Funding for development has been more outward looking ie ODA but this source has not been enough to spur economic growth in Zimbabwe. New paradigm in the funding of a new sustainable development policy (ZIMASSET) is the gist of this presentation.

1. DRM –ALTERNATIVE FINANCING
STRATEGY FOR ZIMASSET
Innocent Bayai

2. Zimbabwe’s Economic Status
The country is characterized with:
• faltering health sector
• poor infrastructure (road and rail)
• power outages
• high unemployment
• poverty
• subsistence agriculture
• corruption and depressed economic growth
(Pickbourn and Ndikumana, 2013)
– Zimbabwe’s top agenda is to pursue development and
institute economic reforms.

3. IMAGES OF GDP GROWTH, HEALTH HAZARDS, STATE OF
TRANSPORT & POWER INFRASTRUCTURE, SUBSISTENCE
FARMING AND HOUSING PROBLEMS

4. ACTION TAKEN
• In 2013, the government en-acted a new Economic turn-
around blueprint titled ZIMASSET (Zimbabwe Agenda for
Sustainable Socio-Economic Transformation)
• Meant to address social in-equality and effect maximum
exploitation of both human and natural resources
(Government Gazzette, July 2013).
• Though noble a policy it is, nothing tangible has been realized
owing to lack of resources to implement the policy which
amount to a staggering $27 billion in a country whose
gazetted 2016 National Budget is just $4 billion!
• The policy was largely premised on external funding which
has failed to materialize given an external debt overhang of
$8.2 billion (Mundi Index, 2015).

6. ODA & FUNDING PROBLEMS
• ODA is a known panacea to economic woes, however:
– Total ODA in 2015 is $651.02m (World Bank, 2015) falls short
of the development needs.
– Latest statistics show that, health and social services guzzle
more than 50% of the total ODA availed to Zimbabwe.
– Only 2.4% is directed to economic infrastructure and 0.4% to
program assistance with manufacturing getting 9.4% with
education and agriculture getting 0.6% and 2.8%
respectively.
– The gist is, given these sectoral allocations, infrastructure
and public sector investment spending is rock bottom, hence
ODA only cannot finance economic growth.

7. USES OF ODA IN ZIMBABWE
Allocation
HEALTH & POPULATION
OTHER SOCIAL SERVICES
HUMANITARIAN AID
PRODUCTION SECTORS
EDUCATION
SOURCE: OECD/DAC

8. NEW FUNDING PARADIGM FOR
DEVELOPMENT
DOMESTIC RESOURCE MOBILIZATION

9. NEW FUNDING PARADIGM
• Given ZIMASSET funding limitations, Domestic
Resource Mobilization (DRM) is the way to go
– especially considering a nation with vast deposits of
gold, platinum and diamonds and a largely literate
population.
• This presentation notes the relevant DRM strategies
for funding ZIMASSET.
• World Bank (2013) notes that DRM has great
potential in Sub-Saharan African given that it has
outgrown ODA during the period 2000 – 2013.

10. PROPOSED DRM STRATEGIES
• Tax Administration
– Tax administration has great potential of improving revenue generation
given that tax to GDP is currently around 15% whilst the developed
states are standing at 35%.
– Though the Zimbabwe Revenue Authority (ZIMRA) has improved
revenue collection by digitalizing VAT collection, the tax base continues
to shrink given the massive closure of corporates on the back of a sick
economy.
– Tax administration thus has to increase the tax base by making efforts to
tax difficult to tax sectors such as SMEs.
– Though a lot of revenue is lost through illicit means in the collection of
revenue, no action has been taken to clamp down on Revenue Officers
crossing the line.
– Corruption has seen the inclusion of revenue officers in smuggling of
imports. In a bid to improve revenue collection, porous borders have to
be sealed as well as involving the public in voicing the corruption
concern since corruption occurs in public circles and business.
– Tax also need to be aligned to the degree of environment degradation
caused by comapanies exploiting natural resources.

11. Efficient Government Expenditure
• This is meant to reduce resources spent thus create
fiscal space for investment in infrastructure.
– Of worry has been the ‘Salary gate’ where CEOs of state
corporations paid themselves hefty salaries ($500 000)
per month as well as ghost workers on government
payroll - gobbling 83% of government revenue.
– Taking an employees’ audit and reduction of subsidies
allocated to ministries ease aid-dependency and
improves credit worthiness hence allow further
resources to be accessed.
– Transparency has to be promoted by embracing good
governance in state enterprises (World Bank, 2013).

12. TAX TO GDP 2004-2009
Source: World Bank Classification and World Development Indicators

13. Private Sector Friendly Policies
• The ugly side of Zimbabwean policies has been the
mis-alignment of policies since most policies
contradict each other.
– Indigenization upholds de-tooling foreign owned
corporates whilst competition policies uphold the
presence of foreign-owned corporate to promote
efficiency.
– Such confusion affects the role of the private sector in
the economy.
– Removal of red-tape and hurdles for new investments
can enable public-private partnerships hence policy
coordination has to take centre stage.

14. Harnessing Revenue from Natural
Resources
• The former Finance Minister Tendai Biti used to
point out that revenue from diamond sales was not
being availed to the Treasury hence the lack of
resources to pay government expenses.
– Transparency has to be implemented as well as making
effort to add value to platinum and other minerals
(beneficiation) which are being exported raw.
– In the same realm, Multinational Companies doing
mining have to pay taxes hence reduce tax avoidance.

15. Procurement
• Though the Government of Zimbabwe en-acted the
Anti-Corruption Commission, the commission
hasn’t done much since offenders are still walking
the street.
– The commission lacks prosecution powers hence
government has to empower this commission.
– Non-partisan membership has to be considered in the
commission too.

16. Establishing a Sovereign Wealth Fund
• Whilst the trend has been the formulation of
Wealth Funds by developing countries which can
fund long term development projects, Zimbabwe
has lagged behind in this realm.
– The realization is that, the government has not been
able to save anything owing to a cash budget it has been
running hence a long-term focus to sustainable
development has to start by embracing the notion of
saving for future investment.