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Key takeaways from Mthuli Ncube’s play-it-safe budget review

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Finance minister Mthuli Ncube played it safe in his mid-term budget review statement on Thursday, making no major policy decisions and saying he may not need additional funding for his 2021 budget.

After many previous policy shocks, the best part about a largely uneventful budget statement was exactly that; it was uneventful. There were no major announcements on taxation, the currency, or any measures likely to shake tables immediately.

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“There is need to stay the course. There are no policy changes; I believe the existing policies are achieving the desired results are still adequate,” Ncube said. If any big budget changes are to made, those would come in the 2022 budget, he said.

Here is a summary of some of the main takeaways from Ncube’s statement:

Economic Growth: More ambitious target set

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Ncube’s prediction of 7.4% growth for 2021 was already ambitious, so much that even President Emmerson Mnangagwa thought it must be revised downwards. But Ncube is even more confident. He now sees the economy growing by 7.8%, higher than his initial expectation of 7.4%.

His predictions are far higher than the IMF’s projection of 6% and the World Bank’s 3.9% forecast. They also contrast sentiment from major local companies, many of which are tempering their confidence of a rebound with caution over the likely impact of COVID-19.

Why is Ncube so confident? He cites “rainfall season, higher international commodity prices, stable macroeconomic environment and a managed COVID-19 pandemic.”

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Ncube says agriculture will this year grow faster than expected. It will grow by 34%, higher than the initially predicted 11%. He bases this on output from key farm segments, such as maize production.

The finance minister is also counting on the base effect of GDP contraction in 2020, when the economy shrank by 4%. For 2022, Ncube expects the economy to expand by 5.4%

He sees year-on-year inflation slowing down to between 22% and 35% by December 2021.

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Vaccine procurement: More spending needed

Ncube said COVID-19 vaccines that have been bought so far have been purchased “utilising the savings from last year, in the main.”

But, to achieve Zimbabwe’s target of 60% of the population, the vaccination campaign will require “mobilisation of additional resources for the procurement of more vaccines, over and above the US$100m resource envelope.”

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Ncube laid out what he has spent so far on the programme. To date, 11.8m doses and 7.2m syringes have been purchased using US$93.2 million.

No extra budget needed, for now

Ncube has stayed away from asking for more money from Parliament. Unless there is a major shock, he says, there will be no need for a supplementary budget this year.

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He said: “In the outlook to December 2021, expenditure target of ZWL$421.6 billion will be maintained assuming continued containment of expenditures, save for exigencies managed through reallocations, where necessary.”

So far this year, the Government has managed to live within its means. The government raised an estimated Z$198.2 billion in revenues between January and June and spent Z$197.6 billion.

Diaspora’s support for economy keeps growing

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During the first six months of the year, Zimbabweans living abroad sent home a total of US$746.9 million. Over the same time last year, they sent US$288.7 million. Remittances are projected to reach US$1.3 billion by year end, Ncube said.

The contribution of Diaspora remittances to the economy is growing.

“Diaspora remittances and other transfers, which constitute the secondary income account, are projected to continue driving the current account balance as was the case in 2020. Personal transfers from Zimbabweans in the Diaspora are expected to remain steady and resilient as the economies in key source markets recover from the Covid-19 induced slow-down, allowing them invest in assets back home.”

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Sold: Gold refinery

In December, Ncube announced that the government was privatising Fidelity Printers and Refineries. This is the company that refines and exports gold. Gold producers would control 60% of Fidelity, with central bank keeping 40%.

Ncube has now announced that this deal is now done. Ten miners have agreed to buy the 60% for US$49 million. This will be the first time that the refinery will be in private hands since it was established in 1988.

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While Ncube did not name the ten miners, a structure announced last year said participation would be based on average gold sales over the previous three years. This means among the potential will be the biggest gold producers, such as Kuvimba’s Freda Rebecca, which is now the number one producer, as well as Caledonia Mining, which runs Blanket, and RioZim. – newZwire

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National

ZIMRA customs officer appears in court for criminal abuse of office

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BY STAFF REPORTER 

A Zimbabwe Revenue Authority (ZIMRA) customs officer, Phillip Kuvenga, has been accused of criminal abuse of office for allegedly assisting in the importation of banned motor vehicles.

Kuvenga, 28, who is stationed at Victoria Falls, allegedly received documents from clients, completed valuation sheets, and carried out the valuation process. However, he is accused of endorsing different chassis numbers to deceive his supervisors during the validation and approval process.

After obtaining approval, Kuvenga would capture the correct chassis numbers in the ASYCUDA World System. He would then alter or replace the documents submitted earlier to his supervisors.

The offense came to light when a motor vehicle that had not yet arrived in Zimbabwe was found to have been already registered. A thorough check by ZIMRA led to Kuvenga’s arrest.

Kuvenga appeared in court on February 1, where he was denied bail by Magistrate Gift Manyka. He is expected to appear in court again today for another bail hearing.

