Opinion / Blogs
How Govt can sharpen focus on National Budget
24 Nov 2013 at 03:47hrs | Views
The Zimbabwean Government has a daunting task of delivering value and transformation to an ailing economy which is burdened with a plethora of challenges and ever-growing expenditure.
Resigning to fate or adopting the 'begging bowl' or the 'alms syndrome' approaches is certainly not the best way to yield long term sustainability.
Treasury needs to be financed as a matter of urgency. It is imperative that we take realistic introspection at our situation before rushing to conclusions or recommendations without looking at cause and consequence. I am therefore going to provoke some thinking on some dimensions which I think require a different approach both from the Government and good citizens perspective.
The National Budget
A budget is a financial plan to resource a strategy. The Budget itself is not the strategy. Every Zimbabwean right now is waiting for the budget pronouncement which usually is followed by Budget review discussions. It is my considered opinion that this approach is guilty of failing to embrace the strategic imperatives.
The starting point is that we must ensure that the Zim Asset blueprint is adopted and communicated to all Zimbabweans. It is the strategic direction that places a demand on the outlook of the national budget. Once the strategy is known, there may be no business is those expensive budget review discussions because the basis for evaluation simply becomes the national strategy.
In the absence of strategic direction and a commitment to the strategic priorities, economic turnaround will remain a paralysed venture. Historically, national budgets have attempted to play a 'balancing act' and try to resource every sector of the economy or arm of the Government. Without suggesting that there are sectors which are less important, the point that I am keen on amplifying is that there are sectors which are either high yielding or have quick turnarounds. If such areas are under-financed, economic depression is perpetuated.
The national strategy must be a co-ordinated effort. This will then inform the operational plans of the ministries.
The Project Approach
We must come to accept that there are certain things that we may not be able to do for now but not for ever. Whilst it is good to build new universities, hospitals and stadia, it may be more strategic to invest instead in high-yielding investments like setting up a diamond beneficiation plant. Whilst this is a capital-intensive project, it requires a commitment first from the Government. It is a commitment which will inform the thought processes on capital mobilisation. It is a strategic commitment which invites investors. In the absence of a commitment, no investor will just wake up and start working on a diamond beneficiation plant in Zimbabwe.
The national strategy must therefore embrace a project approach. Every project has a critical path. Criticality should be a definition at national level and not at ministry level. Every ministry has a wish list; however, it must be clear what can be and cannot be done for now. For example, dualisation of roads is a noble idea but it may fall a notch lower in terms of criticality if compared to increasing capacity of electricity generation.
The South African government has a Ministry of Planning which is responsible for overall co-ordination of government programmes and projects. This allows institutionalisation of budgetary strategy. In the absence of critical thinking, every ministry will demand a fair and equitable budget pronouncement thereby inviting the budgetary balancing act. The net effect is sustained economic depression. Critical thinking and the project approach are therefore a leverage.
'Un-slumbering' Parastatals
The establishment of parastatals is a noble idea whose objective should not be forgotten. These should be profit-making ventures which should play a significant role in unburdening the Government. Nevertheless, the performance of some parastatals has placed burdens on the Government. Amongst the strategic priorities for Government would be to ensure the turnaround of parastatals by making them lean, efficient, highly productive and well-remunerated. We have seen scenarios where some chief executive officers have been awarded shocking 'golden-handshakes' for running down an institution. This should be a thing of the past. There must be turn-around Project Teams, or turnaround chief executive officers who are specifically mandated to drive transformation on a project basis. There should be no CEO-for-life. Task-centric employment contracts are the way to go as a way of promoting a culture of productivity and performance accountability.
Government Expenditure
The relationship between revenue streams and Government expenditure is a key metric which must always inform decision making. The Zimbabwean Government has a widening expenditure base and a stagnant, if not declining, revenue base.
Government must therefore adopt a cost containment strategy. This is done by conducting a candid assessment of Government's highest cost drivers and identifying areas that may be cut down without compromising on quality or strategic intents. The following issues may require introspection:
Government is the single largest employer in the country and naturally that places a big burden on staff costs. Nevertheless, the fundamental question is: "Are the Government ministries structured for functionality?" For every head employed, is there value or is it an absolute necessity? Government must embark on a real Human Capital Audit and not a 'Ghost Employee Audit'.
