Time for Mthuli Ncube to deliver a pro-poor 2023 budget
By Alois Vinga
AS Zimbabwe heads for the 2023 National Budget Blueprint unveiling there is need for the Finance Minister, Mthuli Ncube to deliver a pro-poor budget which affords citizens an opportunity to enjoy the fruits of government’s policy measures. The approach is especially imperative at this juncture considering that most Zimbabweans have endured the yoke of the reform agenda since Ncube’s ascendency to the treasury office back in 2018. A perusal of policy initiatives the Second Republic also known as the New Dispensation administration under the leadership of President Emmerson Mnangagwa who assumed office on August 26 2018 proceeded to introduce a raft of economic reform policies to turn around the country’s fortunes.
The economic reform agenda spearheaded by Finance and Economic Development Minister, Professor Mthuli Ncube witnessed the introduction of the Transitional Stabilisation Program (TSP) which was implemented from October 2018 to December 2020. The TSP was meant to operationalise Vision2030 and to catalyse economic development to bridge the country into becoming a middle income earning economy with a per capita income of US$3 500. The TSP was a package of policy reform initiatives by the new dispensation to encourage domestic production, exports, rebuilding and transforming the economy to an upper middle income status by 2030.
“Upon its expiry in 2020, the TSP was replaced by the National Development Strategy 1 (NDS) economic development policy which will run between 2021- 2025.
“The five-year Medium Term Plan is aimed at realising the country’s Vision 2030, while simultaneously addressing the global aspirations of the Sustainable Development Goals (SDGs) and Africa Agenda 2063,” a Finance Ministry document said in part.
Admittedly, the first phase of the TSP was very tough as the government adopted austerity measures which meant that there was a huge cut down on expenditures. The policy initiatives meant that all subsidies to welfare related needs were significantly reduced or removed, leaving citizens with no choice except to fund their health, education and social protection needs. The hardships triggered by austerity measures prompted a violent demonstration in January 2019 following a 150% fuel price increase amid Ncube’s strategy to come up with realistic fuel prices which are not backed by government subsidies. So dire was the uprising sanctioned by the then Zimbabwe Congress of Trade Unions (ZCTU) president Peter Mutasa that it left 200 civilians behind bars and six dead as the military resorted to the use of live ammunition.
The events thereafter were followed by increased hardships, price hikes and basic commodities shortages triggered by Ncube’s decision to de-dollarise the economy. The situation only turned for the better in 2020, thanks to the Reserve Bank of Zimbabwe (RBZ) Statutory Instrument 185 of 2020 which allowed the use of foreign currency generated under free funds to pay for local transactions. Other raft of measures by the treasury and government significantly improved the inflow of foreign currency into the banking system. With the coming on board of NDS1, industry capacity utilisation recovered to the current 66% as at Q4 2021 according to the Zimbabwe National Statistics Agency (ZIMSTAT).
Bearing in mind that the levels of economic growth are not consistent with the premised objectives of turning around the fortunes of the country into an Upper Middle Income Country (UMIC), it is trite to note that while the business community’s concerns were addressed timeously, the situation was not the same for ordinary citizens. Salaries continued to lag behind inflationary rates with the World Bank reporting that extreme poverty rose to 49% of the total populace in 2020 from 29% as at 2018 just before the implementation of the policy reform agenda. Considering that by his own admission, Ncube is on record acknowledging that the reform agenda pursued since 2018 has paid dividends, 2023 is indeed the rightful time to pay attention towards the poor.
Going into 2023, the Pro-Poor Budgeting Priorities should therefore target the following;
While the previous 2022 National Budget contained a significant increase in allocation towards the health sector at 14,9% just close to the 15% Abuja Declaration benchmark in the 2022 National Budget with 14.9% falling 0.1% short of the Abuja Declaration of 15%. The 2022 National Budget allocated ZWL$117,7 billion to the Ministry of Health and Child Care, which represents 14.9% of the Budget. After closer analysis, it was established that the health budget actually accounted for 12,7% of the total ZW$927,3 billion planned expenditure for 2022.
However, there must be improvements in expenditure towards the sector as health facilities, for instance, increased access to medication in hospitals as opposed to scenarios where patients are sometimes forced to outsource drugs due to shortages. The quality of the budget should guarantee availability of a full treatment facilities bouquet and transform the public hospitals into a one stop shop for the patient. Apart from the budgeted thresholds, there is also a need for timely disbursements of the funds as opposed to a situation where just a small part of the allocated resources is disbursed up to year end.
