Covid-19 recovery packages shouldn’t sink SADC into debt

ENHANCED transparency and accountability in the post Covid-19 recovery is required in SADC to ensure the region does not sink deeper into debt, leading to worsening poverty levels for ordinary citizens.

Civic organisations have acknowledged the region is in distress due to the effects of Covid19 and needs rescue packages to assist mostly the vulnerable groups of society, women, youths, the disabled and small businesses.

As such, this calls for more accountability and transparency regarding to source of the funding, terms and conditions as well as the beneficiaries of such packages.

“A number of countries are getting loans and packages to fight against the impact of Covid-19. If we are not careful, we could sink deeper into debt.

“As a region, we need to ensure there is transparency while the terms and conditions for these packages are clear so that we do not mortgage our resources in the long run,” said Zimbabwe Coalition on Debt and Development (ZIMCODD) executive director Janet Zhou.

She was speaking during an African Forum and Network on Debt Development (AFRODAD) SADC People’s Summit side event held recently.

According to AFRODAD, the summit serves as a reminder and wake up call to citizens of the SADC region to play their citizenship role of contributing to the development of the region by ensuring that governments are making people centred and pro-poor policies.

AFRODAD’s recommendations were part of the SADC Peoples Summit Communiqué, which was submitted to the heads of State and government of the SADC region during its virtual 40th Ordinary Summit early this month.

The SADC Summit is responsible for the overall policy direction and control of functions of the community, ultimately making it the policy-making institution of SADC.

Deliberations at the side event centred on the implications of privatisation of health services in Southern Africa, domestic resource mobilisation in the pandemic era as well as Covid-19 — public debt and economic rescue package with participants from Zimbabwe, Lesotho, Mozambique, Malawi and Kenya.

As part of the recovery process and growing the economy, Zimbabwe launched an $18 billion stimulus package to assist industry get back on its feet and subsequently boost economic recovery.

Said Mrs Zhou: “It is important to know where these monies will come from. Most packages are debt driven.

“The issue of debt and packages must be able to address the problems affecting the ordinary citizen, women and youths, the disabled and other vulnerable groups.”

However, the local initiative according to Finance and Economic Development Minister Professor Mthuli Ncube, is home grown with support from local banks.

More debt could result in ordinary citizens being overtaxed and sinking into deep poverty, despite the abundance of resources in the region with particular reference to the mining industry and the role it plays in the region. It is one of the sectors the region pins hope on for economic recovery.

Tax policy economist in the Ministry of Finance in Malawi, John Mpoha, highlighted the importance of the mineral resources especially to countries like Botswana, Zambia, Zimbabwe, South Africa, Tanzania and DRC, where minerals make a significant contribution to domestic revenues and exports.

While the sector accounts significantly to the region’s economies, it was important to note the high risks.

“Mining sector is quite unique when compared to other sectors. For the mining industry, there is need to avoid or repeal redundant tax incentives such as holidays, in any case granting tax incentives should be preceded by comprehensive cost and benefit analysis,” he said.

Advisor, Tax Justice Network Africa (TJNA) Mukasiri Sibanda, said while there was need to attract investment in the mining industry for post Covid-19 recovery, there is need to exercise caution.

“Mineral resources deplete, which makes it imperative that available resources be used to develop communities and improve the lives of common citizens but if we are overgenerous with tax incentives, how then will they develop back home?

“These are the issues to consider before we talk about tax incentives. We also need transparency to know how such incentives are given,” he said.

The region as a whole is seized with strategies for recovery from the effects of the pandemic. Travel and tourism industry is one of the hardest hit sectors as countries implemented travel restrictions to limit the spread of the virus.