Online Reporter
Between us, Zimbabweans are producing more wealth each year than we had thought, about 26 percent more, when we count everyone’s contribution more completely as has now been done for 2023, with the measured 2,9 percent for last year and the 6 percent expected this year being added onto the new figures.
A major problem in recent years in much of Africa has been underestimating gross domestic product (GDP) and everyone from the World Bank downwards has been keen on better economic census methods to get more accurate results.
The informal sector in particular tends to be seriously underestimated, partly because so many in that part of the economy go to some lengths to keep out of the way of the tax and licencing authorities and partly because there are so many small businesses that they can be difficult to count.
But every 10 years we do make an effort and spend quite a lot of money, to talk to at least one responsible person in every household, the census.
ZimStat in the 2023 Census sought quite a lot of additional information besides just counting heads to get the population figures and an indication of the education and skills base along with the age breakdown — the traditional census questions.
People were asked about housing, expenditure and a range of questions involving the standard and quality of their lives. The census result for each household is confidential, since the wish is to get the total numbers not to take action on individuals, so a lot of accurate information that people might prefer to keep quiet about is collected.
After the fairly complex analysis that is required, ZimStat found out that in 2023 Zimbabweans between us produced around ZiG168,5 trillion (about US$44,4 billion) in all economic activity rather than the estimated ZiG133,7 trillion (US$35,2 billion) that had been based on a less complete 2019 economic model. The gap reflected not just the greater accuracy obtained when you count rather than estimate, but also the more than expected growth in some sections of the economy.
With last year’s growth, now reckoned to be 2,9 percent, that would have gone up to close of US$45,7 billion and the six percent growth now everyone considers probable this year taking the figure to more than US$48,4 billion.
The total net income of all 15 million plus of us was also higher in 2023, being the equivalent of around US$2,859 billion rather than the previously estimated US$2,259 billion.
Again we were undercounting by around 26,5 percent and again this total will probably reach more than US$3,1 billion this year. This is almost 70 percent of the US$4,5 billion that we need to qualify as an upper middle income country and so four more years of reasonably good growth rates will see us reach the required figures and so fulfil Vision 2030.
The figures show annual per capital income can now be expected to reach US$3 000 this year.
While this is not riches as the world counts riches we are still talking about US$250 a month, which is not bad and shows we are moving up the middle-income ranks faster than we had supposed, so the Vision 2030 target is more than attainable.
But the higher than expected national income has additional implications, a major one being that the share of national income going to the Government in taxes, already fairly moderate, was even lower than we thought and that the percentage of the national income not being taxed is higher than estimated.
This has important implications when it comes to taxes and taxpayers, that a smaller percentage of the national income than estimated is having to support the services that all benefit from.
This hiding of national wealth and national income might be desired by those who go out of their way to avoid taxes and who are so desperate not to register their businesses, but it does make the burden carried by those who are taxed even more unfair that was thought before.
The bulk of taxes pay for the essential infrastructure and social spending of the Government, all those roads and dams and the like, plus the provision of education and health services to the overwhelming majority of people.
Yes, standards have been improving in the Second Republic as the economy is sorted out, corruption hammered and waste slashed, but if everyone was contributing their fair share, we would obviously be doing even better.
However, the quality of life that this sort of national wealth, national income and per capita income should be producing is somewhat on the low side, again despite the major progress of the Second Republic.
This is because, as everyone knows, funds are limited. With corruption slashed back and waste sharply reduced, we are making best use of our tax revenue, but with more revenue we could obviously do everything faster.
The economic census results show that more money should be flowing into all those capital investments and social spending that improve the quality of life, as well as accelerating economic growth.
This has already been identified as a challenge by many economists in Zimbabwe, with the new figures showing that the challenge is more urgent.
Efforts have been stepped up to ensure that all businesses are licensed, instead of so many being counted only in a census when action cannot be taken for confidentiality reasons.
But the census system of sending our teams of properly trained people seems to offer a cost-effective solution to not just finding out how much business we have, but also listing these businesses and bringing everyone into the formal economy. As we have repeated stressed, the amount a small business might pay in tax could be very little. But when you start adding up hundreds of thousands of very little tax payments, you have a reasonable pool of money.
Modern technology allows the sort of databases required to be established and maintained very cheaply, so we do not have to spend all our tax money on collecting taxes.
It also allows even the smallest to be listed as the sort of business that is too small pay any tax, although having them in the database means that when they grow they are already there.
So the work of ZimStat in updating our economic census figures is not just good news and showing that the progress to an upper middle income economy is progressing faster than we expected, it also has practical implications on how that progress can be accelerated even more, and how the benefits of that progress can be expanded.
