By Conrad Mwanawashe
Zimbabwe’s 2024 National Budget announced by Finance and Economic Development Minister, Professor Mthuli Ncube, introduced a new revenue thrust that seeks to raise as much revenue as possible from the citizens, literally surrendered agricultural financing to commercial banks and reduced allocation to agriculture to 7.4% of the total budget from 8.5% in 2023.
These measures have the combined effect of increasing the cost of doing business, reduce farmers’ bottom line and negatively affect Zimbabwe’s economic outlook, farmers and economic analysts told Maricho Magazine.
A major concern to farmers and economists is the proposed cut in public spending towards agriculture at a time the country is facing the risk of the El Nino phenomenon which is expected to have adverse effects on rainfall potentially leading to drought conditions in the country.
For 2024, the agriculture ministry was allocated $4.3 trillion to “spearhead the implementation of Agriculture and Food Systems Transformation Strategy”.
The ministry had requested for at least $55 trillion from the budget.
According to Minister Ncube, government interventions in the sector will be complemented by development partner support projected at US$60.1 million which is expected to go towards provision of agriculture development and food security assistance.
“The allocation at 7.4% of the budget is a decline from the 8.5% allocated for 2023 and that’s a concern, especially given that there is going to be El Nino which will obviously affect the agricultural sector,” said Dr Prosper Chitambara, an economist.
“One would have hoped that owing to that significant downside risk of the El Nino effect, public spending or allocation would have been increased because there is going to be high demand for government to import grain or food in general. It leaves the economy in a difficult situation,” said Dr Chitambara.
Professor Ncube projected the agricultural sector to contract by 4.9% in 2024, attributed to the anticipated normal to below-normal rainfall pattern in the 2023/24 farming season.
To mitigate the negative impact of the anticipated El-Nino induced drought, distribution of inputs packages for various crops such maize, small grains and oil seeds are being tailored to agroecological regions.
“The El Nino will affect agricultural production and the rest of the economy. It could also affect hydro production at our power plant. The El Nino is a serious downside risk in terms of our economic outlook,” Dr Chitambara said.
Dr Nyasha Kaseke sees an “awkward situation in that we’re facing El Nino yet the budgetary allocation will not be enough to meet the food requirements”.
“I do not think we will be able to meet the sustainable development goals in relation to poverty and hunger alleviation. This will give us challenges in 2024 if we do not have enough to feed the nation,” said Dr Kaseke.
The Zimbabwe Farmers Union (ZFU), which represents farmers’ rights and interests, said Prof Ncube’s proposed budget’s thrust of raising as much revenue as possible from the citizens will add on to the cost of doing business.
“Unlike the previous budgets, the proposed budget seeks to raise revenue as much as possible from the citizenry. It will certainly add onto the cost of doing business and make it difficult to promote savings for domestic investments. It shrinks disposable income and reduces the propensity to save,” ZFU said in its post budget analysis.
The farmers said the fiscal policy thrust failed to address issues were farmers are owed outstanding payments by government or companies such as Cottco.
According to ZFU, about 40% of cotton farmers who delivered their produce to COTTCO during the 2022 marketing season have not been paid to date.
On the National Enhanced Agriculture Productivity Scheme (NEAPS), government used to support commercial farmers through extending guarantees to commercial banks.
Prof Ncube said, however, due to high levels of defaulters and unwillingness by farmers to deliver produce to the Grain Marketing Board (GMB), Government has reviewed the NEAPS to give room to a more commercialised approach led by private financial institutions.
During the upcoming 2023/24 agriculture season, Government is only extending partial guarantees to AFC and NMB, while the rest of the financial institutions participating in the programme will use their own financial resources.
But ZFU said this is tantamount to handing farmers over to commercial banks.
“This is literally dumping farmers at the mercy of commercial banks, whose reluctance to finance agriculture is well documented. Those farmers disadvantaged by lack of access to productive assets including women and youths will find it difficult to secure financing from banks,” ZFU said.
