THE deepening liquidity crunch and cash crisis affecting the country has crippled the ruling Zanu PF party, which has liabilities of US$19 million and is struggling to service its bank loan and overdraft facilities as it now relies on government political parties’ grant, donations and taxpayer’s money to fund its programmes.
This comes as it has emerged that the government’s political parties’ grant allocation to the party in 2016 was US$4,6 million which, according to the party’s central committee report to the Zanu PF 16th annual conference seen by this paper, represents a 49,9% rise from US$2,3 million in 2015. The report says that Zanu PF’s financial reliance is on the government grant and donations that jointly accounted for 87,4% of the revenue during the year.
“The liquidity situation remains acute. The party is struggling to service its loans and overdraft facilities as well as financing its programmes. The department is exploring innovative ways of improving revenue inflows in order to retire its obligations and improve the party’s financial position,” the report reads.
The ruling party has not been spared from the current liquidity crisis, which comes against a background of an economy hit by a worsening wave of company downsizings, closures and retrenchments that reflect a number of underlying economic problems.
The party’s balance sheet shows that its liabilities rose by 28,6% from US$14,7 million in 2015 to US$19 million in 2016. Its liabilities include the bank loan and overdraft of US$16 million, telephone accruals of US$1,2 million and outstanding creditors of US$2 million.
The report shows that the loan facility is not being serviced due to the party’s parlous financial position and this has led to punitive interest rates and penalties.
The Zanu PF report also states that the party’s financial situation has been worsened by declining revenues from membership fees and subscriptions, fundraising activities as well as hiring out of the hall at the party headquarters for social events. In 2015 the party sold 363 091 of its membership cards, but in 2016 it only managed to sell 47 367 of the cards.
“Income from the sale of membership cards and subscriptions fell by 73% to US$36 000 in 2016 from US$132 557 in 2015. Revenue from membership card sales and subscriptions from all provinces except Matabeleland South, Midlands and South Africa District declined during the year,” reads the report.
Zanu PF is worried about its declining revenues from membership fees and says the party needs to enhance its mobilisation efforts. The party is also concerned about its heavy reliance on donations. However the report notes that although there is concern, the donations are outside the party’s control. In 2016, Zanu PF received donations amounting to US$1,067 million as compared to the US$109 179 received last year.
The reports states that the major cost drivers in 2016 were the just-ended conference, staff salaries as well as bank charges and interest that accounted for 54,3%, 33,6% and 32,5% of the party’s costs respectively.
“The finance sub-committee set a target of US$4 million towards the funding of the 16th National People’s Conference. Each province was therefore tasked to mobilise at least US$50 000 and donations in kind,” the report reads.
The central committee report also reveals that external relations costs for the ruling party rose by 63% from US$49 074 in 2015 to US$80 119 in 2016. The costs are said to have been mainly for air tickets and allowances for delegations on party business.