When businesses look at yesterday’s National Budget, several points will strike them: no extra goodies for business, but continuation of those put in place in recent times; no place in the sun for tax cheats; and finally and possibly most importantly, a record sum in place for capital expenditure.
No one was really expecting much in the way of further tax concessions, since the basic range is now in place to encourage investment and much more would simply produce distortions that would mess up the markets.
But there was a lot in the Budget statement for those who have been skating on thin ice when it comes to taxes to mull. Minister of Finance and Economic Development Professor Mthuli Ncube definitely wants every cent due to Zimra and wants it now, without excuses. He has been doing more than closely loopholes, he has been welding them shut and adding bar locks.
This is not something that will worry a wide range of businesses, large and small, since they are compliant and so can remain compliant, but some of the tricks some people have been up to suggests that there is a group somewhere swimming in the sea of corruption and cheating and then making for shore and listing the sins.
Things like the delays of some in integrating their hardware with the Zimra servers for tax purposes, those who import capital equipment and then move it around and sell it, and a host of others. Well they can now face lack of some business opportunities, and in some cases even a spell running their business on visiting days down at the prison.
For those who play by the rules, doors have opened, but the Minister wants to see proof of playing the rules before he opens his.
But besides the penalties, there will be one major sphere where they simply cannot do business — the public sector contracts. When a country the size of Zimbabwe throws more than 30 percent of its growing budget, rising because the economy is growing, at buying “non-financial assets”, that is things, this is a huge boost for the business sector.
Tax compliant businesses with proper premises and the like can bid for their share and by the look of it, a lot more businesses should be approaching the Procurement Regulatory Authority with the required paperwork, including tax clearance, and getting on the lists so they can actually submit bids.
Tightening up on tax dodging will benefit the real businesses. They will still be competing, but with each other, not with the guys carrying a briefcase emerging out of the woodwork or even those who buy benzes instead of paying their taxes.
The capital expenditure covers a lot, everything from dams and roads, the obvious ones, to building several hundred schools, extending or re-equipping hospitals and procuring an incredible range of goods.
That sort of money can and will prime a lot of sectors, and a lot of businesses from fairly small concerns, a small-town contractor with a classroom block for example, up to the major businesses.
And all it requires to be considered at least is being honest, and all it requires to win is to be good.
Since at least some of this money is earmarked specifically for goods made in Zimbabwe or at least assembled, and the farm mechanisation programme has this written into the scheme, it is apparent that the Government is keen on making a capital account dollar go round a few times as it is spent, which is what it should be doing.
Other areas are the rising budgets for business start-ups. Many of these are tiny businesses, but that initial microloan is not wasted on living costs.
It is used to buy the basic equipment and the first batch of materials. If some woman is starting a lunch counter she needs to buy basic equipment and the first batch of ingredients, and someone needs to sell her those. More importantly someone then needs to keep selling her these things, as she earns her own money. The supplier can live as well with a couple of dozen like her.
Besides the contracts and the growth of new business, the Minister was very keen on public-private partnerships. Sometimes these work and sometimes not, so they need thought. When they work well. The public side normally has both assets, usually resources such as land and water, plus the legal ability to sign deals for public good and usually a guaranteed market. The private partners, admittedly, are seen as the suppliers of money and the things money can buy, but must also be seen a source of skills and managerial systems.
So long as everything is worked out and spelt out they can work, although businesses seeing them as a something to milk should consider that the budget also shoves by the ZACC budget, so once again honesty, competence and a fairness will be at a premium.
Other openings for business are in the spread of money. A lot has been sunk into input schemes to convert subsistence farmers into small-scale commercial farmers. Each family might not be making much, but in aggregate it is a huge market that has its own special needs. Putting in a market of 2 million families where there was almost nothing does change an economy.
Other points in the budget are worth considering. Minister Ncube is someone who hates indulging in wishful thinking. He has a tendency to predict a small budget deficit and then stand in Parliament a year later and so he made a surplus. Perhaps it will be the same this time, with his prediction of a 0,5 percent deficit but the odds are that it there is on it will because of some disaster.
So we remain, even with that prediction, with the sort of fiscal discipline we have become used to. It is still slightly weird to hear a Finance Minister almost apologising for his small budget surpluses, and justifying the need to keep them small because he has so many services to run and needs to meet. But we have got used to this now. So this is fixed.
The foreign currency problem appears to being sorted out. There was a modest current account deficit on trade in the first quarter, with more imports and exports, but this was reversed in the rest of the year.
By now the Minister states the backlog in allocations on the auction has been eliminated and we are paying out as we allot; which is how it is supposed to work.
And this is being done with allocations running at almost 50 percent more than last year.
And his colleagues on the other side of Sam Nujoma Street at the Reserve Bank are doing complicated things with money supply, reserve money and suchlike, the sort of job central banks are supposed to do rather than throw up their hands as they try to fund a spendthrift minister and keep the presses rolling.
This means the macroeconomic environment is still improving. The Minister openly and bluntly reported the rising black-market exchange rate in the third quarter and the delay this imposed on bringing down inflation rates, but was quite confident that progress was now back on course, largely because fundamentals were fixed.
Again this is important because this is the sort of environment the business sectors need to flourish in short, medium and long terms.
Generally Minister Ncube has not been very keen on give-aways, but he appears to be exceptionally keen on creating opportunities for other people to make money, benefiting themselves and thanks to his tighter controls on taxes benefiting the country by paying their share.