Finance Minister Mthuli Ncube laid out a solid spending plan for the US$961 million recently injected by the International Monetary Fund (IMF), saying the windfall would be guarded by three top bankers, who will report to President Emmerson Mnangagwa monthly.
Sectors hardest hit by Covid-19-induced lockdowns would receive maximum attention as Ncube and his team work to revive an economy that slowed by 4% as the pandemic ripped through the country last year, he said.
The US$961 million was part of a US$650 billion injection released worldwide last month to restart economies following a difficult year when countries came under pressure from the pandemic that broke out in China late 2019.
Zimbabwean firms offloaded 500 000 workers between last year and April 2021, according to the World Bank.
Write downs in the key tourism industry hit US$1 billion, the biggest such fall in 40 years.
But as Harare struggles to access international credit to reboot its stuttering economy due to its high risk profile, the IMF’s intervention came as a timely boost.
However, concerns have been raised over the country’s ability to deploy the funding to productive use, given high-level corruption.
Speaking during an exciting economic review webinar organised by the Zimbabwe Independent in partnership with Nedbank Zimbabwe yesterday, Ncube vowed to observe the highest levels of transparency and accountability.
He said a plan on how to spend the money was already in place, with the social sector, productive sectors and infrastructure programmes among the most immediate recipients.
“We received just below US$1 billion in SDRs; so as I speak, because we haven’t used a cent at all, they just count as reserves. So in principle we have about US$1 billion which is supporting reserves and obviously, as we draw down, we use that on development,” the Treasury boss said. “But whatever is unused still remains to be accounted for as part of the country’s reserves.
“SDRs are accounted for as reserves so at any point in time we are supporting the reserves build-up agenda. But over time we will obviously invest in these development projects only up to a point where then the remainder is kept behind in SDR form to bolster our reserves and any other contingency funding required in the future.”
To ensure transparency and accountability, the government has formed an implementation committee chaired by Ncube, a banker; Finance ministry secretary George Guvamatanga, a former Barclays Bank managing director; and central bank governor John Mangudya.
“The SDRs will be used transparently, they will be used prudently, we will be accountable and we are determined to do this. We have managed things in terms of our budget very well every year, producing balanced budgets so I don’t see how on this occasion suddenly those skills will desert us and then we are unable to manage SDRs properly. So we are very accountable and will make sure the public is constantly informed,” added Ncube.
He said priority areas for the SDR will be those hardest hit by Covid-19 — the social sector, health and education.
Productive sectors like agriculture, manufacturing, mining and infrastructural development will also get top priority.
He said the government intended to procure more Covid-19 vaccines and upgrade major hospitals, especially referral or central hospitals to make sure they are revamped, with new equipment installed.
At least one boarding school will be built in each province.
As the government builds the schools, they will be equipped with power with water, while the elderly and disadvantaged groups would also get priority.
A strategy will be put in place to support the youth through some sort of work for cash initiative. This comes as the government has already unveiled a tax rebate incentive for companies that employ youth in 2021.
In the productive sector, the government will use SDRs to support two areas in agriculture, one being the creation of an export revolving fund to support the horticulture sector and secondly funding irrigation projects to climate-proof the sector.
“Anything in horticulture that earns hard currency, especially, will be supported. This is a revolving fund so we are not really spending money. We are going to structure a credit facility with some local and foreign banks,” Ncube said, adding that the government would lower the lending risk by extending a cash cover from the SDRs to banks under this facility.
In manufacturing, Ncube said, the government was looking at supporting specific value chains, for example the cotton and leather value chains as well as agro processing.
The manufacturing funding will also be through a revolving fund and retooling is a priority. The pharmaceuticals are also targeted under the manufacturing sector.
In the mining sector, Ncube said, a revolving fund to avail equipment to small-scale gold producers who account for 60% of the national production of the yellow metal will be set up.
Distribution of the equipment will be spatial and comes amid a deliberate strategy to create gold centres and support small-scale miners.
On infrastructure, Ncube said funding would be allocated to road and housing infrastructure.
“We could invest in specific housing projects which we are looking at. We can have bulk services and private developers can come in and develop housing and real estate.
“We also want to make use of the financial instruments which we have developed such as REITS (real estate investment trusts) and other funding mechanisms which we are developing as we develop our capital markets,” Ncube said.
REITS or real estate investment trusts are companies that own, and in most cases, operates income-producing real estate.