‘Domestic resource mobilisation is the way’
TRANSFORMING the economy through domestic resource mobilisation should be the main focus of the 2017 budget if last week’s Parliamentary consultative seminar in Bulawayo is anything to go by. Below, Speaker of Parliament Advocate Jacob Mudenda shares his views on the issue.
Despite spirited efforts to re-engage multilateral financial institutions with a view to clearing Zimbabwe’s arrears and in turn access international credit lines, it looks increasingly unlikely that Zimbabwe will receive any meaningful external budget.
This is inspite of the commendable strides that Zimbabwe had registered in implementing the Staff Monitored Programme with the International Monetary Fund (IMF), which ended in December 2015 whose strategic thrust was aimed at clearing IMF arrears.
We have not had any external budgetary support for over a decade now. Undoubtedly, therefore, domestic resource mobilisation is the only sustainable option towards total economic freedom. Additionally, this ensures that as leaders, we are accountable to our own citizens and tax payers rather than to donors as is the case in most financially and externally dependent countries.
The Parliamentary committee presentations should, therefore, anchor on domestic resource mobilisation that will guarantee a secured budget of not less than $6 billion so that Treasury can come up with a $10 billion budget.
Consequently, our current wage bill should drop to 45 percent (from the current estimated 90 percent) of the total budget.
It is possible. That is the tenure of the New Partnership for Africa’s Development (Nepad), which eloquently emphasises the need for Africa to strengthen domestic resource mobilisation in the wake of dwindling foreign aid and unfeasible lending conditionalities.
This principle was affirmed by the Addis Ababa Action Agenda of 2015, which underscored the centrality of national policy ownership to achieve Sustainable Development Goals.
The implementation of the Africa Union’s Agenda 2063, thus hinges on Africa’s ability to mobilise adequate domestic resources. Let us take a leaf from the Asian success stories where development was largely underpinned by domestic resource mobilisation.
Chinese and Indian development was buoyed by very high levels of domestic resource mobilisation, which complemented their accelerated integration into the global economy and the two countries have recorded phenomenal economic growth. These countries have moved away from reliance on international financial institutions for investment and other resources.
Fortified by these success stories, nothing can stop our country from following such growth trajectories, as we have shown so much resilience by braving illegal sanctions for nearly two decades. Parliament should enact legislation that strengthens domestic resource mobilisation and ensures effective use of indigenous resources.
Zimbabwe has clearly set out nationally defined domestic targets and timelines to achieve socio-economic development largely propelled by the judicious exploitation of the country’s abundant human and natural resources as enunciated in the Zim-Asset economic blue-print.
President Mugabe has also re-affirmed this broader macro-economic development agenda aimed at stimulating economic growth and creating employment in his 10-point plan presented to the August House 14 months ago.
It is about time that Parliament takes the lead in fostering a paradigm shift from decrying inadequate budgetary allocations without proffering concrete suggestions on how the country can boost revenue inflows.
It is high time Parliament metamorphosed from useless rhetoric on the need to reduce recurrent expenditure without proffering practical suggestions on how this can be achieved.
As you may be aware, revenue mobilisation efforts are being hampered by structural factors such as low per capita income, large informal sector, sophisticated tax evasion and avoidance techniques, large peasant agriculture and struggling manufacturing sector.
Raising adequate domestic resources to stimulate productivity and nurture an inclusive and resilient economy requires supporting legislation and that is where we come in as Parliament.
It is urgent and imperative that we come up with legislative proposals to: incentivise productivity, harness the contribution of the informal sector into mainstream economy, incentivise and attract domestic investors, promote value addition and beneficiation of our mineral resources and other agro-resources, tighten loose ends in tax legislation, improve the ease doing businesses and stem the growing tide of corruption and the attendant leakage of domestic resources in the form of capital flight. THE Ministry of Mines and Mining Development has proposed that the $20 million loan facility for small scale miners be paid directly to suppliers of equipment, instead of cash.
The Reserve Bank of Zimbabwe (RBZ) last month unveiled a fund of $20 million to support the artisanal mining sector.
Speaking at a breakfast meeting held by the Zimbabwe Miners’ Federation (ZMF) and RBZ on Tuesday, Mines Deputy Minister Fred Moyo said there should be a clear and robust disbursement model tailored around the gold centres and involving all key stakeholders.
The meeting was aimed at facilitating discussion between the central bank, the fund administrators Fidelity Printers and Refiners and ZMF on the loan facility, its structure, purpose and roll-out modalities.
ZMF chief executive officer Mr Wellington Takavarasha said yesterday that Deputy Minister Moyo commended the artisanal mining sector for proving their worth in supporting production.
“The Deputy Minister said he expected more in terms of FPR presentations around the overall scope of the project, how much is going to support extension services and which banks FPR will work with,” said Mr Takavarasha in a statement.
“He (Minister Moyo) thinks there might be challenges with the model that RBZ/FPR is proposing — that is, targeting individual miners directly. His proposal is that this be changed to the model of supporting service centres.
“FPR could identify areas to establish service centres (based on gold output). Certain entrepreneurial individuals could take upon the risk for the service centre. The centre would be tooled with all the necessary equipment and would also have extension support officers. Hundreds/thousands of miners would then be serviced by each service centre.
“He also emphasised that no miner should get money directly. The loan facility should be paid directly to suppliers and mining manufacturers.”
FPR general manager, Mr Fraderick Kunaka, who also attended the meeting said FPR had already begun receiving proposals for access to the loan and has begun reviewing them.
On the conditions of the fund, he said: “Interest rate remains 10 percent per annum and where the miner breaches the agreement, the interest rate would go up to 15 percent per annum.
“FPR is open to collaborations with mining associations such as ZMF as they can act as referees to applicants and can assist in terms of vetting.”
The small scale mining sector has been suffering from lack of funding as most of the miners do not have the necessary equipment to mine at their optimum. The $20 million fund is expected to help boost production, chief being the ability to meet the set target of 10 tonnes of gold this year. — @Bianca Mlilo
Advocate Jacob Mudenda during the pre-budget consulation seminar held in Bulawayo last week