Chinamasa Unveils $5,1 Billion Budget, Proposes Revision of Feared Indigenization LawZimbabwe’s Finance Minister Patrick Chinamasa on Thursday presented a $5,1 billion national budget in parliament proposing to scrap some provisions of the country’s feared indigenization law in an effort to promote foreign direct investment. The minister, who was reappointed by President Emmerson Mnangagwa to the finance portfolio after he was sacked by former president Robert Mugabe, said the government is also expected to sack at least 3,700 Zanu PF youth working for the government. In his budget statement for the 2018 fiscal year, Chinamasa told parliament that government has introduced the Finance Bill designed to amend the Indigenisation and Empowerment Act. He said the move is meant to reboot the nation’s comatose economy. The regulations being crafted and set to be introduced in April 2018, are expected to still restrict ownership thresholds in the mining of diamonds and platinum. INDIGENIZATION THRESHOLD “Accordingly, the proposed amendments will confine the 51/49 indigenisation threshold to only the two minerals, namely diamonds and platinum, in the extractive sector. The 51/49 threshold will not apply to the rest of the extractive sector, nor will it apply to the other sectors of the economy, which will be open to any investor regardless of nationality.” Many foreign investors have over the years expressed concern over the indigenization law, saying it did not protect their investments in Zimbabwe. He said there will be a reserved sector for Zimbabweans. “The Reserved sector is only for Zimbabwean citizens, and for non-Zimbabweans, entry into the Reserved sector will only be by special dispensation granted by Government, if the proposed business creates employment, affords the opportunity for the transfers of skills and technology for the benefit of the people of Zimbabwe, promotes the creation of sustainable value chains and meets the prescribed socially and economically desirable objectives.” EASE OF DOING BUSINESS He said it is currently not easy for investors to open businesses in Zimbabwe due to some rigid regulations. “Zimbabwe’s ranking with regards to the ease of doing business remains unacceptably poor, with its ranking only moving from 161 out of 190 countries in 2016 to 159 in 2017. 237. Government is, therefore, seized with the need to implement a much broader array of Ease of Doing Business Reforms.” He said President Mnangagwa wants the country to be in a position of opening up space for local and international investors. “… The president has also pronounced himself over measures to address the ease and cost of doing business. Hence, the thrust of Government will be to make Ease of Doing Business reforms more practical and administratively accessible for actual day to day transaction processes to the ordinary Zimbabwean and foreigner intending to undertake business or investment.” ZANU PF YOUTH At the same time, Chinamasa said the government will get rid of unqualified youth working in the government who are affiliated with the ruling Zanu PF party. “The Cabinet decision to abolish the Youth Officer posts under the Ministry of Youth, Indigenisation & Empowerment and transfer the roles and function to the Ward Development Coordinators in the Ministry of Women, Gender and Community Development is being implemented with immediate effect. This will rationalise the total Youth Officers and Ward Development Coordinators establishment down by 3,739 from 7,269 to 3,530, translating to savings of US$1.6 million per month and US$19.3 million per annum.” The government is also proposing to remove other unqualified and aged civil servants. “Furthermore, 528 members of the Public Service without the requisite qualifications in terms of Section 18(4) e (ii) of the Public Service Regulations are being retired. The retirement of the above members will entail payment of a severance package estimated at US$8.7 million.” He commended President Mnangagwa for trimming his government ministers from 27 to 21, saying efforts are underway to get rid of redundant staff through combining some ministries. PROJECTED GROWTH Chinamasa said the Zimbabwe economy is on track to realise the projected 3.7 growth rate for 2017, adding that revenues have out-performed targets this year and by year end revenue totals are expected to reach $3.9 billion. He noted that the economy in 2018 is expected to record significant growth compared to 2017. “The formulation of the 2018 Budget is against the background of projected positive GDP (Gross Domestic Product) growth of 3.7% for 2017, against a target of 1.7%, and up from 0.7% during 2016. “Notwithstanding the growth being experienced, the economy faces some strong headwinds and challenges … The global upswing in economic activity, which started in the second half of 2016 is strengthening, and is projected to rise to 3.6% in 2017 and to 3.7 % in 2018.” Chinamasa said agriculture is estimated to grow by 15.9% in 2017, on the back of government coordinated interventions in partnership with the private sector. “In addition, the expanded ‘Command Agriculture’ Programme, to include soya beans and livestock production, is expected to sustain growth of the sector.” DIPOMATIC MISSIONS The finance minister noted that the government is expected to reduce diplomatic missions and staff in various nations in order to cut down its expenditure. It will also reduce the number of people accompanying state officials on foreign trips unlike former president Mugabe who used to travel with family members, Cabinet ministers and bloated security personnel. The government will allocate $132 million for conducting the 2018 general elections set for 2018. In terms of ministerial budget allocations, the Ministry of Education received the biggest chunk of the budget. Chinamasa says the ministry will get at least $905 million in the 2018 financial year.