The structure of an organisation is a product of the strategy of such an organisation. It is essential to review whether or not the existing structures are effective to deliver the strategic outcomes of the ministries. Human capital acquisition therefore needs to be remodelled. Certain positions may need contracts of a fixed term nature for the reason that they are project-centric.
For example, some employees recruited by the Reserve Bank of Zimbabwe were for specific projects, for example for conducting education on bearer cheques. If those people were permanently employed, it means that the Government incurs a cost in financing retrenchment packages. I have also observed a trend whereby you have positions like deputy director. In my opinion it is either you are a director or you are not. When it sounds like you are, it means even salary and package will have to sound the same. This may place an unsustainable burden on staff costs. It is important to restructure the civil service for functionality. This however must follow the adoption of the national strategy.
Adjustment of salaries or payment of bonuses must not be ritualistic. It must be a product of a sustainability analysis. You cannot share what you do not have. The future can be safeguarded by making correct decisions today. The Finance Minister should be prepared to be unpopular whilst pursuing a sustainability agenda. It is the long term results which people will be remembered for. Human capital leadership can therefore be a game changer and it must be part of the strategic effectiveness anchors for the Government of Zimbabwe.
Re-industrialisation
The closure and under-performance of companies means loss of corporate tax and Pay As You Earn (PAYE) which all used to be significant contributors to Treasury. Closed companies must not just be resuscitated in the absence of a feasibility analysis; there must a business case. Re-opening companies that closed in the clothing industry will see them re-collapsing due to economic fundamentals which would have remained stagnant.
Re-industrialisation must be a practical agenda. Parliament must adopt a bottom up approach in order to make valuable contributions for legal reform and new economic policy framework. There must be portfolio committees for each major industry which must interface with business and get input on real challenges and map out necessary mitigation or enabling circumstances. Such an agenda is now imperative. In the absence of reindustrialisation, revenue streams for Treasury will remain depressed with no solution in sight. In future instalments, I will be focussing on strategic imperatives for the primary, secondary, tertiary and quaternary sectors of the economy. A turnaround is possible but the key is strategic planning and unburdening the Government.
Request Machimbira is a Strategy, Human Capital and Productivity expert. He is group chief executive of Proficiency Consulting Group.
Resigning to fate or adopting the 'begging bowl' or the 'alms syndrome' approaches is certainly not the best way to yield long term sustainability.
Treasury needs to be financed as a matter of urgency. It is imperative that we take realistic introspection at our situation before rushing to conclusions or recommendations without looking at cause and consequence. I am therefore going to provoke some thinking on some dimensions which I think require a different approach both from the Government and good citizens perspective.
The National Budget
A budget is a financial plan to resource a strategy. The Budget itself is not the strategy. Every Zimbabwean right now is waiting for the budget pronouncement which usually is followed by Budget review discussions. It is my considered opinion that this approach is guilty of failing to embrace the strategic imperatives.
The starting point is that we must ensure that the Zim Asset blueprint is adopted and communicated to all Zimbabweans. It is the strategic direction that places a demand on the outlook of the national budget. Once the strategy is known, there may be no business is those expensive budget review discussions because the basis for evaluation simply becomes the national strategy.
In the absence of strategic direction and a commitment to the strategic priorities, economic turnaround will remain a paralysed venture. Historically, national budgets have attempted to play a 'balancing act' and try to resource every sector of the economy or arm of the Government. Without suggesting that there are sectors which are less important, the point that I am keen on amplifying is that there are sectors which are either high yielding or have quick turnarounds. If such areas are under-financed, economic depression is perpetuated.
The national strategy must be a co-ordinated effort. This will then inform the operational plans of the ministries.
The Project Approach
We must come to accept that there are certain things that we may not be able to do for now but not for ever. Whilst it is good to build new universities, hospitals and stadia, it may be more strategic to invest instead in high-yielding investments like setting up a diamond beneficiation plant. Whilst this is a capital-intensive project, it requires a commitment first from the Government. It is a commitment which will inform the thought processes on capital mobilisation. It is a strategic commitment which invites investors. In the absence of a commitment, no investor will just wake up and start working on a diamond beneficiation plant in Zimbabwe.
