allocation of US$810 million, which essentially satisfied 20 percent allocation demanded by the Dakar Declaration, the allocation fundamentally means that each of the 3,2 million children enrolled in schools is ideally entitled to receiving US$253 in support for the entire year for their capacity development in core competencies in the cutting edge fields of mathematics, engineering, science and technology and ICTs in the hope of enhancing the country’s productivity and innovation capacity.
The allocations excludes funding for rehabilitating schools and building new ones, plans that are some of the core desires of the country’s Zimbabwe Agenda for Sustainable Socio-Economic Transformation.
Chinamasa admitted that the US$330 million vote for health and child care, which translates to US$25 per each of the country’s 13 million people, was way below the 15 percent of total votes recommended for Southern African Development Community countries.
Previous experience shows that only about 30 percent of budgeted figure is actually disbursed every year due to persistent financial constraints in government, which is battling to weed out many ghost workers.
Analysts said with government facing an election in 2018, tempering with the 553 000 strong State workers was one thing the Minister tried to avoid, even though he mentioned that there would be civil service reforms.
“It is a political budget,” said Zembe.
“With elections coming in 2018, he did not want to fire people. Everybody is trying to protect their mujibhas (runners). They have created irrelevant parastatals with many centres of collecting money. With the economy in a tailspin, the Zimbabwe Revenue Authority will not be able to collect US$3,85 billion. UNICEF puts the figure at (of people in need of food) 1,5 million but many economists are already saying 3,3 million people will face starvation in from early 2016.”
In March, after the Financial Gazette asked him why government had clung to loss making parastatals, Chinamasa hit back saying: “I don’t suffer from your problem.”
But last week he acknowledged that government’s oversight has been poor, and promised reforms.
“It is a long established fact that our State enterprises have long ceased to yield value for the State and the economy. It is of great concern that a number of them continue to incur employment costs with respect to long redundant staff complements,” he said.
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