The heightened negative effects of Zimbabwe’s debt crisis on the level of inequality and poverty, particularly for women, requires review of debt strategies and tools.
Agreements and conditionalities, under emerging lenders mainly, worsen debt and its impact on poor people as they come with high interest rates, non-disclosure clauses and require government to forego social spending in order to meet debt obligations.
As a result, gender indicators continue to worsen with increases in gender equality gap, incidences of poverty and extreme poverty, gender based violence, and maternal mortality, among many others.
The country currently lacks a comprehensive debt policy, which ensures maintenance of sound financial position and protected credit quality.
However, various legislations govern debt management albeit implementation incoherence.
The country’s constitution, being the supreme law under which debt management must be anchored, requires augmentation of the legal framework which addresses debt management.
This includes provision of clear and inclusive loan contracting processes, clear stipulation of roles and functions of institutions involved in debt management, improved measures on transparency and accountability, limits on external borrowing, and clear grounds of approved borrowing.
There being a strong association between enforceable economic and social law provided in constitutions and rates of poverty, it is therefore paramount that constitutional provisions regarding debt management be framed as enforceable law which bestows meta-rules that ensure policy makers initiate, fund, and monitor debt policies in line with poverty reduction and gender equality.
While Zimbabwe is undertaking reforms in the Public Financial Management Act, mainly aimed at effective execution of a set of focused improvements of current legislation and institutional arrangements as well as budget planning and accounting, there are still several gaps in corporate governance and functions of oversight institutions that make the reforms ineffectual.
However, these reforms are anticipated to be completed by end of this year and should especially address issues of efficiency, transparency, and accountability.
Opaque financing and spending in excess of appropriations severely weaken budget credibility and sectors mostly affected, resultantly, are predominantly pro-poor and socially protective ministries, departments and agencies.
With lack of accountability, repeated cycles of anti- poor spending and repayments heighten poverty rates and hinder remedial measures.
The Public Debt Management Act was birthed following a recommendation to separate it from fiscal and monetary policies and establish it as an independent policy to address the country’s debt crisis.
Currently, there have been insurmountable socio-economic challenges propelled by arrested and suspended development programs and projects due to lack of access to offshore development finance.
Effected debt management should ideally address arrears clearance and improve the country’s credit rating and risk profile.
In order to implement an effective debt management policy, the gaps in consolidation, fragmentation and functional context, that have added to the debt crisis have to be addressed.
Socio-economic disparities predominantly influence completion rates of higher education levels, where girls, children belonging to the poorest quintile, and children in rural areas, have lower education levels than national average.
As the government prioritises debt repayment and clearance of overdue arrears, limited public resources are channelled towards debt servicing at the expense of improving education and healthcare services.
Vulnerable groups, such as women and children end up receiving insufficient assistance to continue with education or even receive skills trainings which can earn them decent employment.
Resultantly, over 50% of girls in rural areas do not reach and complete upper secondary level, over 60% of girls from poor families do not reach secondary level education and get married before the age of 18, and nearly 40% of children from poor families aged five to 17 are engaged in child labour.
Inadequate health facilities in the country have also propelled inequalities where women, particularly, in rural areas, have less to no access to healthcare, health education, and immunisation facilities.
Despite over $700 million being channelled towards construction, rehabilitation, and retooling of health facilities since 2019, the nation still struggles to procure sufficient medication and equipment to enable the facilities to run efficiently.
Moreover, the recent surge in migration of healthcare workers and teachers at all levels in the education system, as a result of frustrating working conditions and remuneration, has widely impacted the health care system, the education system, family dynamics, and from an economic perspective, taxable revenue which adds to the national budget.
Bearing this in mind, effective budgeting and public finance management are therefore paramount to retention of critical skills and revenue collection base, through sufficient allocation of funds to the health and education sectors as well as support of women in their participation in the economy.
Zimbabwe’s women entrepreneurship, particularly cross border trading, has contributed significantly as an economic driver where over 38% of SMEs are owned by women.
However, tenets of patriarchy still cripple women’s participation economically, politically, and socially.
Such restrictions cascade down to women’s economic representation in policy formulation and implementation.
As such, various reflective insights on impact of policy making on women need to be considered especially with regards to public finance management, women empowerment budgeting, and revenue collection in the informal sector.
Unsustainable levels of debt being the main drivers of aggressive revenue collection, debt policies require careful weaving that ensures effective and responsible borrowing and better public finance management while simultaneously supporting women entrepreneurship and women socio-economic protection.
One of the critical sectors in Zimbabwe’s economy is agriculture. While women players in this sector have steadily increased and have become more productive, policies and implementation of policies, coupled with partial empowerment, still limit women’s ability to exercise control and negotiate for better land ownership and capital financing.
Also, while farmers benefited from the various agro-based credit schemes dating as far back as 2015 such as the command agriculture scheme, there has been a high default rate where the government is liable for the repayment.
At least US$3 billion has expended towards agro-based schemes, which was unbudgeted and the risk of increased debt currently far outweighs the benefit of the some schemes from a holistic social view.
Over and above financing support, sector training, selling, and exporting needs still limit lucrative farming especially for women as they lack access and information to productive farming mechanisms and tools.
As a result, small scale farming and consumption driven agriculture remain predominant among women.
Future schemes require budgeting and effective management during implementation and in line with a holistic debt policy in order to curb debt increase and inadequate support in the sector.
While development financing is a major driver of socio-economic development, Zimbabwe’s debt crises limits access to this financing and resultantly the greater population suffer in poverty with women accounting for majority of the poor and extremely poor.
Clear debt contraction and management, effective governance and functions of oversight institutions, debt policy consolidation, pro-poor and gendered arrears clearance strategy, and gender-based budgeting require major improvements in order to address the gender gap caused by the country’s high and unsustainable debt levels.
- *Vanessa Jaravaza is a policy analyst and writes in her personal capacity.
- These weekly article are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Private) Limited, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe.
- Feedback: kadenge.zes@gmail.com and Mobile no. +263 772 382 852