By Itai Zimunya
The month of June marks the end of the first half of Zimbabwe’s fiscal year. Mid-term policy consultations and reports are now expected, both from Parliament and the executive. This article narrows down on the Minister of Finance on the need to, amidst a lot of pressures, do three things. These are, not in any ranking, a) accelerate on easing the cost of doing business, b) strengthening the Zimbabwe Gold, and c) emphasizing fiscal discipline. The expected 6% Gross Domestic Product (GDP) growth for 2025 must not be isolated, but part of a growing trend. The question is: can Minister Mthuli Ncube pull it through?
Present-day Zimbabwe, the second republic has two policy pulses. On one end, the policy blueprints are on point, placing emphasis on the need for a middle-income status by 2030, improving competitiveness, and reducing the cost of doing business in Zimbabwe. Whilst many tout the infrastructural developments as the second republic’s biggest success stories, we differ. The institution of the Zimbabwe Investment Development Agency (ZIDA) and the National Competitiveness Commission (NCC) remain the biggest indicators of the country’s seriousness in making Zimbabwe great.
However, even as the International Monetary Fund (IMF) suggests in their recent Article IV report on Zimbabwe, Minister Mthuli Ncube confronts several challenges. These include, a) sound economic governance, especially in procurement and Parliamentary oversight, b) formalizing the informal sector to strengthen business confidence and attract long-term finance as well as broaden the tax base, c) and, support the Zimbabwe Gold (ZiG) currency through building more savings on it and confidence by getting government to use the ZiG for its transactions.
As The Eastern Caucus (TECA), Zimbabwe’s premier liberal think-tank, we beseech the Minister to be stricter in maintaining fiscal discipline. There is political pressure, yes and it is normal everywhere. However, the best bet is for the Minister to implement the constitutional fiscal management requirements to the dot as set out in Chapter 17 of the Constitution. Parliament should have oversight of state revenues and public expenditure. The current trend where state tenders are awarded without tendering, or where the Mutapa Fund, a public institution is immune from Parliamentary oversight is wrong and an enemy of “agenda 2030”. Zimbabwe is, for some strange reason, engulfed by a wave of a frenzy for luxury vehicles. It seems there is a stampede for the allocation of sport utility vehicles and other off-road vehicles as a symbol of status. We will discuss the subject in another article but one wishes if people know that motor vehicles, by themselves alone, are not productive capital, but liabilities as they depreciate by the day.
This brings us to the second point of supporting the informal sector. Zimbabwe needs productive economics to grow, and not speculative economics of bling-bling and betting. The informal sector has emerged as a strong base for growth as indicated by figures. 65% of gold is mined by small-scale miners. The Zimbabwe National Chamber of Commerce (ZNCC) reports that 74% of the 2024 transactions by purchasing power parity took place in the informal sector. The biggest suppliers of maize and tobacco are small-scale farmers. The biggest pushers of fast-moving consumer goods (FMCG) are these small shops. What is the Government waiting for? As part of the ongoing ease of doing business and tax reform discussions, a framework must be adopted to support the growth of micro and SME businesses. Get them banked and registered for tax. The give-and-take would be to reduce both the quantum and rates of taxes to motivate production. This economic stroke will change Zimbabwe forever as it factors millions who were formerly excluded from the mainstream since the colonial era of dualism. 45 years after independence, there is no reason why the government needs to maintain this duality.
Lastly, and equally important is the strengthening of Zimbabwe’s currency, the ZiG. The irony is that the Government itself does not use the ZiG in its internal dealings. How can ordinary people have confidence in a currency whose authors don’t believe in? We need leadership. The Government must collect all taxes, make all transactions in ZiG, and get people who need forex to buy it from Bureau de Changes and banks. If Zimbabwe produced 36 tons of gold in 2024, why are her central volts empty only at 3.4 tons? It makes economic sense to sell every loss-making parastatal and shore up Zimbabwe’s gold reserves. That strong gold chest is what is needed to reduce the margin of country risk and invite more long-term cheaper finance into commerce.
The summation of all this will make Zimbabwe competitive, especially in the context of the Africa Continental Free Trade Area (AfCTA). The growth trend must aim towards 10%+ going forward. An isolated 6% is not sufficient to make us celebrate.
The question of whether Minister Mthuli Ncube can pull this miracle is academic. Every duck is in a role, waiting to excel. We encourage the Minister to be bold, bring back parliamentary oversight, maintain a tight fiscal line, and make the ZiG sound. Zimbabwe must now join the League of Africa’s economic miracles given her mineral endowments, climate, economic base, and a fairly trained labour force.