The blueprint must also focus on improving the country’s state of water and sanitation by harnessing the potential of abundant inland water bodies. The strategy will go a long way to create a buffer against the impact of droughts which have since ravaged the nation.
Youth Sport, Arts and Culture
Mthuli Ncube is on record announcing hefty loan facilities for the youth. In 2019 he launched a ZW$500 million loan facility for the youth but 3 years down the line the plight of the young remains dire. There is therefore a need to come up with real facilities which are highly accessible and life changing. Investments targeted at improving job creation should also be made. As established by the 2022 second quarter Labour Force Survey, at least 2,3 million youths are neither in employment, education or training, to tap into the country’s demographic dividend, there is therefore a need to allocate resources which expose such youths to technical skills and access to funding.
Public Works and Social Welfare Allotment
The budget must also revamp the Public Works and Social Welfare Ministry after receiving just ZW$19, 4 billion from the total ZW$927, 3 billion in 2022 National Budget. This is because the department undertakes key pro-people base activities which largely contribute towards human capital development. To cater for the problems of drug abuse and youth unemployment, the budget needs to allocate resources towards the revival of mass public works in areas such as refuse collection, road construction and waste recycling in order to create jobs.
Records show that about 5,8 million Zimbabweans are living in extreme poverty where they have no access to any form of social protection. This therefore calls on the budget to allocate resources which will go toward the establishment of initiatives such as the National Health Insurance Scheme, Unemployment benefits.
There is a need to increase allocation towards the Basic Education Assistance Module from the ZW$4,1 billion allocated last year in 2021, the programme assisted 446,844 vulnerable children with school fees and was complimented by development partners who assisted 175,592 children through the same programme.
The ZWL$4.1 billion 2022 allocated towards BEAM, covers tuition, uniforms, stationery for vulnerable children, against ZWL$2 billion which was allocated in 2021.There is also need to expand allocations to cater for children with special needs as well as going beyond just school fees to cater for uniforms, books and food for the vulnerable. An additional allocation to cater for the Continuous Assessment Learning Activity (CALA) especially targeted at rural communities, as they may not be able to afford meeting the extra resources costs.
More resources should be allocated towards building more schools and improving the teacher-pupil ratios.
It is also important for the treasury boss to make a commitment to climb-down on austerity measures, which appear to have been perpetuated since their inception in 2018. Despite talk that the country is now in a development trajectory, questions still linger as to why civil servants salaries remain paltry.
Therefore increasing the earnings will take away the burden of funding teachers, which is currently on the parents’ shoulders as they have to pay indirectly through extra lessons.
The budget must address the question of civil servants salaries whose earnings combined at the current US$200 foreign currency allowance and ZW$65 000 still fall way below the ZW$275 000 Poverty Datum Line. The treasury boss needs to come up with clear policies which give access to the US$ benefits for the civil servants even upon retirement, as opposed to the current situation where this reprieve is only enjoyed by those still in employment.
The measure must also be spread right across the ordinary citizens by stipulating reasonable tax free thresholds. Importantly since the Minister also sits in the Tripartite Negotiation Forum- a social dialogue platform bringing together government, business and labour representatives , the budget must commit to setting a National Minimum Wage in both US$ and the Zim dollar currencies as a measure to ensure swift strides to the Upper Middle Income Country status. Tax penalties for employers who are not rewarding their employees commensurately against the achievements brought about by policies like the NDS1 must be introduced.
No economy can grow in the midst of investor confidence deficit. Zimbabwe has been affected by a number of setbacks like corruption, property rights inconsistencies, ease of doing business among many others.
A pro-poor budget is one which creates opportunities for its citizens and without confidence, the budget is likely to fail the litmus test. As such the treasury boss needs to make open commitments to address corruption, conclude the legacy issues affecting former white commercial farmers as well as improving the ease of doing business. This also calls for the allocation of resources, which will go towards strengthening institutions like the judiciary and other parastatals.
Moving into 2023, the National Budget Blueprint must simply impact positively in the lives of the ordinary folk. The likes of Tarumbwa down in places like Masembura Communal Lands. The ambitious 22 year olds who are leaving university. The Amai Besas’ who have endured long queues in wait to receive food aid due to climate change effects and the 70 years old retired headmaster who feels shortchanged after years of contributing in anticipation to receive a reasonable pension out.
Alois Vinga is Zimbabwean journalist who holds a Diploma in Communication & Journalism, Bachelor of Arts Degree in Media Studies, post-graduate diploma In Education and is currently reading for a Masters in Development Practice with the Midlands State University. He holds three media reporting awards in Labour and Gender and Disability Reporting.