(TALKZIMBABWE) Biti's Budget lopsided and anti-poor

Biti's Budget lopsided and anti-poor
Itayi Garande
Sun, 13 Dec 2009 23:19:00 +0000

FINANCE Minister Tendai Biti last week presented the 2010 National Budget. An interim budget was presented in July-2009. One of the aims of that Budget was to "save the drowning vulnerable and poor groups".

While there seems to have been some degree of compromise in this Budget, as opposed to the 2009 Mid-Year Fiscal Policy Review, it remains fundamentally pro-business and anti-poor, as it fails to address questions of poverty reduction, among a wide a range of critical areas. The Budget has to be seen against the background of two major developments in the country.

Most prominently, it is to be viewed as the first policy outline of the inclusive Government to cushion itself against the ongoing world economic crisis (termed in several quarters as the greatest global economic recession in the history of mankind) to which Zimbabwe is hardly immune.

It is also to be considered as the first policy formulation of the inclusive Government in keeping the sanctions-induced economic downturn away from critical sectors like agriculture, manufacturing, tourism and banking and for providing substantial relief to the masses in distress through its programmes like STERP - the Short Term Economic Recovery Programme.

Unfortunately, the mainstream sections of the media, business, academics and even the civil society have hailed the Budget saying it will help the business sector recover.

However, the Budget neither makes adequate provision for sustainable human-centred development, nor does it cater for poverty reduction - its main aim.

It is, therefore, important that Parliament give this Budget rigorous scrutiny as it passes its various stages from proposals into law.

The irony of this Budget is that it is meant to "cushion vulnerable groups" and provide "social protection programmes for vulnerable groups".

Minister Biti claims that STERP and the 2010 Budget (or STERP II) are meant to "guarantee the integratability of the poor in the economic growth policy framework".

He adds that STERP II, specifically, is meant to "save the drowning vulnerable and poor groups".

The main weaknesses of the Budget, which do not help the poor move from the poverty trap, are as under.

Firstly, the Budget fails to take into consideration the demographic structure of Zimbabwe.

The Movement for Democratic Change party (MDC-T), of which Mr Biti is secretary general, claims that fourty-five percent of Zimbabweans are malnourished, ninety percent unemployed and over 85 percent are poor. Mr Biti's Budget, however fails to recognise these vital statistics.

He proposes to retain the multi-currency environment, without the parallel use of the Zimbabwean dollar. Many people in the rural areas do not have access to the U.S. dollar used in the country; yet there are no proposals to make some currency, any currency, available to the poor masses.

The Real Time Gross Settlement System (RTGS), Automated Teller Machines (ATMs), Cheque Payment Systems and Points of Sale which have been operationalised, will ease cash access and financial transactions in the urban and peri-urban areas, but will not help the marginalised rural populations and small to medium businesses who do not have access to that elusive currency.

Mr. Biti's Cash Budgeting policy does not address the cash (liquidity) problems in the rural areas. In urban areas, alike, cash access remains constrained. His 'plastic money' proposals do not address this problem either.

Secondly, there are many exclusions in Mr. Biti's Budget which make it difficult to create a coherent picture of the proposals.

In outlining some of the challenges to recovering the Zimbabwean economy, Mr. Biti refers to "structural development traps" which he says are responsible for the decline in the Zimbabwean economy.

The minister gives a raft of these 'traps' or problems faced in turning around the Zimbabwean economy, yet fails to acknowledge, directly, that sanctions have altered the way Zimbabwe does business with the rest of the world community.

The exclusion of the sanctions issue from minister Biti's 2010 Budget, is problematic.

Sanctions imposed by Britain, the US and their Western allies should have been factored into the Budget to give a true representation of the challenges facing the Zimbabwean economy.

Thirdly, the Budget also does not make sufficient provision for human security in terms of protecting the lives of citizens.

Despite the runaway high rates of poverty-related crime such as domestic violence as well as the scourge of corruption in the public service, the allocation for the police is conspicuosly missing from the Budget.

Fourthly, Mr Biti hopes that recapitalisation of banks will help "mobilise domestic savings", yet thinks that "On account of the low savings in the economy ... the responsibility for funding critical infrastructure has largely been through the Budget." Such inconsistencies are dotted all over the budget.

Mr Biti's logic is that once industry takes off and recovers, there will be a willing and able workforce to fill jobs and start making tax contributions to the fiscus.

For a country whose downturn has been consistent for ten years, it is not the unemployment figures that merit attention, but the duration of unemployment. Even when Zimbabwe has emerged from the economic catastrophe, there are huge numbers who will remain unemployed.

Some of these people have become “demoralised” and “dispirited” and have effectively withdrawn from the workforce. It is important to note that long-term unemployment feeds depression, poverty, and family discord.

Radical reform of the public services and social protection programmes is, therefore, needed to change the attitudes and values of people. This is not recognized nor budgeted for adequately, in Mr Biti's Budget.

Lastly, the decision not to raise taxes for big businesses was a particularly retrograde step, and meant the poor and small businesses were taking a far bigger hit in the Budget than the well off. Small businesses, ironically, form the large employment sector in the country. Zimbabwe's small business sector and cottage industries employ the largest number of people.

Vulnerable groups like people with disabilities, women, children and senior citizens are also now at greater risk of poverty; as Biti's proposals fall short of providing specifically for these groups, in a climate of economic flux.

There was no mention of land redistribution, minimum wages, a comprehensive plan for agricultural labour, et cetera. The Budget was silent on irrigation, agricultural extension services and housing.

Interestingly minister Biti has proposed a Cash Budgeting formula, where you "simply spend what you have", yet factors in promised pledges from NGOs and other humanitarian groups to inform the Budget. Such inconsistencies dot his Budget and the more one reads the fine print, the more revealing it is.

Fundamentally, the Budget eats itself, and defeats its own purpose. It simply fails to "guarantee the integratability of the poor in the economic growth policy framework" and STERP II, specifically, fails to "save the drowning vulnerable and poor groups".

Biti has backtracked on his promises to the poor and marginalised groups the MDC-T party claims to represent.

If these exclusions were deliberate, then this is the MDC-T's election manifesto predicated on one simple strategy: "Keep the poor vulnerable and make more promises inorder to win electoral votes."