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The Second Republic’s major drive to repair, rehabilitate, upgrade and extend the infrastructure for the services Zimbabweans need and the country needs to develop have been a boon to many local companies.
As part of the fiscal reforms, which saw recurrent expenditure brought under control and tax evasion hammered, the Government has managed to budget for far more capital expenditure, basically the infrastructure, while still having almost zero borrowing, just using the money it collects far more efficiently and effectively.
With Zimbabwean contractors showing they can do much of the required work properly and up to the necessary standards, the Government has been keen to use local firms wherever possible, with President Mnangagwa being very complimentary about the sort of work being done on the Beitbridge-Masvingo-Harare Highway, for example, and very impressed by the way local firms showed innovation on the supply side when Covid-19 struck.
This turning to our own has many other benefits. It keeps a lot more money in the country, it grows the local economy and increases its capacity, and it provides a lot more jobs, from the humble all the way up to the most skilled.
Basically the money spent on infrastructure is made to do multiple duty and bring multiple benefits.
Communities and the nation get the new roads, the new dams, the new schools, the new hospital wards, the new clinics and all the rest of the better services.
But we also get a whole lot of new or bigger businesses who did the construction and have built up our pool of skilled manpower and seen a lot more people able to take home a decent monthly pay pack. So we win twice.
But there have been the odd problems. Some contractors have not done the work required, or have skimped on quality control. The Government has made it clear that they need to fix what was not done properly, and has said that those who appeared not to care what they were doing would not be getting more contracts.
This is not that damaging. While the business owners will be out in the cold, presumably the skilled and other workers can move across to one of the contractors where the owners and managers are fanatical about quality control and ensure that their work forces become equally fanatical.
Skills are just the starting point; pride in the final product is also required.
Now we have Minister of Finance and Economic Development Mthuli Ncube telling these local companies that the relatively common practice of converting their Government payments into foreign currency on the black market just has to stop.
It had been accepted that some did this to preserve value of their revenues, and the Government had a hard look at their problems and needs and came up with a double innovative scheme.
Half their payments are now in foreign currency, so that can just go out and buy or import required equipment without breaking the law; they can also buy their fuel, which has been worrying them, legitimately.
The other half of the payments are in local currency. Considering they pay their staff in local currency, buy electricity in local currency, pay rates and most of their taxes in local currency this does not appear to be a problem.
They even buy a large block of their materials in local currency. In fact these sort of infrastructure contractors tend to have high inputs of labour, and a lot of their materials are fairly basic, things like sand, cement, stone, gravel, clay.
And when they are building a road almost all the costs of keeping and maintaining the workers, the food and the like, are almost all local currency costs.
Minister Ncube now appears, when we read his last statement, exceptionally irritated at the way some of these Government contractors are still behaving, even when he has fixed their legitimate grievances , and in many cases has gone the extra mile since it is dubious that as much as half their costs are in foreign currency.
Any of them still paying the black market and messing around with the dubious people who control that market have obviously joined others who want to make money from arbitraging, currency speculation and other unpleasant pursuits rather than doing what they do rather well, making roads, building schools and generally doing highly-skilled work rather well.
So his announcement that the Financial Intelligence Unit of the Reserve Bank of Zimbabwe will now be checking what happens to the money they are paid by the Government, and presumably this will be both the local currency and the foreign currency, since the Minister presumably wants the foreign currency component spent productively rather than being used to play the black market from the other side.
And if any of the contractors refuse to take his warnings seriously, he will take action. For a start they can forget about new contracts with the Government, and a fair block of these contractors only have one major customer.
A road-maker, for example, without Government contracts is just making driveways, not the largest of large businesses. So the blacklisting is a serious response to those not behaving properly.
But he will also be using the rest of the legal armoury available, ensuring that the black market currency they buy is forfeited, that they face appropriate civil penalties, and that they can prosecuted for illegal activity.
So the contractors who cannot make money honestly and want to be dishonest will find themselves out of business, without the money they have been secretly buying, having other assets stripped to pay fines, and possibly sitting in a jail cell.
Those who do take their businesses seriously, the ones who breathed a sigh of relief when the Government changed the payment system and who want to continue doing first-rate work for years and decades to come as Zimbabwe develops and the economy controls, will not be troubled by these warnings.
They might want to be ready to bid on a cancelled contract, but they are the ones who all along the line have been doing the best work and who want to continue doing it.
Peter Tanyanyiwa
Online Reporter