2022 NATIONAL BUDGET IS IT A #BUDGET4EQUALITY OR AN INSTRUMENT FOR CAPITALIST ACCUMULATION?

25 January 2022

The 2022 National Budget is a missed opportunity to address the twin challenges of inequality and poverty in Zimbabwe, thereby showing failure by the state to intercede for the poor.

Overall, the 2022 National Budget further widens inequalities between rich and poor Zimbabweans and does too little to eradicate poverty particularly amongst women, people with disabilities, young people and the rural populace.

According to recent estimates, the richest 10% of the population consume close to 40% of national resources. This skewed distribution of resources and economic opportu- nities is detrimental to national cohesion and the achievement of national objectives outlined in the National Development Strategy 1 (NDS1) framework. Inclusive and re- sponsive allocation of national resources is vital to reduce poverty and inequality. In this regard, the 2022 budget fails the poverty and inequality test by increasing the tax burden on the poor, without doing enough to level the playing field for the 70% majority subsisting in the informal economy or boosting household incomes through meaning- ful resource transfers.

The anticipated 5.5% Gross Domestic Product (GDP) growth signals changing fortunes for the Zimbabwean economy. However, economic growth must be an asset for na- tion building not an instrument for monopolistic accumulation and the concentration of wealth in the hands of the few. The benefits of economic growth must therefore be equitably shared to benefit all Zimbabweans. This point seems lost in the 2022 Na- tional Budget. Its business as usual approaches remain inimical to the possibility of achieving devolved and equitable resource distribution and investment mechanisms to grow the economy whilst meeting the needs of a highly youthful and unequal society.

Critical gains in the budget for the poor such as the 14.9% allocation to health and the ZWL10 billion to the Ministry of Public Service, Labour and Social Welfare towards upscaling social protection programmes are to be applauded. This is in the hope that these resources will be optimized towards the broader fight against poverty and in- equality. However, this optimism is tempered by fears that inflation and endemic cor- ruption will inadvertently water-down these critical gains for the poor. Past experience with initiatives such as the harmonized cash transfer system that administered the COVID-19 relief funds for the informal sector show that social protection schemes that are not properly institutionalized with accompanying safeguards are prone to abuse.

Most of the urban poor access primary health needs from Local Authority administered clinics, however, these were allocated a paltry ZWL 2.1 billion to cater for other needs such as water and sewer infrastructure as well. The ZWL 42.5 billion devolution allocation also meant to meet community infrastructure needs is by no means adequate bearing in mind the demand for conducive workspaces for the informal sector in line with SDG 8.

Summarized below are the key concerns in the Zimbabwe Fight Inequality Alliance ‘s assessment of the 2022 National Budget presented by the Minister of Finance and Economic Development on 25 November 2021 from a human development and inequality perspective:

2021 Budget Surplus

• In the 2022 National Budget Statement, the Minister announced a surplus for the 2021 national budget. However, a surplus means nothing if ordinary Zimbabweans are suffering. The public healthcare is crumbling on its knees. Teachers are demotivated. Urbanites are hard hit by cute water shortages. National roads are now “death traps.” So what surplus when citizens’’ welfare is not catered for?

Tax Justice Issues

• The introduced Cellphone Tax of US$50 on every new cellphone is retrogressive as this will further widen the digital inequalities in Zimbabwe at a time the COVID-19 has brought to the fore the need to go digital in almost all operations and interactions. Internet penetration in Zimbabwe is already low; hence the tax infringes citizens’ digital rights. The vulnerable youths and women are the hardest hit as they were trying by all means to catch up with the digital pace. The tax also defeats efforts towards ensuring equal access to online education facilities in the COVID-19 era, with the rural and urban poor learners having their constitutionally guaranteed right to basic education violated. The tax must be repealed.
• The Budget raised withholding tax from 10% to 30%. The move is inflationary and will severely affect consumers whose disposable incomes are already decimated by ever rising inflation.
• Fuel levy of 2% announced in the budget further abrogates citizens’ right to affordable and reliable transport. Transport fees will go up and it is only the poor commuters who will be affected.

Debt Justice

US$13.7 billion in external and domestic debt with US$13.2 billion external and US$ 532 million domestic will see poverty levels rising and inequalities deepening. Zimbabwe`s debt stock has increased by US$ 3.3 billion after the Treasury assumed the legacy debts/blocked funds held by the Reserve Bank of Zimbabwe (RBZ) on its balance sheet on behalf of Government to create a sound RBZ balance sheet. Considering high levels of external debt, we call for increased accountability of the State to Parliament on the performance of such loans as provided for in Section 300(4) of the constitution. We reiterate that information on loans acquired by the state or any agency of the

government is public, and citizens must have access to such information. When citizens are not furnished with specific details of what the debt has been used for but are required to shoulder the debt burden. This is an act of injustice. THE RBZ DEBT ASSUMPTION WILL SUFFOCATE THE POOR. We Demand Debt Justice.

Devolution

We call for the enactment of a distribution formula for devolution funds. There is need for government to promulgate a law for the “at least 5%” revenue sharing formula to allow for predictability of the funds that are to be disbursed to other tiers of government. Lack of clarity on the disbursement formulae will result in conflict between citizens and government, and this requires enabling legislation to resolve. It would also appear as if local authorities in their representative capacity of the local citizens don’t have discretion on how the funds are used. Thus, accountability sways more to the top- down than bottom-up planning framework.

Employment Creation

• We do not want a budget that creates jobless growth. The 2022 National Budget must earnestly and genuinely provide for a conducive environment that gives room for investing in value addition in all productive sectors.

People with Disabilities (PWDs)

• The tax incentive for companies that employ People with Disabilities in not enough to improve the economic wellbeing for the group. It is not attractive and motivating enough for corporates to employ as many PWDs as possible.
• The budget is also silent on making public transport accessible by all including people with disabilities. Anticipation was that the Minister was going to avail funds to acquire disability friendly buses and to improve transport infrastructure that is disability friendly.
• The issue of bunching vulnerable groups is worrisome because if one looks at the budget allocations one would think it is much but nothing much has been said to address the inequalities faced by people with disabilities.

About the Zimbabwe Fight Inequality Alliance

The Zimbabwe Fight Inequality Alliance is a broad-based network of 18 members comprising of social movements, women’s rights groups, faith-based organisations, labour unions and individuals committed to challenging and reversing the unfair distribution of wealth, power, opportunities, social status, access and control of resources in Zimbabwe. The Alliance exists to strengthen collective action to transform Zimbabwe’s highly unequal society and provide a common platform of action to build a just, equitable and prosperous nation. The Fight Inequality Alliance envisions a Zimbabwe in which wealth, power, opportunities, social status, access and control of resources are distributed in a just and equitable manner to enable all Zimbabweans to enjoy their full rights, dignity and an acceptable standard of living as full citizens of their own society.