The yawning gap between Zimbabwe’s rich and poor is expected to widen as the country’s economy continues to stagger amid plans by Finance minister Tendai Biti to cut government spending.
Biti is next Wednesday expected to present his Mid-Term Fiscal Policy statement.
With statistics showing that at least 65% of the population lives in rural areas, with many in abject poverty, a revision of Budget estimates could result in the under-financing of critical safety nets and capital expenditures, further painting a gloomy picture of the economy.
Biti’s Budget was anchored on the need to adopt an inclusive, broad-based and pro-poor growth model that would result in the creation of new jobs.
Official figures show that disbursements for social services and other amenities such as health, education, agriculture and social protection were
$27,2 million against a target of $73,7 million.
This gap of about $46,6 million, according to Biti, was on account of revenue underperformance during the first quarter.
In his 2012 Budget presentation Biti said: “The crafting of the 2012 Budget was a daunting task, given the triple demons of a highly-charged political environment, insatiable fiscal demands on the State and a highly-volatile global financial environment.”
Experts said foreign remittances from Zimbabweans working abroad — once a critical source of foreign exchange during the country’s unprecedented economic decline — were expected to decline on the back of the eurozone debt crisis, which had resulted in some massive job cuts.
A research report by People Against Suffering, Oppression and Poverty (Passop), a South Africa-based advocacy group for immigrants early this year showed that almost $850 million was remitted to the country last year.
The economy continues to struggle to breakout from being informal as a result of a shrinking formal segment employing a small portion of the economically active population.
Locally, more companies mainly in the manufacturing sector are struggling to survive.
According to economist Kipson Gundani, some companies formed during the sanctions-busting era of the Unilateral Declaration of Independence in 1965, had failed to adapt to a free-market economy characterised by cut-throat competition.
Problems besetting companies include underfunding, obsolete machinery and failure to source new markets.
Although construction of some tertiary institutions across the country continued to lag due to underfunding, many young Zimbabweans were graduating in their thousands and facing unemployment.
“Disbursements for capital expenditures during the first quarter of the 2012 amounted to $63,1 million, with $43,2 million having been allocated for capital development expenditures, $11,2 million for payment for grain deliveries and $8,6 million for other capital expenditures,” said Biti during his first quarter state of the economy statement.
Total funds disbursed to energy, transport and communication, water and sanitation, housing, ICT, education, health, irrigation and rehabilitation of research institutions and constituency development fund during the first three months of the year accounted for $43,2 million which represents 7% disbursement as a percentage allocated to the sector during the current National Budget.
Biti argued that the implementation of water and sewer projects, which came under the spotlight when the country hit by a typhoid outbreak early last year, was being delayed by “cumbersome and time-consuming” approval processes at local authorities. Ironically, countries perceived to be hostile to Zimbabwe have continued to finance projects under Zim-Fund — a fund sponsored by development partners to improve the country’s infrastructure investments in energy, water and sanitation.
Erratic power supplies and water rationing remain part of the problem of most of Zimbabwe’s populace while job creation has remained a pipe dream for most unemployed youths.