Lessons for SA in Zimbabwe’s radical diet for its obese civil service

CAPE TOWN — We’re not yet spending 90% of State revenue on our civil servants, but Zimbabwe is, and its tragic experience is a signal lesson that while patronage can keep you in power, the price you pay is penury. As Cyril trims his cabinet’s toenails and saves a few million by combining two ministries, the potential for balancing the nation’s books remains huge if he gets rid of the cabinet rent seekers before beginning what will have to be a master class in union negotiation as he works his way down the pyramid. Basically, it will mean fundamentally changing the long-standing ethic of ANC patronage where the civil service is seen as a gravy train, mostly there for the ride, with meals and housing thrown in. The question Zimbabwe’s determined finance minister unwittingly poses for South Africa’s ruling party is whether it is going to wait until the masses storm the gravy train, completely derailing it out of pure hunger, or whether our leaders bite the politically-risky bullet to reap the benefits of a faster recovering economy. – Chris Bateman

By Desmond Kumbuka and Godfrey Marawanyika

(Bloomberg) – Zimbabwean Finance Minister Mthuli Ncube cut civil servants’ pay and announced a series of other steps to reduce the government’s bloated wage bill.

Ncube, a University of Cambridge-trained economist appointed in September, presented his first budget on Thursday as he seeks to repair an economy hobbled by decades of mismanagement under former President Robert Mugabe. The International Monetary Fund estimates the state’s wage bill consumes more than 90 percent of government revenue.

Mthuli Ncube, WEF, Davos, Switzerland
File Photo: Mthuli Ncube listens during a session on the third day of the WEF Annual Meeting 2011 in Davos, Switzerland. Photographer: Andrew Harrer/Bloomberg

“Against a background of a structural imbalance in the composition of budget expenditure, wherein the wage bill accounts for a disproportionate share, re-balancing of expenditures is critical,” Ncube said. He announced the following measures to contain spending:

  • Cut senior civil servants’ remuneration by 5%
  • Calculate annual bonus using only basic pay, instead of including housing and transport allowances
  • Close eight of its foreign-service missions
  • Terminate the employment of thousands of so-called youth officers

The steps will help the government contain expenditure in 2019, which is forecast at $8.16 billion, unchanged from this year, Ncube said. Revenue is forecast to grow 25 percent to a projected $6 billion, reducing the deficit by more than half to 5 percent of gross domestic product, from 11.7 percent, he said.

$ billion 2017 (Est.) 2018 2019 2020 2021
Total revenue 3.87 5.30 6.60 7.49 8.56
Total spending 6.39 8.16 8.16 8.98 9.82
Budget deficit (%) 11.7 11.7 5 4.1 2.9
Total financing 2.41 6.12 6.47 2.68 2.02
GDP 4.7 4 3.1 7.5 7.7
Inflation (% at end period) -3.4 25.9 5 5.5 5.8

Ncube also cut the Treasury’s growth forecast for this year, citing a foreign-exchange shortage that’s curbed mining and manufacturing output.

Growth this year is expected to be 4 percent, compared with a forecast of 6.3 percent he announced last month.

“During the last half of the year, there was a noticeable growth slowdown associated with foreign-currency supply and allocation challenges, exchange-rate misalignment, inflationary pressures and rebasing effect,” Ncube said. “The most affected sectors include mining, manufacturing and services.”