Kudakwashe Chideme, News Editor 
RESIDENT Emmerson Mnangagwa’s government continues to insist that the economy will grow by 7,4 percent in 2021 basing its hopes on firm mineral prices and a good rainy season, which is expected to boost agriculture and electricity production.
President Emmerson Mnangagwa
Authorities also contend that the economy is on a sound footing after completing the Transitional Stabilisation Programme and emerging almost unscathed from the Covid-19 pandemic, contrary to what had been initially predicted.
This narrative, however, glaringly and conveniently ignores the severe impact that the excessively high inflation and exchange rate have had on local business.
The country might now just be experiencing some semblance of stability, but for the better part of the last 18 months businesses were haemorrhaging and the few that managed to stay afloat are still in need of attention.
Capacity utilisation tanked on account of extremely low volumes as demand softened on the back of reduced disposable incomes and erosion of savings.
But because the economy is largely informal, and also because the government has never been too keen to publish reliable economic and demographic data, we can never know the real impact policy fiddling has had on the economy.
Going into the budget making process, submissions from various business member organisations showed a clear and common position; formal business is under strain and in urgent need of some sort of support to stay afloat.
Phantom stimulus
And because the much talked about $18 billion stimulus package had still not been availed to those in need, more than six months after it was officially announced, expectations were that the government would accord businesses a tax reprieve or deferral.
Finance minister Mthuli Ncube makes reference to the stimulus package at least six times in the 2021 National Budget statement, but neither industry nor the banks know exactly how this facility is being handled.
According to the country’s largest business member organisation, the Confederation of Zimbabwe Industries (CZI), the package is still yet to be availed.
“Companies indicated that no funds were accessed under the rescue package. More focus was on ensuring minimal disruptions to business operations with what was available on hand,” the CZI said in its own submissions to the Treasury.
“Other players have made indications to their bankers, but they have not received responses yet — no funds have been availed.”
There is absolutely no clarity on how this package is being financed, who has accessed it and how it is being disbursed. It remains a phantom roaming the hallways of Treasury.
Cheese delight
While we might have expected a tax reprieve of some sort, the national budget did not offer any relief for business and individuals alike.
It instead proposes to squeeze everyone else even further except the cheese industry.
Yes, the cheese industry.
The budget proposes to suspend duty on raw cheese, citing inadequate raw milk supplies.
It will be interesting to know just how many families can still afford cheese in a country where more than half the population is considered poor and relies on donor food aid.
While the cheese people celebrate, small business owners will have to tighten their belts as an entire Zimra unit will be established to deal with them. Doctors, engineers or lawyers without tax clearance will have to pay $500 000 in presumptive tax per month while architects pay $250 000.
Realtors are expected to part with $1 million per month.
Those who operate flea markets will be charged the equivalent of US$30 per month per stall while their hair salon counterparts will have to part with $2 500 per month.
Excise duty on tobacco is going up 300 percent; 700 percent for spirits and 600 percent for beer.
Excise duty on diesel will go up by US$0,05 to match the petrol duty, at US$0,30.
Fuel imports that come into the country by road will have to pay an extra duty of US$0,05 to promote use of the pipeline.
High ambitions
Ncube is next year also expecting the country to earn some US$1,25 billion from exports of cannabis after the government promulgated legislation to govern the production, procurement, distribution, possession, sale, provision and transportation of the hemp.
Hemp is a strain of the cannabis plant that contains little or no tetrahydrocannabinol, or THC, the substance that makes people high.
Sales of finished packaged medicinal cannabis oils that are ready for resale will attract a 10 percent tax while exports of bulk extracted medicinal cannabis oils that require further processing and/or packaging will be levied 15 percent.
Export sales value of dried medicinal cannabis flowers will be charged 20 percent.
Cannabis is fast gaining recognition across the region as a viable alternative cash crop to tobacco, which is coming under pressure because of health concerns.
The international market for cannabis is expected to grow at an annual rate of 18,1 percent to reach $73,6 billion by 2027, with medicinal marijuana set to make up more than two-thirds of that, according to a February 2020 report by Grand View Research.
Major factors driving the global industrial hemp market size include its growing use in the pharmaceutical, personal care, dietary supplements, and in food and beverage industries as it is rich in protein and fatty acids.
But despite the herb’s growth prospects, Ncube’s targets seem a bit over-stretched given that only two of the five varieties planted by the Zimbabwe Industrial Hemp Trust in a trial plot performed well due to poor rains and high temperatures that caused the crops to grow faster and flower earlier than anticipated.
Given the lethargy of government departments to process investment licences and permits, it is likely to be a long time before any meaningful revenue can start flowing from the herb.
To put the anticipated $1,2 billion target into context, Zimbabwe this year earned US$460 million from an already established tobacco industry, which boasts of not less than 120 000 farmers.
