By Prosper Chitambara
IN a few weeks’ time Finance minister Herbert Murerwa will present the 2007 national budget, which will come at a time the country is facing
immense socio-economic challenges.
Inflation has reached record-highs as the level of economic activity continues to plummet. Corruption is now commonplace while poverty has become endemic, afflicting 90% of the total population.
The country has become highly polarised as institutions established to promote social dialogue such as the Tripartite Negotiating Forum (TNF) remain largely marginalised and ineffective.
The challenge of the national budget is therefore to reverse these negative trends so as to set the stage for sustainable people-centred development.
The national budget is an instrument for implementing the development priorities of a nation as defined in its development strategy.
The national budget should alleviate poverty and initiate a more balanced growth through strengthening the social security system, increasing and improving housing and infrastructure, implementing a comprehensive treatment and prevention plan for HIV and Aids and enhancing food security.
The budget should cushion the vulnerable groups against the harsh socio-economic conditions, thereby laying a firm foundation for human development.
It should be an instrument of resource allocation in order to ensure not just a rapid pace of GDP growth, but also the achievement of important social objectives such as employment creation, poverty elimination and overall development.
The ability of ordinary citizens to achieve their basic social and economic rights is a useful measure of the adequacy or otherwise of the budget.
Previous budgets have tended to allocate more funds towards recurrent expenditure as opposed to capital expenditure and social investment. A case in point is Defence and Security, which have continued to be generously rewarded with high budgetary allocations even though the country is at peace.
Meanwhile the same generosity has not been extended to social service ministries such as Social Welfare, Education and Health. There is need for a readjustment and redefinition of the role of the state so that the state targets those activities with the greatest social and economic return.
From a rights approach, this implies directing fiscal expenditure and budgetary allocations towards ensuring food security, the provision of adequate healthcare at affordable prices, education, housing, transport and basic utilities (electricity and water).
Social sector expenditures need to be protected and targeted measures to deal with poverty should not be seen as “add-ons” but as an integral part of the national budget.
At Independence in 1980, Zimbabwe inherited a relatively developed and efficient urban public transport system. Over the years, with no capitalisation, coupled with unpaid use by government, the whole urban transport service collapsed, and was replaced by a chaotic commuter omnibus system in the early 1990s.
With no adequate foreign exchange and fuel available, the commuter omnibus service has virtually collapsed, leaving in its wake stranded working people. It is now a reality that most workers’ wages cannot meet the monthly transport bill. Workers are now walking to work and are involving themselves in survival strategies, including cutting back on meals.
Basic utilities such as electricity, water, and refuse collection among others are no longer readily available at affordable rates.
Since 1991, Zimbabwe has largely followed a market-based approach to development, with basic social and economic rights in terms of food security, access to healthcare, education, shelter, transport and basic utilities (mainly electricity and water) becoming market-driven.
Because even basic rights have been put onto the market, the majority of Zimbabweans, who are living in poverty, cannot access them. It is therefore important to return to a basic needs approach (or a rights-based strategy), which begins and ends with the people, the real object of development
By focusing more on the formal sector, past policies and budgets have neglected the non-formal (including informal) sectors that accommodate the majority of the population, especially women. The declining economy is, consequently, experiencing unprecedented levels of informalisation or underground economic activities, as the vulnerable population tries to devise survival strategies.
The above factors have therefore reinforced the dual (separate) and enclave (isolated) structure of the economy. With this structure, the economy cannot rely on the formal economy alone to meet the development needs of the people.
The expected “trickle down” from the formal to the non-formal economy has not and will not occur, implying the need for conscious policies of integrating the non-formal economy into the mainstream of the economy.
It is therefore important to remove these distortions to ensure that a broad-based, inclusive and sustainable growth path is taken, which ultimately promotes sustainable human development.
In its latest budget, South Africa has undertaken a new approach through which it is targeting the marginalised groups and sectors (the so-called other South Africa) to create an inclusive and broad-based growth strategy.
The South African government has consciously adopted a human-centred approach, with President Thabo Mbeki adopting a people’s contract to deliver basic social services such as healthcare, education, transport, housing, food security, electricity and water.
A human-centred approach dictates that people’s priorities for the basic rights to food security, good healthcare, education, housing, transport and basic utilities need to be prioritised and adequately financed in the national budget.
Support for sustainable food production by resource-poor farmers should be increased, especially in terms of agricultural input provision — credit, fertiliser, seed distribution systems and marketing.
As a result of collapsing government support and rising fees, school enrolments have gone down. School dropouts are on the rise, disproportionately affecting the girl child.
Thus the policy goal of making education universally accessible is vanishing. It is therefore important to bring back the right to education to the top of the national budget agenda.
It is also common knowledge that Zimbabwe faces a severe housing shortage. Millions of Zimbabweans do not have access to adequate shelter or basic services. It is estimated that over one million Zimbabweans are on the housing waiting list in the major towns.
There is therefore an urgent need to bring back the housing issue into the public domain as an economic right.
The time has come to embark on a campaign to return the economy to a normal footing characterised by decent work and the enjoyment of basic social and economic rights.
Given that social protection is paramount, especially in the context of the worsening economic crisis and the HIV and Aids pandemic, it is necessary to ensure that adequate resources are provided to cushion the populace from the social dimensions of the crisis and mitigate the impact of the HIV and Aids pandemic.
With 90% of our population living below the poverty datum line (PDL), social protection is the only recourse for the majority of our people.
Educational assistance to vulnerable households and the urban public works programmes also need to be restructured to achieve efficiency, effectiveness, relevance and sustainability. There is a need to involve other stakeholders in the implementation of such programmes. This is particularly necessary in that in spite of the Basic Education Assistance Module, school-drop-outs persist. There is need for stakeholder participation in the implementation process.
The interventions assisting vulnerable groups with access to medical care have failed to deliver, especially in the context of cost recovery. Involvement of the relevant stakeholders at all levels is also crucial to ensure that delivery reaches the needy, in an efficient and effective manner.
Overall, the whole social protection programme needs review. A good example of synergetic relationships between government and the other stakeholders in poverty eradication programmes is the example from South Africa where government provides the policy framework, leaving the implementation to NGOs and other stakeholders.
Uganda, which has been able to sustainably reduce overall poverty, is another outstanding example.
Zimbabwe’s tax regime remains onerous and regressive.
While the measure taken in the mid-term fiscal policy review (supplementary budget) to increase the tax threshold from $7 000 to $20 000 was welcome there is need to review the tax thresholds more regularly to link the tax threshold to the PDL.
The Central Statistical Office’s PDL stands at as $134 648,59 as at September 2006, implying that workers earning below the PDL should be exempt from PAYE. The principle adopted by the TNF in mid-2001 is to link the tax threshold to the PDL.
In addition, the tax bands are very narrow. Such narrow tax bands easily nullify wage increments as workers are pushed into a higher tax band.
Ultimately, for the national budget to be effective there is an urgent need to address the sticking issues of domestic governance and the polarisation of the country along political lines.
While the international community can go without Zimbabwe, the country cannot go it alone and hence the need to normalise our international relations as a basis for a sustainable turnaround.
* Prosper Chitambara is an economist with the Labour and Economic Development Research Institute of Zimbabwe.