Government at mercy of donors
INTERNATIONAL donors, who have offered very limited budgetary support to Zimbabwe in the past six years, have now taken almost full control of the funding of critical social services, which leaves government at the mercy of aid agencies.
The increased visibility of aid agencies has been precipitated by government’s failure to improve its prolonged cash flow crisis.
Revenue inflows into State coffers have been worsening every year since a dire liquidity crisis hit the country from 2011, triggering the closure of companies and affecting tax collections.
In addition, over 93 percent of national expenditure has been expended on consumptive overheads, the bulk of it being directed to a bloated civil service with 553 000 members.
As a result, millions of Zimbabweans have been effectively condemned to poverty.
They are now living under difficult conditions with very limited service delivery, according to a report released by the United Nations Children’s Fund (UNICEF), which says between 2014 and June 2015, US$363 million has flowed into various social services through transition funds structured by donors.
UNICEF is both fund manager and technical partner.
During the same period, government has used US$73 million in the social sectors.
These include health, education, social services, child protection and others.
The shift towards high dependence on donor support, which became more pronounced from 2000, places the country at the mercy of foreign agencies, who can move from country to country depending on where they feel real humanitarian assistance is required.
The picture is gloomier in rural areas, where in 2013 for instance, external donors funded about 75 percent of rural health centres’ requirements and 21 percent of district rural and mission hospitals.
The scenario highlights the extent of neglect that millions of marginalised Zimbabweans have had to endure.
An analysis of the 2015 National Budget by UNICEF showed that between January and June this year, donors pumped eight times more funding into social services than government.
It said US$229,3 million flowed into various sectors from the international community, against government’s US$28,3 million.
Donors funded US$133 million in a range of social service provisions in 2014, against government’s US$45 million, according to the UNICEF report, which noted that Zimbabwe’s fiscal scenario has been “worrisome”.
UNICEF stressed that the brief stabilisation of the humanitarian crisis from 2009, when a structured assistance programme was put in place by donors to provide direct aid to unidentified projects without routing cash through Treasury, was driven by donor funding.
But it posed the question: Is this sustainable?
During the period, donors poured US$127,5 million in health, against government’s US$11,8 million while donors used US$30,2 million in education, against government’s US$4,6 million.
At the core of the Zimbabwean crisis is continued infighting in government and conflicting statements on key policy issues, which has dampened investor confidence.
Finance Minister, Patrick Chinamasa, presents the 2016 National Budget on November 26.
Ahead of the budget, there are high expectations that his fiscal plan would provide the foundation on which spending on health, education, social protection and WASH would be improved.
“There is no country that should have figures of this nature where donors are providing more funds than the government,” Samson Muradzikwa, chief of social policy and research at UNICEF, told reporters in Harare recently.
“If donors wake up and say we are no longer supporting water and sanitation, we are moving to education, what happens? It is not a happy situation at all. Government will have to borrow to finance the budget,” said Muradzikwa.
However, given the extent of the crisis already affecting rural communities, it is clear that external funding has remained inadequate.
Between 2004 and 2013, Zimbabwe received about one quarter of aid compared to Tanzania.
Considerable funding from government towards social services will be imperative to arrest suffering, needless deaths and high levels of school dropouts, which, in itself, creates a vicious cycle of poor and illiterate citizens.
But prospects are gloom.
UNICEF says the El Nino induced drought projected to grip the region this farming season, as well as the climate change that has made planning by farmers difficult, will add to the fiscal problems already affecting government.
It says a potential economic slowdown particularly in emerging market economies such as China will have a big say on developments in Zimbabwe, which sells the bulk of its minerals to Beijing.
The strengthening of the United States dollar against major trading partner currencies has already inflicted damage to export performance and the trade balance.
“Government will have to borrow to finance the budget,” said Muradzikwa, warning, however, that this will crowd out private sector borrowing from the domestic market, which is critical for the growth of industries.
Chinamasa’s budget will have to reinvigorate a struggling economy, resuscitating social services and improving health care which is on the brink of collapse owing to rising debts, outdated equipment, poor funding and maladministration, all of which are hurting the poor.
Government has been racing against time to solve the crisis that is now threatening to turn public hospitals, the envy of the region until mismanagement became endemic from the late 1990s, into white elephants.
Experts have warned that at the rate the deterioration is taking place, public hospitals could be rendered useless and unable to attend to even minor ailments after significant progress from 2009 when donor funding helped stabilise the situation.
Maternal mortality declined to 614 in 2014, from 960 in 2009.
Child mortality declined to 75 last year, from 94 in 2009, according to UNICEF.
“2009 was a perfect storm,” said Muradzikwa.
“Everything that has gone wrong went wrong (but) some of the interventions are beginning to show results,” he told reporters at a meeting to review the 2015 budget.
He said UNICEF was worried that growth targets have been further revised downwards, which means government would be incapacitated further in terms of revenue generation, with negative implications on service delivery.
“As we head into the end of the year, we are already in the red and government has not paid bonuses yet,” said Muradzikwa.
“There will be a cumulative US$460 million deficit from the original US$4 billion budget. Government can’t afford to pay these bonuses and not paying the bonuses will save about US$140 million.”
In the health delivery system, this would force patients to flock to private hospitals where fees are exorbitant. This, inevitably, would sideline the majority poor, who may die from home because of health care costs.
In April 2001, African Union countries meeting in Abuja, Nigeria, pledged to increase government funding for health to at least 15 percent of their annual budgets.
However, Zimbabwe has significantly cut spending on healthcare over the past few years.
In the 2015 national budget, the Ministry of Health and Child Care was allocated US$301 million which represented 6,3 percent of the US$4,1 billion before it was revised to US$3,6 billion.
In 2014, allocation to health was US$337 million.
Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette