‘Do­mes­tic re­source mo­bil­i­sa­tion is the way’

Chronicle (Zimbabwe) - - Business -

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

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