WHILE Zimbabwe is targeting 5.2% economic growth in 2024, this will be largely dependent on key issues such as massive investment in public service delivery, fiscal discipline, good governance and the curtailment of illicit financial flows, according to a new report by a social justice watchdog, the Zimbabwe Coalition for Debt and Development (Zimcodd).
The country has been dogged by illicit financial and mineral flows which, for instance, leading to the loss of an estimated US$1.2 billion in gold every year and Treasury approving loans without Parliament’s authorisation in violation of the constitutional tenet of accountability.
In its 2024 Budget Strategy Paper released last month, Treasury said it is targeting to collect 19.2% of gross domestic product (GDP) in tax revenue, underpinned by tax administration initiatives to enhance tax enforcement and compliance as well as adoption of technology.
According to an analysis of the 2024 Budget Strategy Paper by Zimcodd, the country is facing numerous risks that are likely to slow down the projected economic growth.
“There remain many risks to the second half of 2023 (2HY23) economic outlook that can slow down economic activity. For instance, the August 2023 presidential election result is contested, which will compromise the legitimacy of the declared winner,” reads the analysis.
“Other risks of disputed election include inter alia squandering of public assets, corruption and impunity, political violence, sour international relations, and capital flight.”
Adds the report: “The nation, together with other Sadc member states, is also projected to experience drought weather conditions for the 2023/24 season thus greatly subduing agricultural activity. Elevated fiscal spending is expected in 2HY23 and beyond as the government seeks to cushion the economy and citizens from a likely drought that will threaten Zimdollar and price stability.”
Zimcodd says growth will largely depend on good governance.
“The economy is projected to grow by 5.2% but this is largely dependent on good governance, curtailing illicit financial flows, massive investment in public service delivery, climate mitigation and smart agriculture, fiscal discipline among others,” reads the Zimcodd report.
“Strong and effective institutions are critical for optimum governance that foster transparency, accountability and responsibility. The 2024 budget will set aside resources for institution building. The targeted institutions include the Zimbabwe Anti-Corruption Commission (Zacc), Office of the Auditor-General (OAG), National Prosecuting Authority (NPA) and Judicial Service Commission (JSC). The targeted institutions have an oversight, watchdog and ombudsman role that is prerequisite for good governance and resource utilisation accountability.”
Treasury’s latest economic growth projection is a shift from 3.8% forecast in the previous budget strategy paper, and even higher than the African Development Bank’s projected 3.2% growth between 2023 and 2024, largely owing to the country’s volatile economy.
“The severe macro-economic fluctuations witnessed in the first half of 2023 (1HY23) derailed some key assumptions underpinning the 2023 budget such as stable local currency (ZWL), low inflation, and increased electricity production,” reads the report.
“The fluctuations greatly subdued business activity by sending production costs haywire. Also, the resultant hyperinflation eroded the real value of earnings, subdued social service delivery, and plunged many citizens into poverty.”
Zimcodd adds: “This compelled authorities to institute a plethora of policy measures to tame instability. Statistics show that Zimdollar depreciation and price growth moderated in July 2023 through August 2023. As a result, authorities now expect national output (GDP) to grow by 5.3% in 2023, up from initial projections of 3.8%.”
Zimcodd said the government should target key priority areas which include social protection to address the humanitarian crisis facing the nation.
According to the analysis, 3.8 million rural people are facing food insecurity, while a further 1.8 million urban people are facing food insecurity.
Approximately 3.5 million children are chronically hungry, while about 60% of rural girls and women encounter period poverty by lacking access to menstrual supplies and education.
An estimated 68% of pre-primary aged children (3-5 years) and 47% adolescents (13-18 years) are not in school, while 4.5 million children experienced loss of learning due to Covid-19 by early 2021.