File: Budget: a missed opportunity to fight poverty



SOCIAL pressure group Zimbabwe Fight Inequality Alliance (ZFIA) said the 2022 national budget was a missed opportunity to address the twin macroeconomic challenge of inequality and poverty in Zimbabwe.

As 2022 approaches, the national budget which was presented to parliament on November 25, last month, Finance Minister Mthuli Ncube was expected to present a pro-people budget.

However, Ncube’s budget fell short of social spending expectations.

This is despite the fact that such spending generally improves consumer spending, thereby stimulating production and earning more taxes for the government.

As a result, Ncube’s target economic growth rate of 5.5% for next year remains uncertain as consumer spending has become extremely depressed largely due to the depreciation of the Zimbabwe dollar.

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

“Overall, the 2022 national budget further widens the inequalities between the rich and the poor in Zimbabwe and does too little to end poverty, especially among women, people with disabilities, youth and the rural population.

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

“The expected growth of 5.5% in gross domestic product (GDP) signals a change in fortunes for the Zimbabwean economy. However, economic growth must be a nation-building asset and not an instrument of monopoly accumulation and concentration of wealth in the hands of a few, ”ZFIA said.

“The benefits of economic growth must therefore be shared equitably for the benefit of all Zimbabweans. This point seems lost in the 2022 national budget. Its usual approaches remain hostile to the possibility of achieving a decentralized and equitable distribution of resources and to investment mechanisms to grow the economy while meeting the needs of a society. very young and uneven.

The depreciation of the local currency has made consumers poorer and poorer as it has resulted in high inflation, with the prices of goods and services rising weekly and in some cases daily to maintain value.

Ncube also announced that the prices of equipment, services and government goods will also increase in line with economic developments making citizens even poorer.

“This asymmetric distribution of resources and economic opportunities is detrimental to national cohesion and to the achievement of the national goals described under the National Development Strategy 1 (NDS1),” 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 living in the informal economy or increase income. households through significant resource transfers.

According to the United States Agency for International Development’s food safety agency, the Famine Early Warning Systems Network, most households must ration food.

Yet the government has left very little to support extremely vulnerable people in the fight against poverty, with a rate of around 50%, which was reported by the World Bank.

This means that about half of last year’s 15 million people are now poor and increasingly poor.

“Observation, most families eat two meals a day. The poorest meals per day. Quality of meals not necessarily balanced like boiled rice and tea for breakfast, or chimodho (African style bread) and tea for breakfast. A piece of meat and vegetables dipped in royco (mixture of sauce) and sadza (cornmeal) for supper, ”said Harare Resident Trust director Precious Shumba.

“So the average meal in Zimbabwe is low in protein. Substituting for meat, eggs have also become a popular substitute for meat where people eat cheap cuts of meat like I see chicken intestines and butcher’s sausages have become very popular. Fruits and dairy products like milk, yogurts are generally considered a luxury and are rarely consumed.

He said there was plenty of food in the stores, but the majority of people no longer had the disposable income to buy adequate food.

While there was an allocation of 14.9% in the health budget and the $ 10 billion to the Ministry of Civil Service, Labor and Social Welfare to strengthen social protection programs, the depreciation of the local currency will reduce these values.

That’s why the ZFIA says optimism must be tempered by fears that rampant inflation and corruption may inadvertently reduce these critical gains for the poor.

“Past experience with initiatives such as the Harmonized Money Transfer System that administered COVID-19 relief funds for the informal sector shows that social protection regimes that are not properly institutionalized with the accompanying safeguards are subject to abuse, ”ZFIA said.

The Vendors Initiative for Social and Economic Transformation (Viset) has also been dismayed that the 2022 national budget is not pro-poor.

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

“The budget clearly indicates tax increases 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 US $ 50 tax on imported handsets. .

“The latter goes against the spirit of minimizing the digital divide in this era of COVID-19 where the nation should be seen trying to improve digital literacy among the underprivileged classes of society,” in particular with the introduction of online courses for schoolchildren and virtual markets for informal traders.

  • Follow Tatira on Twitter @tati_tatira


About Author

Comments are closed.