The thuggish manner in which economic policy is being implemented by the Ministry of Finance and the central bank is producing devastating outcomes for vulnerable citizens and already suffocating businesses in what is now described as a US$52 billion economy.
Government borrowing is not unusual. What is extraordinary is the unilateral, chaotic and coercive manner in which the State is now “borrowing” from peasants, farmers, corporates, exporters, gold miners and microfinance institutions — without agreements, compensation or consent. This unwritten policy amounts to economic violence against the very citizens the State is meant to protect.
The Ministry of Finance has acknowledged owing microfinance institutions more than US$85 million in deductions for civil servants’ loans. MFIs, already operating under tight fiscal constraints, are now effectively funding government payrolls — a business model that defies economic logic. Unsurprisingly, some MFIs have closed while others face corporate rescue, with inevitable job losses.
Peasants and farmers are similarly abused through the Grain Marketing Board. Payments are often made more than a year after delivery, frequently in ZiG, a currency few want. This delays cascade to urban workers who subsidise rural agriculture. Grain farming has become a loss-making venture, sustained largely to fund government operations.
Yet tobacco and wheat growers — largely within elite circles — are paid promptly, even enjoying private buying arrangements. The warped prioritisation of bread over sadza reveals policy choices that deepen inequality rather than address food security.
Exporters and gold miners, whose businesses involve real risk and sweat, are also being forced to fund government. The central bank’s decision to withhold ZiG retention payments in a bid to prop up the currency has created incentives for smuggling and rent-seeking. Combined with high royalties, it is clear the system is not designed for productive enterprise.
The governor regularly celebrates “building reserves”, yet these reserves are largely funded through delayed payments to exporters and miners. If these obligations were settled, the ZiG would collapse, exposing a currency propped up by unpaid citizen labour rather than real value.
Infrastructure spending is being financed in similar fashion. Government owes contractors more than US$1.6 billion, yet proposes to unilaterally convert these short-term debts into opaque long-term instruments. These instruments ignore real exchange rates, offer no return on capital and were never negotiated. Many contractors will fail, taking jobs with them.
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Worse still, companies are taxed on income they have not received. VAT and income tax fall due at invoicing, while unpaid balances attract penalties and interest outside the in duplum rule. By the time payment is made, businesses are often left worse off — a grotesque form of taxation.
The currency itself is partly anchored on non-payment of domestic debt. The likely escape route will be yet another premature currency shift that destroys value for all.
Government must abandon this coercive approach to financing and begin protecting, rather than exploiting, its citizens.
Sedze is a strategy, innovation and compliance consultant and president of the Free Enterprise Initiative.