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Retailers send Mnangagwa SOS as shops continue shutting down over operational woes

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BY ZIMLIVE

The Confederation of Zimbabwe Retailers (CZR) has implored President Emmerson Mnangagwa to intervene and save the sector which has seen various formal retail and wholesale businesses closing shop countrywide due to operational challenges.

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In a statement on Sunday, CZR president Denford Mutashu said the continued closure of formal retail and wholesale businesses is a direct consequence of the tough economic environment that has consistently failed to support formalised sector players who face stiff competition from informal businesses and vendors the majority of whom have no tax obligations to deal with.

Mutashu said his association was concerned that authorities continue to downplay the crisis.

“The recent closure of several outlets under the N. Richards Group, coupled with Spar Zimbabwe’s painful decision to shut down Queensdale Spar, Choppies Zimbabwe’s exit from the market, and Mahommed Mussa’s significant reduction of shop space by 60%, highlights the growing crisis.

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“As the representative association for these and other brands, CZR is alarmed that while formal businesses face enormous challenges, the authorities continue to present a different picture of the operating environment,” he said.

Given the situation, Mutashu said, only President Mnangagwa can rescue the troubled sector.

“CZR therefore calls for urgent intervention from His Excellency, President Emmerson Dambudzo Mnangagwa, to rescue what remains of the formalized retail and wholesale sector,” said Mutashu.

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He said the sector was in urgent need of rescue.

“While CZR acknowledges the continued support from the Ministry of Industry and Commerce, it is clear that the root causes of these challenges are fiscal and monetary in nature. These require urgent and decisive action to ensure the survival of formal businesses.

“CZR therefore appeals to the Presidium to prioritize interventions aimed at saving jobs and mitigating the ongoing wave of shop closures and retrenchments,” he said.

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Crisis in Zimbabwe Coalition vows to resist term limit changes

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BY WANDILE TSHUMA

Zimbabweans are speaking out against proposed constitutional amendments that would extend President Emmerson Mnangagwa’s tenure beyond the constitutional limit of two five-year terms.

A stakeholder engagement meeting convened by the Crisis in Zimbabwe Coalition today brought together a diverse group of stakeholders, including labor, church, and business representatives, to devise a collective strategy against the proposed amendments.

“The participants firmly argued that such changes would significantly undermine the spirit and collective will of the Zimbabwean populace,” the meeting noted.

They characterized the amendments as “self-serving maneuvers orchestrated by a small clique of politicians pursuing personal ambitions over the broader interests of the nation.”

“This clique’s pursuit of power undermines the very foundation of Zimbabwe’s democracy,” the meeting emphasized. Furthermore, the participants noted that the proposed amendments “fundamentally contradict the democratic principles enunciated in the country’s constitution.”

The meeting expressed concern that enacting such changes would exacerbate the lingering legitimacy crisis, leading to increased international isolation and a further decline in Zimbabwe’s global standing.

The participants also reflected on how these ongoing attempts to alter the constitution demonstrate a profound disregard of the will of Zimbabweans, as expressed in 2013 when they unanimously voted for the supreme law.

The meeting further noted that the relentless efforts to amend the constitution will continue to limit the democratic space in Zimbabwe. “The shrinking environment poses a serious risk of consolidating authoritarian practices and eroding the fundamental rights and freedoms of the citizens,” the meeting warned.

In addition to the constitutional amendments, the meeting highlighted the ongoing economic crisis in Zimbabwe, which has severely impacted the daily lives of ordinary citizens. “As inflation spirals and basic necessities become increasingly scarce, many families struggle to meet their fundamental needs,” the meeting noted.

The participants expressed concern that political elites and a small group of individuals with close ties to the government are exploiting the nation’s resources for their own gain. “This systematic looting occurs with little regard for the welfare of the populace, exacerbating the country’s economic plight and contributing to widespread hardship among the general population,” the meeting emphasized.

To resist these developments, the meeting resolved to:

– *Build a Broad-Based Movement*: Unite various stakeholders to defend democratic space and resist the proposed constitutional amendment. This comprehensive approach seeks to unite stakeholders, including the media, diplomats, community mobilizers, and rapid response teams, to ensure ordinary Zimbabweans are empowered to engage in this righteous and noble cause.
– *Mobilize Nationally*: Prioritize community consultation to safeguard the constitution and nurture a culture of constitutionalism. This mobilization effort must extend across all political affiliations and should commence without delay.
– *Convene a National Convention*: Organize an inclusive national all-stakeholders convention that incorporates all stakeholders to prepare for a united response, specifically a collective VOTE NO campaign, should a referendum be called regarding any constitutional changes.
– *Employ All Permissible Channels*: Utilize mass mobilization initiatives, organize demonstrations, engage in diplomatic discussions, and pursue public interest litigation to challenge and stop the encroachments on democracy.

The Crisis in Zimbabwe Coalition emphasized the urgency of mobilizing citizens across the country to defend democratic ideals and resist any proposed amendments to the constitution.

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