Pro-government individuals are always praising Mthuli Ncube for achieving a budget surplus during his tenure as the Minister of Finance. That is probably because these individuals are not well-versed in economics. You cannot judge the well-being of an economy by just looking at one macro-economic metric and arriving at the conclusion that all is well. Just as a human being can be gravely sick while having a normal body temperature an economy can get a surplus even when it’s going through hell. This is the case in Zimbabwe and it’s all thanks to our Finance Minister.
I couldn’t believe what I was reading yesterday when I read the Finance Minister’s inconsiderate statement that some people would be asked to pay for the vaccine. Where does he get off making such outrageous statements? What has the government done to help these private individuals he wants to pay for the privilege of getting a vaccine which us taxpayers will be asked to pay for?
What being a Finance Minister is all about
To understand why I think Mthuli Ncube is hurting our COVID-19 fight you need to understand the rudimentary elements of the Finance Minister’s job. Basically, he is like the treasurer of your local grocery buying cooperative when it comes to financial affairs. He collects money from every member of the cooperative (taxation). He does this by trying to come up with ways to raise money. He might say everyone must contribute a dollar each per month which money goes towards the club’s collective funds (the Consolidated Fund). He might also charge cooperative members who make use of the cooperative’s facilities e.g. if you want to hire the cooperative’s truck you have to pay this and that amount.
Now collecting money is only a part of the job. That money that is collected has to be expended for the benefit of the cooperative. This might take the form of things like buying more groceries in bulk at discounted prices so that members save money. Money might have to be spent to service the cooperative’s truck otherwise you will be forced to spend money to hire expensive outside transport next time you want to buy groceries. It would not make sense to have the treasurer collect money from you and then just pile it in some bank account or in piles of notes at his house.
At the end of say each month your little grocery club does its accounts. In short, they compare their income (total money collected from members) versus the money that was spent in the interest of the club (expenditure). If the money you collected is more than the amount you spent it means you have a surplus. If the amount of money you spent is more than what you collected it means that you have a deficit. In rare cases, you might have neither a deficit nor a surplus.
In general, deficits are bad and surpluses are good but that’s not always the case. In fact, things are never that simple.
When surpluses are bad
In order to achieve a surplus all you have to do is to make sure you spend less than what you collect. This is what our good professor has been doing-aggressively if I might add. To the extent where our public health sector has been brought to its knees. We cannot have a surplus when hospitals don’t have basic medicine and PPE is in short supply, our highways can be barely be called tarred roads anymore as the potholes have coalesced to form dusty patches and this is just the tip of the iceberg. This is the equivalent of our grocery buying treasurer achieving a surplus by refusing to buy grocery essentials like soap and cooking oil just so he can boast about his surplus.
Zimbabwe is an informal economy and yet during his tenure the Finance Minister has done nothing for this sector except dream of new ways to tax it. It’s not enough that he has to collect VAT from it, he came up with the IMT tax, during the last budget he came up with a presumptive tax on top of this. Some businesses pay as many as five taxes including PAYE. The informal sector has been the hardest hit by the lockdowns and yet there has been no support for it.
The parsimonious minister is hurting the COVID-19 fight
Last year the Minister promised support to those who had lost income due to the lockdowns. That support never materialised for the bulk of Zimbabweans. In January we went into another lockdown which was recently extended to 15 February and will probably be extended further. No word from the Finance Minister except outrageous remarks to effect that Zimbabwe is “OK” when it comes to the state of it’s COVID efforts despite nurses donning bakery aprons instead of proper PPE.
The reason why the current lockdown is failing is because Mthuli Ncube is refusing to spend money to cushion those who have lost their incomes because of the lockdown. How can the government expect those in the informal sector like kombi owners and operators to survive for a year without support? These people lost their businesses overnight due to bans and now have no way of making money except by violating the law.
The same goes to all people who are currently engaging in business despite the lockdown. It’s not because they are naughty as the government would have us believe. It’s because they have a tough choice, watch your family starve or take the 15% chance that you get severe COVID and die. For most the choice is clear. 15% is a good odd compared to the 100% chance that you will get evicted by your landlord and die of starvation if you stay at home.
The latest outrageous utterances out of the Finance Minister’s mouth are about the vaccine. He wants some people to pay for the vaccine so the government can “recoup” it’s costs. It’s like he thinks the money (consolidated fund) belongs to the government! All the government has belongs to the people and right now the biggest threat facing the people is the coronavirus and nothing else. Why would he be concerned about a deficit when people are dying is beyond me.
For the vaccine program to work the bulk of the people, ideally everyone, has to be vaccinated otherwise it’s all for nought. Experts have expressed fears that if this is not done new strains which are not covered by the virus will emerge making partial vaccination programs a stupid waste of money. Statistics from the government’s own agency, ZIMSTAT show that the people are poorer ever since Mthuli Ncube took reigns in 2018 and now he wants to make those same people poorer by demanding payment for a virus.
Even rich nations are giving the virus away for free. Here in Zimbabwe where people are poorer he is asking that they pay? If we continue down this route the coronavirus will become our very own epidemic. The AIDS of this generation and once it’s entrenched it will only cost more to eradicate-if it can ever be eradicated at all.