via ‘Budget spells death of old economy’ Sunday, 22 December 2013 by Edwin Mwase and Lincoln Towindo Sunday Mail
The National Budget presented by Finance and Economic Development Minister Cde Patrick Chinamasa last week will usher in a “new” economy, anchored on the recently adopted Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset) and will witness the local economy assuming a sustained growth trajectory as well as improve the livelihoods of ordinary Zimbabweans.
Food security and nutrition, housing, health and transport are among the key deliverables the country’s citizens are keenly awaiting.
Presenting the Budget last Thursday, Minister Chinamasa announced the “death” of the “old” economy, saying a new one is rising from the ashes.
The 2014 National Budget, which is projected to grow the economy by a cumulative 6,1 percent, up from this year’s 3,4 percent, is premised on an active implementation of Zim Asset as well as the strong recovery of agriculture and improved performance of the mining and construction sectors.
The Budget, which has been roundly described as “policy-driven”, has introduced a raft of policy changes that are expected to improve the well-being of many Zimbabweans through improved social service provision, providing access to affordable housing loan schemes, resuscitation of ailing industries and support for small-scale farmers.
The policies introduced in the Budget dovetail with the Zanu-PF election-winning manifesto, President Mugabe’s inauguration address and the President’s address on the occasion of the opening of Parliament, all of which feed into Zim Asset.
The Budget will promote, among other objectives, the development of the agricultural sector through the revamping and rehabilitation of the country’s irrigation infrastructure, which will be financed to the tune of US$9,4 million, to push the country towards food self-sustenance.
Beneficiaries of the Land Reform Programme will be able to tap into the recapitalised National Irrigation Development Fund for credit financing to fund irrigation development. This will, no doubt, mitigate the effects of recurrent droughts.
Food security and nutrition are of paramount importance. A huge chunk of national funds is channelled towards grain imports on the back of poor yields. The country has observed the trend of recurrent droughts translating into poor harvests.
Though the fact has always been clear, the shibboleth of irrigation development remained just that: a catchphrase. Nothing much appeared to move in terms of implementation.
However, the running agricultural theme in Zim Asset and indeed the Budget touches on this imperative of ensuring food security through irrigation development across all provinces.
Farmers will also access irrigation equipment through hire purchase arrangements established by Government and equipment suppliers.
In line with Zanu PF’s housing-for-all policy, the Government will immediately gazette legal instruments to extend the tax exemption on mortgage finance to all financial institutions that provide mortgage finance.
Financial resources will also be mobilised for extensive planning, surveying and servicing of land for the development of housing stands across the country. Civil servants, on the other hand, will benefit from low-cost housing through the revamped Civil Service Housing Loan Scheme as part of the non-monetary incentives available to all Government workers.
Low-cost housing stands will be availed throughout the country in suburbs such as Dzivaresekwa Extension Phase 2, Parklands, Waneka, Cherutombo, Nemamwa, Chiredzi, Tshovani and Murereki. In order to resuscitate distressed industries, with a view to increasing capacity utilisation as well as generating employment opportunities, the Budget introduced zero-rated duty for capital equipment for local industries.
Analysts note that such people-oriented policies will go a long way in fulfilling Zanu PF’s election promise of pushing for the resuscitation of industry as well as creating employment.
Economist Mr Brains Muchemwa said the Budget, which has come under difficult economic conditions amid high expectations, has been realistic and demonstrated the limited scope of fiscal policy flexibility.
However, he said it is clear that the economy remains depressed and focus should rather be on soft issues relating to building confidence and policy consistency.
“The major challenge remains that the manufacturers may fail to respond positively to such measures as they have more pressing problems relating to high-gearing levels and inefficient operating structures.”
Another economist, Mr Takura Mugaga, described it as an enlightening Budget as it acknowledges the problems bedevilling the economy.