Govt must avail US$100m for business
PRESIDENT Emmerson Mnangagwa’s government should inject an additional US$100 million stimulus package to industry, an academic has said.
This comes as the Confederation of Zimbabwe Industries (CZI) has warned that manufacturing utilisation capacity was likely to dip below 28 percent this year due to low aggregate demand emanating from effects of the coronavirus pandemic.
“Most of our companies — both formal and informal – are reeling from the global effects of Covid-19 and it is prudent for the government to come up with an additional stimulus package of US$100 million to prop up these businesses,” said Arthur Chikerema, a public sector management lecturer with the Midlands State University.
Chikerema, who was addressing an online platform organised by the Zimbabwe Coalition of Debt and Development (Zimcodd) on Thursday, also called for frameworks to ensure that the stimulus package is not abused.
“We are currently in a state of disaster and we have no idea how the stimulus package announced by the government is being distributed and there are fears that much of the money could be siphoned through corruption and will not reach the intended beneficiaries,” he said.
The government recently unveiled an $18 billion financial intervention aimed at meeting the diverse requirements of the national economy during the difficult period. At least $500 million (about US$20 million) of the package was set aside to capacitate micro, small and medium enterprises and those in the informal sector.
“The package is proportionate to the disruption the virus has caused in our national economy,” Mnangagwa said. “The Economic Rescue and Stimulus Package is designed to scale up production in all sectors of the economy in response to the adverse effect of Covid-19. The package will also be used to address the needs of the small-scale industries, improve health facilities, reduce poverty and hardships and assist vulnerable groups in our society.”
However, Zimcodd said the $18 billion stimulus package should be administered in a manner that is focused on protecting jobs. “The essence of a stimulus package is to protect both businesses and the employees, as such adequate stimulus package is one that ensures that no employee will be laid off especially by those companies which would have benefitted from the package,” Janet Zhou, Zimcodd’s executive director, said recently, adding that the package should “come with terms and conditions such that those who fail to meet these must be disqualified”.
Zhou also lamented government’s approach in drawing up the package. “No research has been done to assess the extent of the impact of national lockdown and covid-19 in Zimbabwe,” she said. “It is also not about the gross amount but it is about the specific amounts allocated to particular sectors, for instance… the $500 million that was allocated to the small and medium enterprises… is not enough.”
She warned that focus must be on the criteria for identifying the beneficiaries, ensuring that the allocations reach the target beneficiaries and ensuring that mechanisms are in place to plug out leakages. Zhou also brought up the issue of the apparent exclusion of Parliament in the process, a matter that has also been raised by MP Tendai Biti, the chairperson of the august house’s budgetary committee. “It is worrying that the package was availed at a time when the Parliament of Zimbabwe was said to have been on recess.
This indicates that proper public finance management procedures were not followed as stipulated in the Constitution. “This only explains the extent to which the role of Parliament is reduced to that of merely rubber-stamping executive decisions, the reason why the country is suffering gross abuse and mismanagement of public funds,” she said.
And like many who have commented on the issue, Zhou questioned the government’s ability to come up with the funds.
“Based on Zimra’s first quarter report, revenue takings amounted to $13,88 billion. So government will need about four months to generate resources to finance the stimulus… in the unlikely event of suspending other lined up government expenditure and direct all the resources towards the stimulus package.
“The bigger question remains, how can a government that fails to finance the fight against covid-19 on its own manage to finance a stimulus package?” she queried.