Zim fails to meet fiscal transparency standards

MARTHA MAMOMBE

Zimbabwe   has failed to meet   the minimum international fiscal transparency standards, the latest US State Department’s fiscal transparency report shows.

The 2022 report evaluates data  on the budget and natural resources extraction transparency for 141 countries across the globe that receive US assistance, including Zimbabwe.

Although Zimbabwe demonstrated some significant efforts towards doing so, the southern African country is one of the 27 governments that did not meet the minimum fiscal transparency requirements.

Other countries that failed to meet the minimum standards included South Africa, Botswana, Namibia and Nigeria among others.

Commenting on the report , the public diplomacy officer of the United States Embassy in Harare, Meg Riggs said: “This year, the report recognises Zimbabwe as one of the 27 governments that did not  meet minimum fiscal transparency requirements but demonstrated significant efforts towards doing so.

“The government of Zimbabwe achieved this by improving the accuracy of its budget projections in 2021.

But it did not publish total debt holdings by State owned enterprises.

The budget documents did not paint a  complete picture of revenue and expenditures. There were no procedures in place to promote Parliamentary reviews.

“Basic information about mining concessions was not publicly available.”

She added: “Zimbabwe’s fiscal transparency will be improved if  it publishes debt information , subjects budget accounts  to civilian oversight, provides a complete picture of revenues and expenditures, detailed allocations to  and revenues from State-owned enterprises in the  public documents, follows laws and regulations on the natural resources  extraction and licensing and practice.”

In what is a likely reaffirmation for the government, the Mildred Chiri-led Auditor General has in the past year met international standards of independence according to the report.

While the Fiscal Transparency Report does not suggest or imply prevalence of corruption or lack thereof, there is a correlation between unavailability of public documents and under hand dealings, both of which prejudice the public of information relating to finances, government tenders and awards.

On the other hand, the Zimbabwe Anti-Corruption Commission continues to make efforts to weed out corruption with a string of arrests and asset forfeitures. Unfortunately, these efforts are seldom accompanied by prosecution and or liquidation of the seized assets. Critics have argued that the uninspiring catch-and-release system gives the impression that impunity is a luxury for the elite, while arrests of a political nature are handled with far less pardon.

With public service across urban and rural communities at its worst, civil society groups and citizens alike have called for public spending to be channeled towards clean water, decent roads, lighting, and capacitation of hospitals among other basic social amenities.

Accountability and robust public finance management become a necessity for effective public service delivery.

To meet minimum requirements next year, there is a need for public revenue and expenditure to be made available and for parliament to review intelligence budgets. “Zimbabwe’s fiscal transparency would be improved if it published debt information of its major state-owned enterprises, subjected off-budget accounts and intelligence budgets to civilian oversight, provided a complete picture of revenues and expenditures, followed laws and regulations governing natural resource extraction contracts and licensing,” Riggs said.

The findings of the Fiscal Transparency Report come just months after Zimbabwe was ranked 157 out of 180 countries on the Corruption Perception Index compiled by Transparency International.

Between 2015 and 2020 there was a steady improvement of the country’s score.

However, that has changed in the last two years as priority was given to essential government departments and parastatals.

The Covid 19 pandemic resulted in many countries directing funds to critical areas without due process and awarded tenders for the procurement of personal protective equipment, vaccines, and test kits.

The CPI uses a scale of 100, with 100 being very clean, and 0 being the most corrupt.

Zimbabwe scored 23.

While perceptions remain just that, domestic and international opinions inform how a country is regarded, how market forces react, the influx or lack thereof of foreign and domestic investors, and levels of public confidence.

Coincidentally, Zimbabwe’s economy is battling severe headwinds currency and exchange rate volatilities.

In the last three weeks, the Zimbabwe dollar has been a bit stable.

However, the economy is not out of the woods yet  with incomes eroding fast and the public’s  buying power thinning by the day.

Multiple analysts said there was a need to expedite home grown solutions such as  tracking how much money public entities make, for example the Cold Storage Company, ZESA or the Zimbabwe Consolidated Diamond Mining Company, among many other government entities.

The mining sector’s aspiration of becoming a USD12bn  industry by  2023, might be far-fetched given that the sector is not effectively regulated.

Informal and formal miners prefer to sell their minerals to alternative parallel buyers because of the competitiveness of their prices, giving rise to leakages.

A quick Google search of the Mines Ministry website yields nothing, as the website is “under maintenance.” While this may appear to be a minor glitch it could paint a daunting picture of what channels of information mining aspirants have to rely on and how accurate or misleading those channels are.

According to Zimbabwe’s law, foreign investors are allowed to own 100% shareholding for mining operations in all minerals except for platinum and diamonds which the foreign investor is expected to jointly own with the government on a 51% and 49% share basis.

This leaves room for mineral revenues to be kept confidential.

The Zimbabwe Consolidated Diamond Mining Company with operations in Chiadzwa district, Manicaland Province, for example, provides no records of revenue generated in the 2021 fiscal year on its website although it is a state-owned enterprise.

Zimbabwe’s fiscal and economic prospects are hinged on transparency but more so on sustained eradication of bottlenecks and deliberate red tape that breeds corruption, especially in the public sector.

“The government specified in law or regulation but did not appear to follow in practice the criteria and procedures for awarding natural resource extraction contracts or licenses,” Riggs said.