Zimbabwe’s 2018 budget lacks depth says chartered development financial analyst

Improved production and productivity may promote import substitution especially where food imports are in question. This budget does not address the issue of agro-processing, input production and agricultural mechanization in the same breath as previous budgets.

In view of the 2017 import bill which was $6.8 billion, it would have been informative if the critical components making up the import bill were broken down in detail. This would have been handy is isolating the lowest hanging fruits for quick gains by the new administration.

The quick gains would have been through targeted high impact solutions to import cost categories like agricultural input procurement and agro-processing through local production enhancement.

Ballpark savings could be between $200 – $400 million on the 2017 import bill but with potential additional downstream earnings or savings resulting from improved local manufacturing, job creation and possible export revenue. This could enhance foreign currency reserves contributing to the alleviation of the liquidity crisis.

The Command Agriculture Programme, the flagship programme being promoted by the budget should, in alignment with the manufacturing sector revival strategy, give primacy to input production, agro-processing and mechanisation as well.

The results of the Command Agriculture Programme reflect some movement in the right direction but cannot be considered satisfactory: a loan recovery rate of 66% ($47.4 million) on $72 million advanced could be decisive on whether the programme will progress as a revolving fund in the medium to long term.

The budget takes further steps to extend it to other crops and livestock farming in the coming years, but this could be some ambitious investment into a fund or programme that could burn itself to insignificance if no corrective measures are not adopted.

It will be costly especially given that the funds are sourced from the private sector and backed by government guarantees. It may result in the twin burden of loan repayment plus interest by the government and lost potential economic growth through wasted investment into non-performing loans issued to non-productive farmers.

The 33% potential default rate could be devastating if there is no improvement by the start of the next Command Agriculture loan cycle.

Overall, the tone of the budget was positive and deviated from the hitherto central message of previous budgets wherein there was no commitment to open the country to foreign investment and re-engage the international business community. This was usually on the pretext of the conditional demand for the removal of targeted sanctions.

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