Finance and Economic Development Minister, Professor Mthuli Ncube might be a fundi in economics and full of bookish ideas that appear to be the panacea to the economic crisis facing the country but somehow he is not in touch with the plight of the ordinary man on the street.He is not in touch with the masses.
His ‘Austerity for Prosperity’ narrative seems to be putting a huge burden on the ordinary person on the streets and will definitely be a Herculean task for it to triumph in an African set up.
This behavioural trait (out of touch with masses) in him was exposed during his radio interview with Linda Mhuriro on Star FM on Monday.
In the heated interview , he declared that the general populace had embraced the 2% tax ,salary cuts ,increase of excise duty, duty payment in foreign currency with open hands.
This is despite the fact because all these raft of measures were not subject to any public consultation nor any consultation with other stakeholders.
In that interview he boldly states that:
“You will be surprised, the people will get used to it.”
In that statement, it shows someone who is clearly saying I don’t care how the policily will be executed or how it is going to affect the ordinary citizen in the immediate, medium and long term.
I also noted that in his budget presentation, the recurring thrust was on the issue of taxation, which has made him very unpopular among the general populace.
The Zimbabwean people are strong and has been victims of the government’s ‘hunting and gathering’ methods in the name of taxation for so many years..Of course tax need to be paid as it is the source of revenue for the fiscus, but the draconian manner in which this tax collection is being executed is cause for worry.
Mtuli’s policies are largely based on bookish knowledge where he wishes for an economic ‘Utopia’ without putting people first.
He simply forces down policies down the throats of the people.Yes on paper they look sexy, but the implications on the masses.Is is the people centred government that he is representing?
In his defence he always says, people need tough measures before enjoying the fruits.He said these tough measures help to cut government expenditure and “people will get used to it” is his anthem.
When I was going through the budget statement with a third eye i noted that the first highlight of the budget is on the International debt to the African Development Bank and other Bretton Woods Institutions.
He acknowledges that the country has been defaulting in the payments of the debts it owes to the bank and the ability to clear this debt will unlock new credit lines for the country. He mentioned, in an interview on Star Fm on Monday, that the measures to be taken have to be the ones accepted by the African Development bank and also accepted by the people of Zimbabwe.But are the people of Zimbabwe accepting his measures.?
His approach reminds me of the unpopular Economic Structural Adjustment Program (ESAP) of the year 1992. The government was working on external recommendations in order to secure a path for credit lines, disregarding the socio-economic impact it would have on the populace. The need to satisfy the Gross Domestic Product at the expense of the Income Per Capita which affects the people at the macro level. It is no secret that ESAP was a total failure, with devastating effects that lives on until this day.
One scholar Saliwe M. Kawewe in his journal submitted that such economic blueprints like ESAP inflate poverty.
He said: “These economic reforms inflate poverty, decrease the country’s capability to develop a strong diversified domestic economy, increase the exploitation of workers through deregulation accompanied by environmental degradation. ESAP’s devastation of the poor translates into recurrences of socio-economic crises that threaten peace and social justice and compounded by natural calamities and the relentlessness of the HIV/AIDS pandemic. Human helping professionals like social workers are left to scramble for diminishing resources to meet the basic needs of more clients with less.”
Basing on that submission it is safe for one to conclude that “Austerity for Prosperity” takes the character and form of ESAP.
In street lingua they would say “iESAP yakaenda ku private school”
The honourable minister also talks of the budget deficit that has to be matched with the GDP and his solution to closing the gap is revenue expansion, also in the name of taxes. The 2% tax, increase in fuel prices amongst other forms of taxes. It seems to him, revenue expansion is only attained through taxes. But let me remind him that there other methods of growing the GDP, such as increase in production, particularly primary production level. Our agriculture production has been very low. Commercial agriculture has a huge potential in Zimbabwe to contribute to the GDP but nothing is being done about it. Mining and benefician of minerals is not being fully exploited to its maximum capacity. These two areas only, accompanied with the policy of beneficiation, guided by proper corporate governance, have the potential to turn around this economy.We have rich and vast natural resources and minerals in this country.
Economic restructuring needs one to take positive and decisive steps and not double standards and backtracking. At one point he is out saying the bond note, rtgs and United States dollars carry the same value, but before the end of the week he is out asking people to open separate accounts for US dollars and another for bond notes which is an indirect admission that they don’t carry the same value.
He constantly runs away from the truth and then gets kicked back to reality. He goes out to increase fuel prices, his justification being that fuel in Zimbabwe is cheaper than anywhere else in the world so to him the people have to find a way to pay for the hefty fuel using their RTGS salaries because he wants it to match the Rand price or the USD price according to the prevailing rates. In his infamous Star FM interview, he is quizzed on the rate (basis) he is using to justify his assertion and he said that he is using United States dollars .
What boggles the mind is why he did not address the bond note issue in his budget so that he simply demonetise the bond note to avoid the confusion since everything is to be measured in United States dollars. The effect that this has on the economy is it breeds a hyperinflationary environment, sharp rise of prices and shortages of basic commodities which we are experiencing already.
That civil servants are underpaid is an open secret. Some even getting as low as $80 usd equivalent as their salary and here is a full minister proposing a slash of 5% and having the audacity to say that it would be accepted. Most civil servants do not have access to allowances that those at the top get such as housing allowance, fuel allowance amongst others that he stammered to disclose during the interview. The effect of a salary cut during the time of price hikes is unthinkable. This can only be done by a person who is a total alien to prevailing conditions and realities.
Another justification he proffered for the 2% tax ,was that he wanted to reach out to the informal enterprises. Before one can treat the symptoms, the sickness has to be diagnosed and treated first. Mtuli Ncube needs to realise that the informal sector is growing because of unemployment caused by the closure of industries hence productivity has to be enhanced. Another cause of the proliferation of the informal sector is the bottlenecks and bureaucracy that one goes through to register a company so that they may be included in the formal sector. The government make it so difficult to register a company that brings economic prosperity, employment and revenue to the government but make it very easy to register a church and even give them access to land sometimes free of charge, hence policy misdirection. They need to help the informal sector so that it may become formal. If someone is going to be paying tax i don’t see a reason why they should pay through their nose to register the company.
The duty that was being paid by vehicle importers has been a major cash cow for the country. Currently the duty is at 98% which is unjustifiably hefty. After paying the duty , one is asked to pay warehouse charges of $170 , then pay $30 towards insurance and $20 for temporary number plates before they are then asked to pay $80 for number plates and $20 for ZINARA and a traditional $2 tollgate fee every time they use the highway. As if that is not enough, Mtuli Ncube is now asking for the 98% duty to be paid in United States Dollars.
My question to the minister is, where they supposed to pay in bond notes and rtgs? So if I buy in rands I need to pay duty in rands? What if i buy in kwachas, YEN or Meticash?
If Zimbabwe is indeed a multi currency country, you can’t force people to use foreign currency in their own country unless you mean to say that the money you are paying civil servants is not money.
Sadly, when your only tool is a hammer all your problems will look like a nail. Mtuli’s only solution to the economic quagmire of this country is tax. It reminds me of the Smith regime where there was hut tax, dog tax, land tax and cattle tax. Slowly but surely we are going back to that era, soon you will be asked to pay tax per every child you have. The honourable minister, needs to treat the disease and not the symptoms lest he be remembered for an economic genocide.