admin
Government has approved the rationalisation of the civil service that should eventually lead to a reduction in its huge salary bill. That bill is estimated to gobble 83 percent of Government revenues.
The aim, according to the Minister of Finance and Economic Development, is to cut that percentage to close to 40 percent.
We are unable to commend Government one way or the other. As they say, it is a painful pill to swallow. On one hand, it is a painful decision for long-serving members affected, directly and indirectly, on the other, it is a decision which has to be made as part of measures to restore economic viability.
The issue is not only about trying to please or meet the requirements of foreign lenders in a world whose economy has been anaemic for almost seven years, therefore with limited resources to splurge. We also have to do a reality check as a country.
We have to accept as a nation that we are consuming more than we produce, we are eating into the next generation’s resources. More than that, those nations we expect to lend to us are only able to do so because somebody is prepared to cut consumption and therefore put something aside. When that happens, they expect compensation for the pain.
What should therefore be understood is that Government cannot meet its huge wage bill and still be able to invest in critical public infrastructure that makes economic development possible.
Even where public-private sector partnerships are involved, Government still has to make significant contributions, otherwise it might as well privatise everything.
It is in this light that we hope civil servants will take this drastic action by Government, given its long-term benefits for the entire economy. It is not sustainable that Government should continue to be the chief borrower in the national economy when that debt is used to finance consumption in the form of salaries.
That tends to drain resources which should otherwise go towards financing production in the private sector. In saying all this we are mindful of the negative role played by the banking sector in the credit crunch over the past decade. Many if not all local banks have adopted what can only be rationally described as penalties for depositing and keeping money in a bank account.
Invariably, by the time the depositor withdraws the money, there is far less than what they put in. It’s all costs, no interest, no incentive for people to save.
Zimbabwe appears to be the only country where banks seem to penalise people for depositing money. Bank charges are usurious, and bank managers still behave like they belong to the Stone Age. The emergence of mobile banking doesn’t appear to move them at all.
The overall result is that there is a shortage of money for investors. Those who get it have to pay through the nose. That makes for a chronically shrinking economy as there are no resources for expansion. That also accounts for the closure of otherwise viable companies because it is extremely difficult to recapitalise.
While sanctions have been a major challenge for the economy over the past 20 years, Zimbabweans themselves have not made much effort to alleviate their situation. If anything, they have been complicit to the contraction of the economy, so long as this could be blamed on sanctions or the land reform or wrong Government policies.
We therefore believe the civil service audit approved by Cabinet last week was not a matter of if, but when. Its execution was inevitable for Government as a necessary stimulus for economic development and as the tax base continues to shrink.
An important message has to be driven home: Zimbabweans have to accept responsibility for the development of their economy. That can largely be done through less wasteful spending and by putting money into productive investment.
The banking sector must play its traditional role by encouraging people to keep their money in their deposit accounts, which money the banks can then on-lend to the productive sector at reasonable interest rates.
There will be no miracle solutions to the challenges in Zimbabwe, whether political or prophetic. We simply have to be realistic about our expectations of what foreign investment can do, and that it comes at a huge cost.
Online Reporter