16 January 2013

Zimbabwe: Biti's No-Growth Budget


BITI'S 2013 budget has been praised as "pro-people" and "pro-poor".This is because of its generous and very important investments into education and health.

The only criticism that has been voiced has been by ZANU PF which has pointed out that there is insufficient investment into agriculture. However, one important question is: Can the budget bring about economic growth in the immediate and medium term? In the longer term the investments into education and health will pay off in higher level productivity, but there is little hope that the 2013 budget will bring about economic growth very soon.

In every economy, and Zimbabwe's is no exception, investment is inevitably led by its Government. The government's policies and strategies are followed by the national private sector and by outside investors. The main indicator of government's policies and strategies is the budget. The budget tells what the government is aiming to achieve. The main objective of Zimba-bwe's 2013 budget is to please the people in power. This is clear from the massive investment of US$20 million for foreign travel for the office of the president and cabinet. Given that the cabinet comprises about forty people, it means that an average of US$500 000 is invested in the travel of each member of the Cabinet. This is surely excessive, when compared to the US$35 million for the Grain Marketing Board (GMB), the main market for communal and resettlement farmers. There are approximately 1.8 million Communal farmers, and 150 000 small scale Resettle-ment farmers, this gives about 1,95 million farmers who are catered for by the GMB. This means that the budget is planning to spend US$17,95 on each of these farmers. It is therefore no surprise that Zimbabwe can no longer feed itself, but instead has to import most of its food. Honourable Minister Biti tells us in his 2012 mid-year fiscal policy review statement, p.112, that Zimbabwe imported US$515.6-58 million of food between January and May 2012.

Presumably the amount spent on the full year is roughly double this amount. Failure to fund purchase of farmers' food crops by the GMB means that farmers do not have enough money to spend on seeds and inputs for the next year's crops as banking facilities for farmers is very limited. The 2013 budget provides US$4 million for Agribank. You don't need to be a brilliant mathematician to see this is not enough. The result is that lower income farmers who are the food producers of the country are inadequately financed to provide the food for the country.

Some political analysts believe that the failure of the government to fund agriculture adequately is due to the MDC-T's policy to prove that the Land Resettleme-nt programme after 2000 has proved to be a failure, forcing the country to import massive amounts of food. Whether there is actually such a deliberate policy and strategy is of course unknown, but what is painfully obvious is that the government's investment into the GMB is very far from adequate, making it impossible for most small scale farmers to produce enough food for the country. Of course Biti alone cannot be blamed for this under-investment into the GMB, as the Budget is approved by both cabinet and parliament. If government is to target economic growth, it should begin by reviewing its budgetary priorities. Moving some funds from foreign travel by the cabinet to the GMB might make a real difference to next year's food production. Agriculture remains one of the most important industries in the country, and funding it better will definitely bring an increase in economic growth.

In addition to savings from the Cabinet's Foreign Travel, there are many other areas where savings can be effected. The largest area for savings is the number of civil servants. The number has increased from 161 932 in 2000 to 235 841 in 2011, an increase of 73 909 civil servants in eleven years. This is a 45,6 percent increase. The average salary for these civil servants in 2011 was US$2720 per annum. A policy to stop filling posts as they fall vacant will lead to a natural contraction of the civil service. Assuming that there is a five percentvacancy rate in the civil service, this would entail a saving of US$19,355 million (using 2011 figures). This saving could be provided to the GMB, and would certainly boost food productivity in the country, with a knock on effect on other industries which are heavily dependent on agricultural productivity. Civil service employment costs comprise 68,5 percent of the 2013 budget. It would be wise if this could gradually be reduced, to say 55 percent of the budget, leaving more room for economic growth.

The government has used the civil service as a way of providing employment. However, this is not a wise and sound way of generating employment creation, unless more civil servants can be engaged in production and can increase their own productivity. This is not necessarily possible if, for example, agricultural extension workers do not have the wherewithal to carry out their duties.

They may have no transport to visit the farmers they are responsible for. The farmers concerned may not have seeds or fertiliser, or access to ploughing services. Instead of increasing the number of civil servants, government should provide the existing civil servants with the tools, equipment and materials to do a good job. Providing poor pay for large numbers of civil servants will also not enhance civil service efficiency.

The under-funding of productivity is not a Biti problem. He is only continuing a trend that has been a characteristic of government for several decades.

The question is whether government can in the future plan its Budget in such a way as to boost productivity and so attract national and foreign investment. There is no possibility that national and foreign investors will invest when the government itself is not investing in productivity.

Dr Fay Chung is an educationist and founder of Women's University in Africa.

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