Best advice on how to deal with current Zimbabwe economic crisis

Patience pays for our situation. What has contributed much to our current situation is that Zimbabwe pressed the panic button after contested elections. We need to move on and deal with what is currently on our table. First of all we need to understand that one of the best economic and development principle is to eat what we kill. We need to adopt this mode, and it is critical for our economy. We must be a principled nation, we need to learn to survive with what is on the table. We have a serious weakness, which we must curb, our expenditure exceeds our income. Economy is a process and it's gradual. We don't have to expect results on the same day the cabinet was put in place. I think basically what Mthuli Ncube is trying to do is to correct the problem using basic fundamentals of the economy and development. Remember we are coming out of the pit and we are trying to repair the damage for the past 34 years and this can't happen in a twinkling of an eye, it's a process and there is need for patience. One cannot celebrate the downfall of the economy, because the after effects of the crisis are not selective they affect almost everyone. Our economy does not need to be bookish, it's a practical economy, it's an informal sector therefore there is lack of industrialization and the problem must be corrected. If you check very well, we have been surviving on borrowing and we have a huge budget deficit, the gap is too wide to close, instead of talking of other measures like multi-currency system, the best option is recapitalisation of the industry. We need capital for the industry. We need to close the gap of borrowing. The major challenge is whatever we are going to borrow, we spend it and we go and borrow again. How then do we expect to close the gap of borrowing? We need to be cautious on how we spend our money? Instead of buying cars and other useless things, we can major on empowering citizens so that we can be able to generate more income and revenue.

Debt Clearence Plan
Minister of finance must come up with a proper debt clearance plan. One of the best options is to join those countries which can't get rid of their debts, then we are classified under the poor debt relief plan so that we can be able to clear our arrears. Most lenders need to know how we used our previous debts and our major plan to clear the current debt. We have a huge budget deficit. We have been surviving on debts since the previous regime. We have mortgaged our country to various international financial institutions because of our debts. We owe world bank and IMF over 1 billion, we owe Afrimex bank over 600 million, we owe various financial institutions around the world between 3 billion and 4 billion, how then are we going to recover from such huge deficit caused by debts? We have been giving farmers inputs, farm equipment and other necessities without them paying back. There must be a financial mode which must be a business model so that our country can recover from such huge financial loss. Most purported farmers have been selling farming inputs and equipment instead of investing making use of such opportunity to produce more. Minister of Finance must facilitate deals which a business model which can help to recover those debts. In the past Zimbabwe used to finance its local budget using Agriculture by contributing towards the revenue of our country and GDP, about 60% came from agric sector. We need to transform ourselves from slavery mentality into business class model. The idea of begging and dependency syndrome has destroyed our own people. We need broad based empowerment plan which can contribute directly towards the fiscus. We need to eat what we kill by ensuring that nothing is for "MAHARA", everything must come from hard working and sweat. Why should our people get free inputs? For cheap political gain which is not even necessary. How then do we close the gap of budget deficit? I think it is also critical for our Minister of Finance and Governor of Reserve Bank to produce quarterly reports on our expenditure and debt position. This idea of borrowing money outside parliament has put our country in a financial mess. The public must have the knowledge of our debt position, and how we arrived on such debts. The country needs explanation

We Need a Clear Sound Development Policy
One of the major critical areas which can have a positive drive on our donors and other potential investors is a clear plan. Though Muthuli Ncube is trying but I think President Mnangagwa must come up with a clear development policy which can then be followed by an indaba launch on economic policies. We should not be desperate for investors. We end up putting our country at risk of dubious investors. We have critical sectors of the economy which includes mining, agriculture, production, tourism, health and infrastructure development, with a major boost our economy can be on the horizon anytime. We need a proper plan. We need a clear legal, socio-economic frame work which comprise of academics, policy makers and technocrats in critical areas of our economy. Our country has been duped in so many deals and we have been short changed in the past because of desperation. Questions should then be raised, what is the investor going to get? What is Zimbabwe going to benefit from such deals?