The national strategy must therefore embrace a project approach. Every project has a critical path. Criticality should be a definition at national level and not at ministry level. Every ministry has a wish list; however, it must be clear what can be and cannot be done for now. For example, dualisation of roads is a noble idea but it may fall a notch lower in terms of criticality if compared to increasing capacity of electricity generation.
The South African government has a Ministry of Planning which is responsible for overall co-ordination of government programmes and projects. This allows institutionalisation of budgetary strategy. In the absence of critical thinking, every ministry will demand a fair and equitable budget pronouncement thereby inviting the budgetary balancing act. The net effect is sustained economic depression. Critical thinking and the project approach are therefore a leverage.
The establishment of parastatals is a noble idea whose objective should not be forgotten. These should be profit-making ventures which should play a significant role in unburdening the Government. Nevertheless, the performance of some parastatals has placed burdens on the Government. Amongst the strategic priorities for Government would be to ensure the turnaround of parastatals by making them lean, efficient, highly productive and well-remunerated. We have seen scenarios where some chief executive officers have been awarded shocking 'golden-handshakes' for running down an institution. This should be a thing of the past. There must be turn-around Project Teams, or turnaround chief executive officers who are specifically mandated to drive transformation on a project basis. There should be no CEO-for-life. Task-centric employment contracts are the way to go as a way of promoting a culture of productivity and performance accountability.
Government Expenditure
The relationship between revenue streams and Government expenditure is a key metric which must always inform decision making. The Zimbabwean Government has a widening expenditure base and a stagnant, if not declining, revenue base.
Government must therefore adopt a cost containment strategy. This is done by conducting a candid assessment of Government's highest cost drivers and identifying areas that may be cut down without compromising on quality or strategic intents. The following issues may require introspection:
- Staffing levels of the Government
- Local and foreign trips
- Size of delegations for trips
- Lawsuits
- Capital projects, etc
Government is the single largest employer in the country and naturally that places a big burden on staff costs. Nevertheless, the fundamental question is: "Are the Government ministries structured for functionality?" For every head employed, is there value or is it an absolute necessity? Government must embark on a real Human Capital Audit and not a 'Ghost Employee Audit'.
The structure of an organisation is a product of the strategy of such an organisation. It is essential to review whether or not the existing structures are effective to deliver the strategic outcomes of the ministries. Human capital acquisition therefore needs to be remodelled. Certain positions may need contracts of a fixed term nature for the reason that they are project-centric.
For example, some employees recruited by the Reserve Bank of Zimbabwe were for specific projects, for example for conducting education on bearer cheques. If those people were permanently employed, it means that the Government incurs a cost in financing retrenchment packages. I have also observed a trend whereby you have positions like deputy director. In my opinion it is either you are a director or you are not. When it sounds like you are, it means even salary and package will have to sound the same. This may place an unsustainable burden on staff costs. It is important to restructure the civil service for functionality. This however must follow the adoption of the national strategy.
Adjustment of salaries or payment of bonuses must not be ritualistic. It must be a product of a sustainability analysis. You cannot share what you do not have. The future can be safeguarded by making correct decisions today. The Finance Minister should be prepared to be unpopular whilst pursuing a sustainability agenda. It is the long term results which people will be remembered for. Human capital leadership can therefore be a game changer and it must be part of the strategic effectiveness anchors for the Government of Zimbabwe.
Re-industrialisation
The closure and under-performance of companies means loss of corporate tax and Pay As You Earn (PAYE) which all used to be significant contributors to Treasury. Closed companies must not just be resuscitated in the absence of a feasibility analysis; there must a business case. Re-opening companies that closed in the clothing industry will see them re-collapsing due to economic fundamentals which would have remained stagnant.
Re-industrialisation must be a practical agenda. Parliament must adopt a bottom up approach in order to make valuable contributions for legal reform and new economic policy framework. There must be portfolio committees for each major industry which must interface with business and get input on real challenges and map out necessary mitigation or enabling circumstances. Such an agenda is now imperative. In the absence of reindustrialisation, revenue streams for Treasury will remain depressed with no solution in sight. In future instalments, I will be focussing on strategic imperatives for the primary, secondary, tertiary and quaternary sectors of the economy. A turnaround is possible but the key is strategic planning and unburdening the Government.
Request Machimbira is a Strategy, Human Capital and Productivity expert. He is group chief executive of Proficiency Consulting Group.
Source - Sunday Mail
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