adminis very clear that the major drawback to increased economic growth is lack of capital.
There are 101 things that require money to come to fruition. The major requirement for finance is the infrastructure investment without which economic growth will be retarded.
Our roads, bridges, supply of water and electricity require a major overhaul, without belittling requirements for agriculture and industry. But these cannot be addressed outside infrastructure investment.
How can money be raised to meet this investment on infrastructure development?
It would be a misuse of resources if money realised from diamond sales were to go to pay for infrastructure refurbishment or for salaries. This could only be a stopgap measure, which is unsustainable.
What is fundamental going forward is for Government to float investment financial bonds to raise the required capital.
This can be done through the Reserve Bank of Zimbabwe. The US$100 million allocated to the RBZ will then be used to service the bonds, that is to pay half-yearly interest on the bonds.
Even money from the sale of diamonds could also be channelled to the RBZ for servicing the returns on the bonds.
This infrastructure investment will lead to the capitalisation of agriculture and industry from which revenue inflows will be realised with sustainability.
What is of importance is to keep the wheels of agriculture and industry turning rather than apply initiatives that are just short term.
Yes, there is a greater need to meet current expenditure from taxes, but taxes should come from increased economic growth, which can only come from business confidence where local and external investors are willing to plough their money if profits are guaranteed.
At present, with erratic supply of water and electricity, there can never be any business confidence in investing in the country. What about the ever-present potholes even in our capital city of Harare?
Many in the public sector are saying that there is nothing in the budget for them since the Minister of Finance did not make a provision for increase of salaries.
What the Minister of Finance should have done is to explain the economic crisis Europe is facing where democratic governments have been replaced by a government of technocrats to try and work out ways to repay the debts by cutting down on salaries and benefits.
Some may say that borrowing without the means to pay back the loans is bad economics.
In Europe, the governments have been forced to pay interest on their debts from local revenues collected from taxes. Running the country on a cash budget is just a stop-gap measure.
The country must develop an earning capacity but only through policies that can convince investors that they will get a return on their money.
The country can use capital injected, for hundreds of years as long as we can pay interest on the money borrowed through government bonds.
What also must be looked at is the cost of doing business in Zimbabwe. While many countries are cutting taxes to boost business investment, we should not be seen to be doing the opposite.
Cutting down on excess expenditure is the key for a sustainable economic growth through business confidence in doing business in Zimbabwe.
Other countries are cutting back on too much regulation and unnecessary expenditure on legislating for setting up institutions that consume the little revenue being collected by Zimra.
A case in point was highlighted at Air Zimbabwe where the ratio of workers to aircraft was very high in Zimbabwe compared to other airlines.
The obsession with overemployment in the parastatals and the public sector is a major factor in increased misuse of resources.
The good news from the budget statement was the increased deposits on money at the banks.
After two years of multi-currency use in our transactions, people have now satisfied their appetite for clothes, cars and electronic goods to the extent that they can keep excess cash in the banks.
What to do with the bank deposits is the major issue. Can the money be used to purchase bonds even if they yield low interest compared to what the market can pay?
But also the market is not utilising the bank deposits for lack of ability to pay back the interest charges.
One gets the feeling that the budget may have put more emphasis on meeting expenditure requirements due to the fact that all political parties are looking forward to elections rather than concentrating on facing the economic challenges that lie ahead.
Online Reporter