FINANCE minister Mthuli Ncube yesterday presented the mid-term budget and review statement to the National Assembly.
Editor’s Memo Brezh Malaba
A budget is supposed to be the most important policy instrument of any government, which explains why everyone is always keen on scrutinising it.
The general verdict on the minister’s statement is that it was underwhelming in its failure to offer anything meaningful to poverty-stricken Zimbabweans. The elephant in the room is the issue of livelihoods. The government cannot — in all seriousness — brag about a “budget surplus” of ZW$800 million when civil servants are expected to survive on slave wages.
There is a 17-year-old orphan in Nyanga who was bitten by a dog and the government failed to provide the required four injections costing US$140. A social welfare officer ended up pleading for financial assistance from a non-governmental organisation.
What kind of country have we become? There is no money to buy a rabies injection for an orphan in Nyanga, but there are millions of US dollars to hire a private jet to fly a vice-president to China for world-class treatment? Whose country is this anyway? Where is the compassion? Four-year-old children are now scrounging for a living by selling sweets and cigarettes at street corners in the townships. This is happening in a country with world-leading reserves of gold, platinum, diamonds, chrome and lithium. Can you wrap your brain around that?
While I concede that every country is affected by Covid-19, there is no denying the words of the political scientist Francis Fukuyama who correctly observes that the worst affected nations are those deficient in the following three qualities: leadership, social trust and state capacity.
There is always a danger that the ministers who lead a pampered life in the lap of taxpayer-funded luxury are totally alienated from the everyday hardships of the average citizen. The wheeler-dealers of Harare are still building jaw-dropping mansions, importing fancy supercars, sipping on whisky and buying palatial homes in South Africa, Mauritius and Dubai. Some of this money is clean, but most of it flows from the proverbial “gravy train” — the sum total of shady public procurement tenders — as well as from laundering and outright smuggling.
A person witnessing the obscene display of ill-gotten riches in the leafy suburbs of the “Sunshine City” would be forgiven for believing in the fallacy that most Zimbabweans are swimming in US dollars. But the reality, of course, is that these people who are living large constitute just 1% of the country’s entire population.
For the 99%, life is an endless struggle. There are very few households whose monthly income exceeds US$30, yet a bottle of cooking oil costs US$3.
Zimbabwe is on edge, as it grapples with the steepest economic decline in living memory. The implosion, accelerated by the Covid-19 lockdown, is unprecedented.
Stagflation is with us. We are being buffeted by the relentless headwinds of a triple whammy: escalating inflation and a collapsing exchange rate; declining employment, real wages and consumer spending; and a massive fall in gross domestic product.
In the absence of an external economic bailout package, life can only get tougher for 99% of our society. Bankruptcy — at individual, corporate and national levels — is real. The risk of insolvency resembles the grim reaper, swinging a gigantic scythe above our heads.
Tony Hawkins, a professor of economics at the University of Zimbabwe, was remarking the other day how everyone seems to be ignoring the massive storm clouds of insolvency on the horizon. CBZ Bank, for instance, has revealed that it has a US$451 million legacy debt with the Reserve Bank of Zimbabwe.
“That exceeds CBZ’s market capitalisation and in Zimdollar terms it is almost ZW$28 billion, against the central bank’s net asset base of less than ZW$13 billion.”
Hawkins has highlighted the point that there are many companies with substantial offshore liabilities in US dollars which, when converted into local currency at the official rate — regardless of the more realistic parallel rate — would overwhelm the firms.
At national level, Zimbabwe’s official public and publicly guaranteed debt stood at US$8,1 billion as at December 31, 2019. When you factor in the US$3,5 billion recently agreed compensation to dispossessed farmers, the foreign debt is almost equal to the size of the gross domestic product. I have serious misgivings over the official debt figures and you can read more about my thoughts on this by running a Google search on my recently released 90-page investigation into “Southern Africa’s Debt Conundrum”.
In the main, Zimbabwe’s multi-faceted crisis is self-inflicted. Only when we begin talking honestly and openly about these issues will we chart a new course.