Domestic resource mobilisation spurs Zim, says Chinamasa

via Domestic resource mobilisation spurs Zim, says Chinamasa | The Herald September 10, 2015 by George Chisoko

Zimbabwe resorted to domestic resource mobilisation for economic development owing to the drying up of external development assistance, Finance and Economic Development Minister Patrick Chinamasa has said. While addressing a high-level forum on mobilising domestic resources to finance Africa’s transformation, Minister Chinamasa said domestic resource mobilisation was not a matter of choice for Zimbabwe but a necessity triggered by the imposition of illegal sanctions.

“For us it has not been a matter of choice, but we had to resort to domestic resource mobilisation in the wake of illegal sanctions imposed on us in retaliation to our land reform programme. We have not received any meaningful external development assistance in the last couple of years, also because of our debt situation with our creditors. This has, however, helped us discover ourselves and given us ownership in what we do,” said the minister.

The issue of domestic resource mobilisation dominated discussions at the African Capacity Building Foundation (ACBF) Board of Governors meeting held at the African Union headquarters.

Zimbabwe has set up a high-level taskforce led by the two Vice Presidents — Emmerson Mnangagwa and Phelekezela Mphoko — to look into how the country can transform using domestic resources without depending on foreign aid.

“We are generating financing for social and infrastructural development from domestic resources and this is why we continue looking at our tax regime in terms of where we can tax and get revenue. With the decline in our economic fortunes where we have experienced a structural shift from the formal to the informal, we continue grappling with taxing the informal sector given its importance in our domestic resource mobilisation efforts,” said Minister Chinamasa.

While agreeing with Minister Chinamasa on the importance and significance of domestic resource mobilisation, panellists on the high level forum, however, said African member countries needed to treat it as a must given that external financial flows were highly unpredictable.

Domestic resource mobilisation refers to the generation of savings and taxes from domestic resources and the allocation to productive activities. Governments can mobilise savings through institutions like pension schemes and insurance firms while widening the tax base.

During the same meeting Zimbabwe was commended for being a strong pillar of the foundation. ACBF executive secretary, Professor Emmanuel Nnadozie said while other member countries had supported the work of the foundation by ensuring they were paid up, Zimbabwe had remained a strong pillar as evidenced, not only by having paid its financial obligations in full, but by also giving the foundation offices to operate from. ACBF is head-quartered in Harare.

“I want it to be on record that Zimbabwe has been excellent in paying its dues every year. We have not had any problems with Zimbabwe in that regard and as a result we want to increase our support in capacity building,” said Prof Nnadozie.