(HERALD) Govt urged to prioritise investment

Govt urged to prioritise investment
By Golden Sibanda

GOVERNMENT should whittle down consumptive expenditure and double investment to accelerate economic recovery, the Zimbabwe National Chamber of Commerce has said.

ZNCC made the proposal among wide ranging recommendations to Government for consideration in the next national budget.The business grouping said the Government should significantly reduce unproductive spending, estimated at 95 percent of the national budget.

ZNCC said a drastic reduction in consumptive spending would enable the Government to double capital expenditure to 10 percent. "Government (must) do a cost benefit analysis and establish composition of Government expenditure (95 percent) of total revenue, 4.6 percent only allocated to capital expenditure is not sustainable," said ZNCC.

Government could reduce expenditure through downsizing the public service, which should be preceded by a revamp of the public service charter.In addition, ZNCC suggested that the Government could whittle down expenditure by reducing ministries, embassies, consulates and missions abroad by consolidating representation in various regions.

It could also cut on expenditure by reducing foreign trips and using alternative forms of communication such as video conferencing.Government has been advised to mainstream the informal sector into the economy by bringing it under the tax record and introducing incentives to encourage the informal sector to bank proceeds. This, ZNCC contends, would help widen the national tax base.

ZNCC said minerals must be channeled through an accountable structure to raise revenue and limit smuggling while borders must be made tight to improve legality of business and improve revenue.To improve the inflow of international capital and the country’s credit worthiness ZNCC proposed that the country should settle its debts. In addition ZNCC recommended the restoration of relations with Bretton Woods institutions to widen potential sources of liquidity.

The business representative body said Government should adopt market-based farming and carry out farm audits to access productivity and then offer support based production taking place.These proposals, among others, would enable the Government "to fund consumptive expenditure from revenues and balance recurrent and non-recurrent expenditure without recourse to borrowing".

ZNCC also made proposals on tax reforms, export stimulation, financing, investment promotion, indigenisation and solving the brain drain for the country to achieve accelerated economic recovery.

The business grouping conceded that economic recovery had irrefutably commenced, but a lot of ground was still to be covered.

It was in this regard that the 2010 budget is expected to play a major role in accelerating and intensifying economic recovery.

The recovery has to target the key economic sectors mining, manufacturing, agriculture, financial services, tourism and commerce.