By Prince Kurupati
On 7 November, Zimbabwe’s Minister of Finance Patrick Chinamasa announced the 2018 budget. People from all walks of life, local and foreigners, listened attentively to the budget due to its significance. This was the first budget in Zimbabwe since the resignation of long-time President, Robert Mugabe.
After the calm, reassuring and conciliatory inauguration speech by President Emmerson Mnangagwa, everyone was looking forward to the budget statement to get an understanding of where the country is heading. As the Minister of Finance concluded his budget statement, economists, policymakers and members of the public all agreed that the statement touched on all the major issues affecting the country and expressed optimism that the fortunes of Zimbabwe will be changing soon if the government manages to implement effectively their plans.
From the outset, it was clear that there was a huge difference between the budget statements presented during the Mugabe era and this post-Mugabe era. There was an honest admission of past mistakes by the Minister of Finance. He acknowledged the previous administration’s weaknesses citing, “policy inconsistencies, reversals, and hesitations of the past”. This marked the first time in over 15 years that the government dissuaded from using the ‘illegal sanctions’ mantra as a way of distancing itself from its mistakes.
By acknowledging failures the government took the first step in bridging the gap it has with the public while by dissuading from the ‘illegal sanctions’ mantra, it showed the international community that it’s on the path of reformation.
Moving into the figures of the budget itself, the combined education ministries received $1.2 billion. The ministry of agriculture received $497 million, the defence ministry $420 million, and the health ministry $408 million. From these numbers, it’s clear that the government got its priorities right.
The combined ministries of education received the largest chunk because of the current curriculum change in schools, which need massive funds. For the first time in years, Zimbabwe did not import maize during the past year owing to the resounding success of the command agriculture program thus it’s obvious why the government wants to continue pursuing the program. If done right, command agriculture has the potential not only to feed the country but also to feed the region thus helping as well in foreign currency generation.
Acknowledging the fact that the country has been operating under a budget deficit for the better part of the last 3 decades, the Minister of Finance said they would be initiating some cost-cutting measures starting immediately. The aim is to reduce expenditure to 70 percent next year.
Among the cost-cutting measures to be undertaken by the government, include abolishing over 3500 posts of youth officers who have often been used as intimidators during election periods by ZANU (PF). Effective 1 January 2018, the government will forcibly retire all civil servants above 65 years. Top government officials will no longer receive government vehicles rather the government will extend them loans to buy their own cars. The government will reduce delegations during foreign travels utilising staff at embassies in the receiving country instead. The government also muted on downsizing foreign missions; currently, Zimbabwe has 46 embassies and consulates. A directive was given to all state enterprises and parastatals, 93 in total, that if any fail to record positive performance during the coming year, they will be privatised. State enterprises and parastatals did not receive any allocation from the 2018 budget.
In relation to the international community, the Minister of Finance said the Zimbabwean government is now ready to re-engage with Western nations and international financial institutions. The Minister also touched on the controversial Indigenisation Law, which scares away investors. The Minister clarified the Act saying only companies seeking to invest in diamond and platinum exploration are affected by the 51/49 act. The Minister reiterated that Zimbabwe is a market economy thus it safeguards the free movement of capital. With such pronouncements, only consistency is needed now to regain investor confidence.
The first post-Mugabe era budget expresses great potential. Now it’s time for the government to walk the talk. If the new leadership can effectively implement this budget then Zimbabwe is on the cusp of radical economic development. Only time will tell.