- Last Updated on 02 December 2011
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2012 national budget: less talk and more of implementation
The 2012 national budget announced by Finance Minister Tendai Biti, on the 24th of November, following weeks of anticipation and speculation, is indicative of the inclusive government's moves towards adopting a pro- poor strategy in the country which recognizes the importance of human development as a vehicle towards national development.
The finance minister indicated that $600 million in new revenue from diamonds is expected to in the coming year. He highlighted that this will go towards the nation's ailing health, water and power services. The energy crisis in Zimbabwe has reached its worst level hitting industrial and trade sectors, besides common man. The finance minister announced that the vision of the power sector contains measures to increase supply, manage demand through energy conservation and take administrative measures to streamline the transmission and distribution of electricity. According to the budget strategy paper Minister is expected to also set aside about US$80 million for the rehabilitation of power stations to increase power generation to about 1 900MW which could ease persistent power outages. In 2011 alone, about US$40 million was disbursed for the energy programmes, however, resulting in only un-sustained marginal gains in power generation. The targeted power supply in 2011 of 1 600 MW remains a challenge, as only an average of 1 105 MW has so far been realised, though some output improvement from 952 MW in 2010. In 2012, electricity output is projected at 1 244 MW, reflecting only a 4.5% growth, a far cry from power supply levels required to drive sustainable increased production activity power supply remains a major loop around the economy.
Biti also allocated more resources to rural electrification, water and sanitation services and the government also plans to sink boreholes at all rural schools to improve water supplies and cut the distance women travel to water sources. Water supplies for both urban centres and rural areas are crucial particularly in the wake of the typhoid outbreak in Harare and fears of a repeat of the 2008 cholera outbreak. At the same time, the country needs to upgrade the health delivery facilities by providing affordable and accessible health services to all citizens.
The Ministry also allocated funds to the education sector (including higher education) to allow for the resuscitation of the sector which has been on a downslide for more than a decade. The budget is largely based on projected in flow of funds mainly through taxes and diamonds, presenting the need for the government to ensure transparency and accountability particularly in the extraction and sell of diamonds. The Marange diamond fields, discovered in 2006, have the potential of generating between $1 billion-$1.7 billion according to the Ministry of Finance and hopefully this will not bring back last year's scenario were the country realized less than USD100million in diamonds revenue due to high levels of corruption, mismanagement and lack of transparency and accountability. If the projected revenue for next year falls exclusively into the hands of President Robert Mugabe's ZANU-PF it could spell the return of a single-party dictatorship and end the present shaky power-sharing arrangement between ZANU-PF and the two MDC factions.
It is imperative to note that much of Zimbabwe's problems emanate from the failure of government to fully implement policies (in this case the budget) and to foster an environment which allows for investment. Between January and September 2011, 1,2% of the national budget was spent on foreign travel. These resources could have been channeled to development in the country as opposed to spending large amounts of money on expensive trips abroad. The key to attracting the much needed in flow of revenue for the treasury also lies in creating an environment free of political instability. The continued arrests of civil society activists and Movement for Democratic Change (MDC) supporters, perpetration of violence against perceived ZANU PF opponents and riotous takeover of foreign companies does not promote investment.
Biti announced the budget review at a time inflation is showing worrying signs of resurgence, while local industry has continued to struggle largely because of a liquidity crisis that has deprived factories of cash for re-tooling and to import raw materials. The Finance Ministry indicated that duty would be charged for goods imported into Zimbabwe however, there is need to appreciate that Zimbabweans are opting for imported products as they are more affordable and due to poor investment in local industries, the local goods are more expensive. The government thus has an obligation to promote local industries by ensuring that adequate resources are injected into industry. This will ultimately boost industry production, ensure job creation (which will lead to poverty alleviation), guarantee an increase in the national fiscus, increase resources that can be availed to the public sector thereby improving working conditions and remuneration for civil servants and promote human development through channeling of funds to social services. Given this, Recapitalization of industry should be a top priority on the national agenda so as to gain industry and commerce confidence in the inclusive government's ability to revive the economy that was in recession for the past 10 years and only recorded growth last year after the coalition administration came into office.
The ultimate objective of a national budget is to improve the welfare of the people, hence in the year 2012, the government of Zimbabwe should strive to:
1. Ensure accountability, transparency, responsibility, effectiveness and efficiency in disbursement of capitation grant and other tax-payers' money.
2. Work towards realigning the country's economic landscape with job creation, revamping the manufacturing sector, and promotion of a sustainable and competitive local industry.
3. Address the demand side for local products and services and the high costs of production that have affected the competitiveness of local brands and assure the working Zimbabwean increased disposable incomes which will allow people to consume more.
At this moment in time Civil society, ordinary citizens and the press must also play their part in ensuring that national assets, including the Consolidated Revenue Fund, are not pillaged through corruption, clientelism, or bad decisions.