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Mystery Shrouds ZWL$18 Billion Stimulus Package

Since the advent of the COVID-19 pandemic and its disruptions to economic activities around the world, the state–funded stimulus packages meant to offer soft landing for businesses have come under immense scrutiny.

Public funds by nature have always been subject to increased levels of accountability and transparency –more so in these difficult times, where governments, businesses and individuals are in distress.

In the United States for instance, an initial US$500 billion proposed by the Donald Trump administration was subject to intense debate with concerns over the size of the package which they said was likely to increase national debt.

Closer to home in South Africa, a R500 billion stimulus package was announced in April and the sources of funding were clearly laid out with the biggest part of the R500-billion being a R200-billion loan guarantee scheme, in partnership with major banks, the treasury and the South African Reserve Bank.

Perhaps the biggest undoing back home, when President Emmerson Mnangagwa announced a ZWL$18 billion stimulus package on the first of May last year is that it was clear that the package hung on thin air.

Simply put, government had no money to set up such an ambitious fund.

As a result, it has been widely criticized for merely being a credit guarantee scheme which does not bring any relief to businesses as it still features stringent terms such as pre-pandemic interest rate of 20 percent not feasible for a bailout purpose.

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Like in other jurisdictions, maybe government should have mobilized resources first and set up a fund for businesses to make a draw down.

This would assist authorities with figures to gauge how much of the fund has been disbursed and also measure the impact it has on the economy.

As  it stands, a lot of companies are yet to access some form of monetary support from government, almost a year since the pandemic started.

A local social and economic development watchdog, Zimbabwe Coalition on Debt and Development (ZIMCODD)’s attempts to raise some of these issues including bringing the stimulus package for debate in Parliament were never entertained.

However, the biggest question, nine months on, is how much of the ZWL$ 18 billion has been spent and who have been the beneficiaries.

This appears too complex a picture to determine, even for the monetary authorities themselves.

“It’s a moving fund. It is difficult to give you a figure because it’s the banks that are dealing with companies who need the loans,” Finance Ministry spokesperson, Clive Mpambela told 263Chat Business in a telephone interview recently.

The Finance Minister, Professor Mthuli Ncube this week said Zimbabwe’s government spent ZWL$ 25 billion on the fight against COVID19, excluding the stimulus package and the resources covered different aspects such as risk allowances of frontline workers and others, upgrade of health facilities, drugs, PPE, lockdown enforcement.

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Again, no mentioning of how much of the ZWL$ 18 billion has been spent on health.

Investigations into various sectors of business that were supposed to be the benefactors of the scheme still failed to yield clear results.

The SMEs sector professed not having received any substantial assistance from the ZWL$ 500 million promised to them under the scheme.

“We haven’t received anything from the ZWL$ 500 million that was meant for SMEs. The terms are still high for most of us and when we approach banks we realize that there is no special funds meant for us, banks are using their normal lending charges,” SME Association of Zimbabwe, executive director, Farai Mutambanengwe  told 263Chat Business in an interview recently.

It appears the stimulus package could have been a mere political smokescreen to act as if government was supporting businesses and the lack of data to give a breakdown of how it has been spent attests to this.

It’s only some time at the end of last year, that Prof. Ncube gave a slight hint of the stimulus package  was spent to date when he mentioned that ZWL$ 6 billion had been injected into the agriculture sector.

However, the spokesperson in the ministry of Finance said authorities will soon meet banks to ascertain how much they have disbursed  without giving timelines.

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