The bonus freak out

Chinamasa1

THE last time President Robert Mugabe freaked out and took a drastic decision was when the British government washed off its hands over the land issue and reneged on a commitment to fund the land redistribution programme.
His government quickly embarked on what later turned out to be a chaotic land reform process, forcibly expropriating  about 5 000 former white-owned farms after a row with former British prime minister Tony Blair’s government.
Blacks, notably ruling party elites, their cronies and members of the military and other State security agents, were the major beneficiaries.
The economy stumbled, and went through an unprecedented crisis for close to a decade: the agricultural sector was decimated, and it took down with it the agro-based economy — industries haemorrhaged, and jobs were lost. The Zimbabwe currency became defenceless against the onslaught of an unprecedented hyperinflationary crisis. It was eventually abandoned for a hard currency economy in 2009.
The President had been forced to act because the land issue appeared to threaten his legacy; he and his ZANU-PF party had ushered Zimbabweans into independence in 1980, but he had failed to deliver land, one of the key issues for which the liberation war had been fought, to his people.
In the late 1990s, President Mugabe became an object of derision from cartoon strips over the land issue.
One cartoon had the ageing President promising in four successive elections since Independence: “Vote for me and I will give you land!”
During the 1980 election, when he first made this promise, he was standing upright. But in consequent elections, his body was bent from old age, with the right hand holding a walking stick, according to the depictions from the cartoon.
Time was certainly running out.
Failure to deal with the land issue had become a mockery to ZANU-PF and its leadership. At Independence, the British had pledged to support land acquisition by government on a willing seller, willing buyer basis. There had been little success in this front, but the Conservative British government had always supported Zimbabwe with funding for land redistribution until Tony Blair’s Labour party came to power.
Clare Short, then Britain’s secretary of state for international development, had infuriated President Mugabe after writing a letter to then minister of agriculture and lands, the late Kumbirai Kangai, rejecting Britain’s colonial responsibility for land reform in Zimbabwe.
“I should make it clear that we do not accept that Britain has a special responsibility to meet the costs of land purchase in Zimbabwe. We are a new government from diverse backgrounds without links to former colonial interests,” Short had said in her letter.
In just two-and-a-half years since Short’s letter, government took over between nine and 11 million hectares of land from white farmers.
By government’s own admission, widespread corruption marred the exercise, resulting in the consequent economic meltdown.
Last week, President Mugabe freaked out again and embarrassed Chinamasa, who had suspended civil servants’ bonuses for 2015 and 2016.
“I want to make it clear…. that bonuses were being withdrawn is not government policy,” President Mugabe thundered.
“We were never consulted… and we say that is disgusting to us and it will never be implemented at all,” he said.
Government workers had predictably received news of the suspension of their annual bonuses with scorn and anger.
The Zimbabwe Teachers’ Association (ZIMTA), which represents the largest number of civil servants in the country, said “workers were in shock”, and that the suspension of civil servants bonuses was “the greatest betrayal” since independence in 1980.
That may not have been enough to nudge the ruling elite and President Mugabe into a volte face; even against serious criticism and anger, government has always proceeded with implementation of unpopular decisions.
Last year, Transport Minister Obert Mpofu proceeded with a hike in tollgate fees by 100 percent, even against a furore by a cross-section of stakeholders.
The increase in tollgate fees was contrary to counsel by Chinamasa, that prices in the crisis-torn economy should start coming down, arguing there was an overhang of the hyperinflationary era mentality of large figures.
Under a hard currency economy currently grappling with deflation, that was no longer necessary, Chinamasa advised.
Moreover, the country was going through a harsh liquidity crunch, which appears to be worsening, and an increase in tollgate fees, which would directly increase the cost of logistics, would result in a market-wide hike in prices that would punish the consumer.
So, the hullaballoo over suspension of civil servants’ bonuses was expected to pass like any other concern that has easily been shrugged off by government and its political bureaucrats.
But something should have embarrassed President Mugabe to step in and reverse the decision by Chinamasa.
Three days before Zimbabwe celebrated its 35th Independence, ZIMTA subtly reminded President Mugabe that his legacy was under threat: “We are aggrieved by the fact that civil servants shall be losing their bonus for the first time in 41 years.”
Civil servants bonuses were introduced for the first time in 1974 as an incentive to motivate government workers.
ZIMTA said civil servants had “always received” bonuses until Chinamasa’s decision. By implication, Chinamasa’s decision is President Mugabe’s decision.
“What a turn of events!,” ZIMTA said.
Indeed it was a very bad turn of events, and President Mugabe was to become the leader who took away a cherished incentive from hard-pressed civil servants. That should have been unpleasant for President Mugabe to consider.
But his directive is not unlikely to be without consequences.
Last year, Chinamasa said he capitulated to bonus payments after being “intimidated”.
There was clearly no capacity to pay those bonuses, Chinamasa argued.
Indeed government failed to mobilise bonus payments in time for the annual break last year. Most civil servants were paid bonuses early this year, only after threatening to go on strike.
Government’s salary bill has doubled; there were 250 000 civil servants during the tenure of the inclusive government up to 2013. Surprisingly, that number has shot up to 553 000.
It has not been explained how the number of civil servants got to that figure at a time government was struggling to control a lower salary bill.
But the consequences are already dire. Government is currently struggling to pay monthly salaries from a dwindling revenue base eroded by a shrinking economy affected by company closures and increasing job losses.
Salary costs currently account for about 90 percent of government expenditure. The little left is going towards travel costs and other recurrent spending. There are no capital projects, and the revenue base is narrowing further.
The pressure is being felt by the Zimbabwe Revenue Authority (ZIMRA), government’s tax collection agent.
A few weeks ago, it raided bank accounts belonging to companies that have defaulted on their tax payments.
After failing to mobilise meaningful revenues from these defaulting companies, the tax collector went after their debtors, forcing them to pay their dues directly to ZIMRA rather than their creditors.
But the defaulters’ debtors are equally struggling; most are in arrears with payments to their creditors not out of choice but because there is no liquidity in the economy and revenue streams are drying.
Yet Chinamasa has yielded to the demand by his principal for bonus payments.
He said the suspension of bonuses was a mistake “made in good faith”.
“We are bound to make these mistakes given the budgetary pressures weighing heavily on the shoulders of Treasury,” Chinamasa said.
He said there were challenges with payment of bonuses for 2014, and that government was facing challenges with payment of pensions, wages for foreign missions, medical aid contributions and debt repayment to creditors, some of which are local companies.
In fact, reports suggest that foreign mission staff have gone for months without salaries.
So where will the money come from?
The joke is that the President chuckles when he meets Chinamasa.
“Chinamasa, what did you expect me to say when the soldiers were drenching in rain?”
It rained on Independence Day.
newsdesk@fingaz.co.zw

  • Aliphelithemba

    Civil servants can not be the whipping boys for a lawyer who is a recent convert to Washington’s neo-liberal economic policies of IMF,WB,and so on. As recent as yesterday evening President Obama through his twitter account was insinuating a further sharpening of their strangle hold on charting world economic policies.Instead of improving the welfare of civil service scarce funds are being paid to IMF.No ways!! IMF should cancel the debts.

  • Kubhlungu

    And what quid pro quo are you suggesting….i trust nothing short of Mugabes immediate retirement and summoning to the Hague!Surely you are not suggesting a total let off of debt to a bunch of kleptocrats…now to that i say NO WAY!!!

  • Emru Kunanti

    When Biti was saying these things you thought he was crazy. Drink the soup Chinamasa…..

Connect With Us

Fingaz Polls

Will Emmerson Mnangagwa survive in Zanu PF until 2018?