Thumbs up to the Minister of Finance

I would like to start by thanking the Minister of Finance and Economic Planning as well the Parliamentary Portfolio Committee on Budget and Finance for a job well done.

IPERSONALLY participated in the National Budget consultations and I am pleased that a number of policy measures, which were submitted by the participants, were taken into account. The National Budget statement was pregnant with a number of policy measures aimed at stimulating the economy. Major policy measures which were enunciated and could take us to Canaan include fiscal consolidation measures, dealing with corruption, amendment of the indigenisation law, policy measures aimed at the agricultural sector and parastatal reforms.

The minister was bold in proposing a number of measures to deal with the budget deficit, a disease which largely contributed to the cash crisis through expansion of liquidity not backed by hard cash, retrenchment of over 3 000 youth officers, abolishment of unnecessary foreign trips, reducing foreign missions, call for early retirement, cuts in packs to senior officials in Government and restructuring of the overall civil service in line with leaner Cabinet. These measures will go a long way in reducing Government expenditure.

In terms of dealing with corruption, the Minister of Finance tackled corruption from two angles.

First, he emphasised the need to enforce the ultimatum given to economic agents and individuals, who externalised monies and must return it in the stipulated 100 days or face the full wrath of 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, it will result in the three-tier system collapsing within the coming three months.

Secondly, the minister went on to announce measures aimed at capacitating institutions dealing with corruption such as judiciary, anti-corruption commission and the 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 to mention just 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 that Zimbabwe is now committed to the need to eradicate corruption.

On indigenisation, the minister did will when he proposed to amend the law in line with President Mnangagwa’s inaugural speech on the need to guarantee the safety of foreign investments. The indigenisation policy was one policy which seemed like a framework aimed at expropriation of foreign companies thereby dishonouring the country’s commitments to bilateral investment agreements.

Now the policy will apply to platinum and diamond sectors and reserve sectors but with flexibility on the later. For the rest of the sectors, indigenisation will no longer apply. This is sweet music. We must actually have a memorial service for the changes to the indigenisation policy.

This policy was quite significant in starving us foreign direct investment and associated jobs which come with it.

However, going forward I see scope for the review of the policy on platinum sector. Hopefully Government can consider the sector’s support to local content policy and value addition and beneficiation as form of indigenisation but in the diamond sector it must stay like that.

On measures aimed at supporting the all important 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.

In terms of support for soya beans, the minister set aside $52,7 million aimed at growing soya beans on 60 000 hectares of land. If one takes average yield of 5 tonnes per hectare as minimum it would mean that this country will produce 300 000 tonnes of soya beans.

This is before we take into account the fact that soya beans is also on Command Agriculture and also individual farmers and contract farming efforts. What it therefore means is that by next year we will move our national output from 21 000 tonnes to national requirements of 600 000 and save about $250 million we were spending on soya imports.

In terms of the local content policy, Government has already started on it under the Ministry of Industry and Enterprise Development. This policy will come up with policy measures aimed at rewarding companies supporting local production, small and medium enterprises development and value chain development through tax incentives.

The Minister of Finance, in the 2018 Budget, undertook to provide these tax incentives. International experience has shown that local content policy is a panacea to trade deficits if well instituted. Clearly, we have an opportunity to deal with trade deficits and we can do it!

On security of tenure, the old regime used land as a political tool hence its lack of commitment to offer security of tenure. This was retrogressive and counterproductive. The move to offer security 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 on land such as compensation, productivity issues and multiple ownership of land must be addressed.

On Command Agriculture, I do not want to further elaborate here because we have seen how Command Agriculture has helped us to move from food insecurity to self-sufficiency and considering the fact that Honourable Perrance Shiri who was commanding Command Agriculture is now the Minister of Agriculture we are certain that we are in big business here.

On parastatals reforms, the budget statement was crystal clear that the state owned enterprises must be reformed, commercialised or privatised depending on the circumstances. Some of the parastatals which are beyond redemption will be done away with.

This is an excellent move considering that, based on reports, out of 107 SOE or parastatals few are commercially viable currently. The majority of them are failing to meet wages and salaries late alone service delivery. These state-owned enterprises contributed significantly to budget deficits as they relied on the fiscus. Against this background, addressing the sticking issues around these parastatals is of paramount importance.

As I round up this discussion, I call on Zimbabweans to remain focused and committed in solving our problems as one regardless of our political affiliation. While it is true that the National Budget cannot make everyone happy regardless of how much resources one has, this budget statement is the best this country got since Independence. Schools of thought who are downplaying this budget are either ignorant or have no clue of basic economic reasoning. ◆ Dr Mugano is an Author and Expert in Trade and Development. He is the Registrar of Zimbabwe Ezekiel Guti University and Research Associate at Nelson Mandela Metropolitan University and Feedback: Email: gmugano@gmail.com, Cell: +263 772 541 209.