PER capita spending on health is also expected to decline from US$71,8 in 2024 to US$65 in 2025.
According to the 2023 Global Expenditure on Health by the World Health Organisation (WHO), average health spending per capita in 2021 was US$4 001 in high income countries, which is eight times the US$531 in upper-middle income countries, 27 times the US$146 in lower-middle income countries and 89 times the US$45 in low-income countries.
The same report notes that progress in boosting health spending in resource-scarce countries has been limited, despite a commitment to leave no one behind.
The inadequate public financing of health has resulted in an overreliance on out-of-pocket and external financing, which is highly unsustainable.
The health sector is expected to receive development assistance support amounting to US$461 million, which will go towards HIV/Aids, malaria and tuberculosis prevention, maternal and child health programmes.
In countries that are highly dependent on external aid, health priority in government spending tends to fall in line with the increased aid. Development assistance for health has crowded out government resources and created donor dependence.
Government expects to mobilise ZiG4,1 billion from the special taxes on sugar and airtime. These are substantial resources, which must be ring-fenced towards the health sector to ensure improved health service delivery.
The introduction of a 0,5% tax on the sale value of selected fast foods is in line with international good practice and seeks to address the growing burden of non-communicable diseases (NCDs) while mobilising additional revenues for the government.
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The consumption of fast foods is one of the biggest risk factors for NCDs. It is vital that the proposed fast foods tax be ring-fenced towards supporting the health sector just like the sugar tax and the airtime tax.
The proposal to reduce customs duty on electric vehicles from 40% to 25% is expected to promote use of eco-friendly vehicles in the country.
This is critical in terms of addressing climate change. This will also reduce the country’s fuel import bill. The proposal to exempt VAT on Liquefied Petroleum Gas (LPG) is a positive move which is expected to result in a significant reduction in the cost of LPG, which will bring a lot of relief to both businesses and households.
Owing to the worsening of the power situation in Zimbabwe, most households and businesses are relying a lot on LPG. LPG is a cleaner cooking fuel and is key to achieving clean energy access. Access to clean energy improves health and protects the environment through reducing deforestation.
LPG is recommended by the International Panel of Climate Change as a key climate mitigation measure.
A key highlight in any National Budget statement is the proposal to set aside ZiG670 million to support Rural Development 8.0 interventions anchored on value-adding and beneficiating agricultural produce, raise incomes for communities and ensure national food security at household level.
The objective is to establish 35 000 village business units in 35 000 villages, 4 800 youth business units and 9 600 school business units, which can generate income for households in order to improve livelihood by 2028.
During 2025, the target is the establishment of 10 000 business units.
It is important to ensure that the interventions also focus on providing the requisite capacity development services such as training, mentorships and business development services to the beneficiaries to profitably and sustainably run the business units.
This is especially critical given that while most women and youth entrepreneurs have good levels of education, most lack sound business management skills.
The initiative should also be rolled out in partnership with key business, women and youth associations.
In view of the huge labour market challenges facing the country, the National Budget does not contain any direct and clear interventions to incentivise and promote the hiring of women, youth and persons with disabilities.
Such incentives can take the form of tax credits for employing women, youth and persons with disabilities as well as tax deductions for expenses incurred by businesses in removing physical, structural, and transportation barriers for persons with disabilities at the workplace.
Importantly, the Ministry of Finance must adopt and implement a pro-employment budgeting framework.
Pro-employment budgeting is about integrating, or mainstreaming, an employment perspective in the planning and budgeting process of a country’s government.
This approach of budgeting uses tools and methodologies with a common requirement to ensure that employment issues are mainstreamed in all budget documents and procedures, at the various stages of budget preparation, implementation, monitoring and reporting.
Pro-employment budgeting aims to ensure, firstly, that policies of all relevant government agencies take employment concerns into account.
It also aims to ensure that the government agencies then allocate and spend funds in a way that allows effective implementation of the pro-employment policy.
Given the high levels of informality, the national budget should support and facilitate transitioning of informality to formality.
Integrating informal enterprises into the formal economic fabric is particularly vital for effective domestic resource mobilisation as it expands the tax base.
Moreover, most formal businesses have strong linkages with informal enterprises which can be leveraged. In 2015, the ILO came up with Recommendation 204 concerning transition from informal economy to formal economy to help member states to: facilitate the transition of workers and economic units from informal to formal economy; promote the creation and preservation of sustainable enterprises in the formal economy; and prevent informalisation of formal economy jobs.
In September 2015, the United Nations adopted the 2030 Agenda for Sustainable Development, which included the transition to formality in the targets for Sustainable Development Goal 8.
In particular, target 8,3 of the SDGs stresses the need to “... encourage the formalisation and growth of micro-, small- and medium-sized enterprises.…” in order to promote sustainable and inclusive economic growth.
These two instruments represent major milestones in the global approach to formalisation, particularly by providing guidance on the process.
Importantly, an effective approach to transition from informality to formality requires more than just mere registration and enforcement.
It requires the elimination of structural barriers and binding institutional constraints at the root of informality.
- The official rate stood at US$1:ZiG25,3 as at November 28.
- Chitambara is a Harare-based scholar and economist. These weekly New Perspectives articles, published in the Zimbabwe Independent, are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Pvt) Ltd, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe. — kadenge.zes@gmail.com or +263 772 382 852.
