CHEROKEE-AMERICAN cowboy, comedian, social commentator, vaudeville performer and actor Will Rogers once said: “The minute you read something that you can’t understand, you can almost be sure that it was drawn up by a lawyer.”
Closer home, lawyers have not only managed to master the art of arguing, bellowing Latin words in courtrooms as well as managing corporate politics in boardrooms, but they have also become influential figures in government.
President Robert Mugabe on Tuesday appointed immediate past Justice Minister Patrick Chinamasa as the new Finance minister.
A lawyer by training, Chinamasa succeeds another legal representative Tendai Biti from the opposition MDC-T led by Morgan Tsvangirai.
Other lawyers that have in the past taken up the Finance portfolio, albeit in an acting capacity, include Emmerson Mnangagwa.
What does this say about Mugabe? After criticising past ministers of practising bookish economics, the veteran leader, who won the July 31 elections, now believes that lawyers may have the oomph to drive the economy.
Forget the legalese associated with the profession, lawyers have will to control Zimbabwe’s Treasury for a cumulative nine years should Mugabe maintain the same Cabinet.
While Chinamasa is credited by his party — Zanu PF — for introducing the multi-currency regime when he was stand-in Finance minister in 2009, his new assignment will certainly not be a stroll in the park. This is certainly the Cabinet’s hottest seat at the moment given expectations from several quarters and the pressure Biti endured.
The Zimbabwe dollar became worthless due to a decade-long economic meltdown which ended after dollarisation.
The stakes are high and a host of problems continue to confront the economy. Chinamasa, considered a hardliner in the Zanu PF political matrix and chief negotiator during the intra-party talks, faces a daunting task of approaching organisations he has been fighting.
Whether Chinamasa will attract funders especially after clashing with the United Nations Development Programme on several occasions and whether he will eat the humble pie and seek technical support from them, only time will tell.
While inflation has slowed down on the back of a weakening rand, the Zimbabwe Stock Exchange (ZSE) seems to have taken a knock after the polls.
Year-end economic growth rates have been revised as mining, manufacturing and agriculture continue to underperform.
It would be interesting to see whether hawkish Zanu PF politicians will blame Chinamasa on the underfunding of agriculture, or they will just blame it on the sanctions.
As former Justice minister, Mugabe could have considered Chinamasa’s political gravitas in stamping his authority when vultures knock on the door.
Facing pressure from a relentless civil service, Mugabe has already promised uniformed forces a pay rise despite stagnating revenue.
Analysts said if the government suddenly secures more revenue to fund the huge public sector wage bill as promised by Mugabe, then earlier claims by the outgoing Finance minister of an existing parallel government during the tenure of the just-ended coalition government could be true.
Currently operating with limited fiscus, the new Finance minister will have to strike that balancing act between populist measures and austerity given the trickling capital inflows.
Official figures show that government revenues have stagnated with recurrent expenditure accounting for 70% due to low business activity.
Revenue collection during the period between January and June amounted to $1,807 billion against a target of $1,7 billion resulting in a positive variance of 0,8%.
Tax revenue accounted for 91% of the total revenue, while non-tax revenue accounted for the remaining 9%.
Revenue from diamonds, according to Biti continued to underperform.
A salary hike for the civil service will not only reduce fiscal space, but expose the new government to the ills of the dollarisation which came through the back door.
A ballooning import bill currently trebling exports has further worsened the country’s balance of payment position.
Zimbabwe is also saddled with a $10,7 billion debt which represents 103% of the Gross Domestic Product.
Government figures show that over 70% of this debt is accumulated arrears.
Zimbabwe has been defaulting on its international debt obligations since 1999.
As Chinamasa strolls to his New Government Complex offices, there is no price for guessing what will be going through his mind. He has less than two months to craft the 2014 National Budget, which would be a compass on Zimbabwe’s economic policy.
It remains to be seen whether he will be equal to the task, whether he will be popular with the civil servants and whether the war veterans who had taken to the habit of demonstrating and knocking at Biti’s doors will do the same. Let’s wait and find out.
More than 70% of the population are employed in the Small and Medium Enterprises and close to half of the population are directly or indirectly involved in the sector according to the Finscope survey 2012.
The informal sector accounts turnover is at $7,4 billion. This means that the new government cannot continue to ignore this critical sector of the economy.
The agricultural sector has to be revived as the country now relies more on imports when it has the capacity to feed itself.
Figures from the Ministry of Finance shows that $2 billion is required for the sector to revive the sector.
The revival of the agricultural sector will help the manufacturing sector as it will start producing more goods and more people will be employed and more taxes to government and poverty will be reduced.
The government should work on the competitiveness of the country with various stakeholders such as business and labour to resolve the uncompetitiVe nature of the country’s production processes. Below are the immediate challenges for the new government.
‘CHINAMSA SHOULD GROW ECONOMY’
ZIMBABWE’S newly appointed Finance Minister Patrick Chinamasa faces a herculean task of stimulating economic growth against the backdrop of growing push to indigenise foreign-owned companies operating in the country, independent economic analysts have said.
REPORT BY VICTORIA MTOMBA
In an interview with NewsDay Business, local economist John Robertson said the new Finance Minister should ensure that the country, currently ranked as one the worst investment destinations, should craft policies that promote foreign direct investment.
“Chinamasa has to improve tax revenue through the increase in the amount of business. There is need to increase investment promotion to provide equity capital and loans that will become tax payers,” Robertson said.
He said the country should follow the International Monetary Fund Staff-Monitored Programme signed in June to improve the country risk as well as prospects of accessing long-term capital from multilateral finance institutions.
Robertson added that the issue of credit has to be looked at as well. The country’s debt overhang is at $10,7 billion.
He said there was need to address challenges besetting the agriculture sector to contain a growing import bill.
Critics said the sector plunged into doldrums after the chaotic land reform programme at the turn of the millennium.
“Banks will need to grow and attract more capital from outside the country and the threats of indigenisation from international banks needs to be stopped as a way forward.”
According to a World Bank report, fiscal revenues have stabilised at $4 billion and Treasury can no longer keep the pace of the past fiscal recovery to absorb new commitments.
In the first half of 2013, revenue increased $1,81 billion through non-tax revenue which came from licensing fees in the telecommunications sector.
The report states that tax revenues were lower due to the slow down in the economy on the run up to the election in July.
During the first five months of the year, the economy was on a decline path resulting in former Finance minister Tendai Biti revising the economic growth targets to 3,4%.
Zimbabwe’s economy has been registering strong growth since the formation of the inclusive government in 2009. Capacity utilisation for the manufacturing sector has been on an upward trend since 2009 from 10% to 57,2% in 2011 and then it started to contract to 44,2% in 2012. The sector is faced with liquidity challenges, antiquated equipment, power and water shortages that pose viability challenges.
A local economist who declined to be named on professional grounds said although the Staff Monitored Programmes (an IMF programme that monitors the country’s economic reforms, policies and facilitate arrears clearance with official creditors) is an informal arrangement with the Brettonwoods institution aimed at tackling debt, the new finance minister should see through the programme to ensure re-engagement with multilateral lenders.
“It was not Biti’s programme, but was sanctioned by Cabinet. An informed legal person will tread carefully,” the economist said.
The economist said: “The budget that is due for November cannot change and promises for salary hikes for civil servants cannot be met as there is no money. The promises have to be postponed and he has to back off and become unpopular.”
He added that the Government of National Unity brought stability to the economy and recovered it from complete disaster between the 2000-2008 period.