Widen Tax Base
Government is losing more than 800 million a month through tax evasions. There are several people including senior Government officials who are not remitting tax to the Government. Most companies are involved in tax scams and then it is difficult for the Government to recover from such huge scams. If you have a proper check on ZESA report you discover that some owed ZESA up to 300 000 united states dollars. So how do we recover as an economy? More than 4000 companies and individuals are not remitting tax to the Government either by evading tax or avoidance. How does our Government reconcile their own figures? According to ZIMSTATS, the institution which is responsible for collecting data and statistics, we have over 4000 companies which are not on tax sheet. Our economy largely depend on revenue especially from taxes, especially to finance our local budget. My suggestion to the minister of finance is that instead of introducing the 2% tax bill (statutory instrument), he can introduce the informal tax. 97% of our economy is in the informal sector. Government is losing millions of dollars from the informal sector. It would be a good catchment area by targeting the informal sector, especially the informal traders.

Cutting Expenditure
Whilst our finance minister is pushing hard to introduce certain measures to curb economic leakages, it is good for our Government to go an extra mile to walk the talk. There is need for President Mnangagwa to do away with the issue of deputy ministers. We don't need deputy ministers in such a dire economy. Our economy is in the intensive care unit, and I would suggest that deputy ministers for now should be shelved. We have perm secs in every ministry and principal directors they can assist responsible ministers to implement policies so that we can be able to cut expenditure. We also have a heavy burdened civil service payroll which can be audited. For example we can say all civil servants who are above 50 can be retired from service, and also ghost workers pegged at about 60000. You realise that as a nation we can save at least more than 25 million dollars a month which can be re-directed to critical sectors of the economy such as health and agriculture. I don't buy in the idea of command agriculture. Government used over 500 million using the facility bankrolled by an individual, how did they arrive at such figures to finance such a small economy? Did the idea benefit the Government and the economy as a whole? I would like to believe the command agriculture vehicle spearheaded by individuals brought more problems than solutions by putting us in terrible situation (debts). We need a proper broader empowerment plan and we deviate ourselves from such unnecessary vehicles which have the potential to plunge our economy in serious debts.

Corruption
We have a major toxic issue which has affected our economy. Investors are not guaranteed unless we deal with the root of corruption. Corruption affects the day to day operations of governance and restoration of confidence within the system. One thing you need to understand is that if confidence is eroded away from the public. The recent outbursts on RBZ rot is quite saddening and the President must do something about the corrupt elements within the system so as to restore confidence on investors. Investors have adopted the wait and see approach until confidence is restored.

The Forth Coming Budget

I would suggest that whilst it is important to have a wide consultation for the 2018/2019 budget it is also important to meet academics, opinion makers, policy makers, business community and academics and the public at large and hear what they would suggest. We are transforming ourselves as a nation by accommodating other people's views but it is also necessary to hear what the public wants through round table meetings. We can't ignore policy makers of this country. There are sound policy makers out there who can contribute positively towards the growth of this country and enhance development. The budget must reflect the debt position, budget deficit and arrears we have as a nation, mega deals that were signed should be made public. The budget should also talk about critical sectors of the economy, financial reforms, and economic reforms, major adjustments in the fiscal environment such as cutting expenditure and how much we have spent as a nation. The budget must also widen the tax base, and at the same time, address the major facts on the middle class economy ahead of 2030. We have major critical sectors of the economy such as agriculture, mining, tourism, infrastructure development and it is important for the minister to inform the nation on how those critical arrears are going to be supported. There is need for the minister to issue a statement which is broader on the supplementary budget such as aid, donor funding for critical areas such as health and education. However the budget must be centred on transparency and macro and micro economics.

Tinashe Eric Muzamhindo writes in his personal capacity as an academic and he is studying Doctorate in Philosophy at Women University and can be contacted at tinamuzala@gmail.com