Finance Minister Patrick Chinamasa yesterday presented the first budget under the presidency of Emmerson Mnangagwa, seen as key to Zimbabwe’s economic recovery by restricting thresholds of the controversial Indigenisation Act to platinum and diamonds while re-engaging foreign debtors on the 2015 Lima debt clearance plan
Here are five takeaways:
The Indigenisation albatross
Chinamasa took a hammer to the Indigenisation and Economic Empowerment Act, passed in 2008 by Robert Mugabe and has been key to his reelection in the 2008 and 2013 elections. But it had also become the albatross on the economy as the country fell behind regional peers in the battle to attract foreign investment. The Act compelled foreign companies, including mines and banks, to transfer at least 51 percent shares to black Zimbabweans.
Chinamasa said that the 51/49 ratio will apply to only two minerals; diamonds and platinum while the other sectors of the economy will be open to investors regardless of nationality.
The civil service conundrum unknotted slightly
Zimbabwe’s bloated 298 000 strong civil service has been the subject of Chinamasa’s humiliation by his former master, Mugabe, who reasoned that job cuts equalled electoral defeat. But the shackles have been released and Chinamasa went to it, even though, reservedly. After all, elections are about nine months away.
Anyone above the retirement age will be retired, those that do not have skills for their jobs, will be kicked out while thousands more will be urged to take voluntary retirement to bring government spend on wages to 70 percent of budget expenditure in 2018, from the current 86 percent.
Clearly, Chinamasa’s “new economic order” has less room for political sentiment, with government wielding the axe on 3 739 so called Youth Officers and Ward Development Coordinators. Business class travel has been with immediate effect restricted to Ministers; Heads of Ministries and equivalent grades; Parastatals’ Chief Executive Officers; Local Authorities’ Mayors, Town Clerks, Chief Executive Officers; and Constitutional Commissioners. Government will also not hire 6000 early childhood development teachers. However, government will pay the promised 2017 bonuses to civil servants but at the current rate, the 13th cheque will become alien in future budgets
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