Budget delays disastrous

via Budget delays disastrous – DailyNews Live  21 NOVEMBER 2013  

Zimbabwe’s continued delay in announcing the 2014 National Budget is not only disastrous for business but for the whole economy.

Already everyone in the country is now feeling the effects of the absence of a sustainable roadmap for economic management.

Since the new government was inaugurated in August, the economy has been deteriorating significantly with the business community waiting for policy direction.

This lack of direction is being felt in every sector of the economy.

Demand has shrunk, volumes are not moving and debts are not being paid.

Many companies are going for months without paying workers their wages.

The much-touted blue-print dubbed the Zimbabwe Agenda for Sustainable Socio Economic Transformation (ZimAsset) has failed to halt the economic decline, which is threatening to break the country’s social and moral fibre.

We strongly concur with former Finance minister Tendai Biti who this week said at the moment, it was crucial that leadership of the new government makes bold statements and decisions that can bring back confidence in the economy.

This is because speeches alone will not be sufficient to address mounting challenges Zimbabwe is facing but bold actions that will deal with the issues of transparency, bilateral aid, foreign direct investment and the issue of the disproportionate wage bill.

Unemployment levels in the country have reached alarming levels and something needs to be done urgently to stop this scourge.

Every week, companies are filing for liquidation and each month thousands of employees are being thrown into the streets as firms are fiercely engaged in the race to the bottom.

At the same time, school and college graduates are being churned out yearly adding to the already ballooning unemployment rate.

At this rate, we are raising a generation of young people who will never know what it feels like to work and earn a wage.

We are raising a generation of people who will live and grow without ever making a meaningful contribution of their youth strength and energy to their country’s developmental needs.

No nation on earth can prosper when it allows its huge youthful manpower strength to remain idle and go to waste.

This is a national crisis of  large proportions that clearly needs a marshal plan and deliberate government national policy to tackle and solve with the urgency it deserves.

No single family has been spared by the unemployment crisis that has ultimately driven young people into early morning drunks and alcoholics and indulgence of all sorts.

 

COMMENTS

WORDPRESS: 7
  • comment-avatar
    Boss MyAss 8 years ago

    Development finance has gained real momentum in the postwar years for a variety of reasons, including a wave of decolonization that led to the independence of countries once under the thumb of European imperialism. The Cold War simultaneously sparked a race between East and West to amass influence and resources in less developed countries.

    By the early 1990s, private capital flows began to outstrip bilateral and multilateral flows of government development funding.This signaled a profound shift in the world economy, opening new possibilities for broad-based job growth.

    A crucial change in terminology played a supporting role in attracting this new surge of investment. For many years, the “underdeveloped” label had tainted the assets of developing nations, yielding undervalued assessments and arbitrary discounts. But terms like “less developed countries (LDCs)” and the “Third World” eventually gave way to “newly industrialized countries (NICs).” Then, in the early 1980s, Antoine van Agtmael, then serving as division chief for the World Bank’s treasury operations and deputy director of the International Finance Corporation’s Capital Markets Department, coined the term “emerging markets.”

    No country has sustained rapid growth without also keeping up impressive rates of public investment in infrastructure, education, and health.As well as transport and telecommunications networks, infrastructure spending also encompasses electricity, quality schools, sanitation, and clean drinking water—services that have a dramatic impact on the quality of life for residents of low-income nations.

    The situation is also urgent in Africa—especially in sub-Saharan Africa, where road density, electricity, and sanitation lag far behind other countries. Only one in four Africans has access to electricity, and only one in three rural Africans has access to an all-season road. According to the World Bank’s Africa Infrastructure Country Diagnostic (AICD), Africa’s infrastructure deficit is lowering the continent’s per capita economic growth by 2 percentage points each year and reducing the productivity of firms by as much as 40 percent. By 2007, external financing for infrastructure (from private capital flows, development assistance, and other sources) had reached $20 billion. But the AICD report estimates that some $80 billion a year is needed.

    A number of financial innovations could be applied to address this daunting capital gap. Credit enhancement funds could be created to accelerate interest in capital structures, reducing the risks for private-sector investors in these projects. Developing nations could direct more domestic funds to infrastructure projects by using derivatives to free up the allocation of funds from institutional investors, such as insurance companies and provident funds. Measures could be taken to enhance the role of banks as intermediaries for local infrastructure finance projects by creating instruments and markets to shape risk, maturity, and duration.

    One financial innovation has recently been deployed to spur sustainable infrastructure development that fights climate change: World Bank Green Bonds. In partnership with a consortium of investment banks, the World Bank raised $350 million via several key Scandinavian investors (first transaction) and $300 million via the State of California (second transaction) to support green development projects. These include solar and wind installations, deployment of clean technology, upgrades of existing power plants, funding for mass transit and residential energy efficiency, methane management, and forestry protection initiatives administered by the World Bank in developing countries.

    The concept of “global development bonds” has been floated to overcome the historical inability to link institutional investors with developing countries. These fixed-income securities would cover a pool of diversified projects and would mobilize capital market funding, particularly from U.S. institutional investors. Institutional investors are currently unable to invest in such projects because rated securities do not exist, but this could be solved through public agency and philanthropic credit enhancement. It may be possible to utilize entities like the Overseas Private Investment Corporation (OPIC) to provide credit wraps or guaranteed credit enhancement funds to draw in institutional investors into these infrastructure projects.

  • comment-avatar

    BMA, that’s very enlightening and well articulated. Though I’m sure you support those thoughts, I’m still curious, did you write it?

  • comment-avatar

    What a load of tripe – the only thing that will draw in investment is getting rid of the corruption and greed of ZANU(PF), and instituting respect and enforcement of property rights, including investments in business.

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    simon 8 years ago

    correct DW- simple isn’t it yet the zanu destructive machine wont do it. they rather watch zim die. their bank account are full enough why should they care about the people. 33 years of plundering looting has made them very rich.

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    munzwa 8 years ago

    A Marshall Plan!!!! That is exactly what zanu are working toward.Steel the entity blind and have someone else come in and bail them out. These people need to be held accountable. There some amongst us that are builders and others that destroy/loot.