Budget: A missed opportunity to fight poverty

13 December 2021

Heading into the 2022, the national budget that was presented before Parliament on November 25, last month, there were expectations that Finance minister Mthuli Ncube would present a pro-people budget.

This is despite the fact that such outlay usually improves consumer spending, thus spurring production and earning the government more taxes.

As a result, Ncube’s targeted economic growth rate of 5,5% for next year remains in doubt considering that consumer spending has become extremely depressed largely due to the depreciating Zimbabwe dollar.

“The 2022 national budget is a missed opportunity to address the twin challenges of inequality and poverty in Zimbabwe, thereby showing failure by the State to intercede for the poor,” ZFIA said in a statement.

“Overall, the 2022 national budget further widens inequalities between rich and poor Zimbabweans and does too little to eradicate poverty particularly among women, people with disabilities, young people and the rural populace.”

ZFIA said recent estimates showed that the richest 10% of the population consume close to 40% of national resources showing that the nation continues to grow the poor population.

“The anticipated 5,5% gross domestic product (GDP) growth signals changing fortunes for the Zimbabwean economy. However, economic growth must be an asset for nation building not an instrument for monopolistic accumulation and the concentration of wealth in the hands of the few,” ZFIA said.

“The benefits of economic growth must therefore be equitably shared to benefit all Zimbabweans. This point seems lost in the 2022 national budget. It’s business as usual approaches remain inimical to the possibility of achieving devolved and equitable resource distribution and investment mechanisms to grow the economy while meeting the needs of a highly youthful and unequal society.”

The depreciating local currency has caused consumers to become increasingly poor as it has resulted in high inflation whereby prices of goods and services are rising weekly and, in some cases, daily to maintain value.

Ncube also announced that prices for government amenities, services and goods would also increase in line with economic developments making citizens even poorer.

“This skewed distribution of resources and economic opportunities is detrimental to national cohesion and the achievement of national objectives outlined in the National Development Strategy One (NDS1) framework,” ZFIA said.

“Inclusive and responsive allocation of national resources is vital to reduce poverty and inequality. In this regard, the 2022 budget fails the poverty and inequality test by increasing the tax burden on the poor, without doing enough to level the playing field for the 70% majority subsisting in the informal economy or boosting household incomes through meaningful resource transfers.”

According to the United States Agency for International Development food security arm, the Famine Early Warning Systems Network, most households are having to ration food.

Yet, the government has left very little to support the extremely vulnerable in combating poverty, with the rate, at around 50%, which was reported by the World Bank.

That means about half of the 15 million population as of last year, is now poor and getting poorer.

“Observation, most families eat two meals per day. The poorest ones meal per day. Quality of meals not necessarily balanced like boiled rice and tea for breakfast, or chimodho (African styled bread) and tea for breakfast. One piece of meat and vegetables soaked in royco (gravy mix) and sadza (maize meal) for supper,” Harare Resident Trust director Precious Shumba said.

“So, the average meal in Zimbabwe has little protein. Substitution of meat, eggs have also become a popular substitute for meat or people eat cheap cuts of meat like I see chicken intestines and butchery-made sausages have become very popular. Fruits and dairy products like milk, yoghurt are generally considered a luxury and are eaten infrequently.

He said there was abundant food in the shops, but the majority of the people no longer have disposable incomes to buy adequate food supplies.

While there was a 14,9% allocation in the budget for health and the $10 billion to the Ministry of Public Service, Labour and Social Welfare towards upscaling social protection programmes, the depreciating local currency will reduce those values.

This is why ZFIA says optimism must be tempered by fears that inflation and endemic corruption will inadvertently water-down these critical gains for the poor.

“Past experience with initiatives such as the harmonised cash transfer system that administered the COVID-19 relief funds for the informal sector show that social protection schemes that are not properly institutionalised with accompanying safeguards are prone to abuse,” ZFIA said.

The Vendors Initiative for Social and Economic Transformation (Viset) was also dismayed that the 2022 national budget wasn’t pro poor.

“The Minister of Finance and Economic Development Professor Mthuli Ncube presented the 2022 national budget on the 25th of November 2021. The budget, which was taunted as being pro-poor, is nothing close to that but rather shows the government’s commitment to neoliberal policies,” Viset said in a statement on the budget.

“The budget clearly indicates increases in taxation that will have a negative impact on the poor such as the proposed increase in withholding tax, from 10% to 30%, the introduction of an additional 2% on fuel and the US$50 tax on imported handsets.

“The latter goes against the spirit of minimising the digital divide in this era of COVID-19 where the nation should be seen trying to enhance digital literacy among the disadvantaged classes of society, particularly with the introduction of online classes for schoolchildren and virtual marketplaces for the informal traders.”