‘Domestic resource mobilisation vital’

Zimbabwe can benefit more from sustainable domestic resource mobilisation (DMR), which is central to attaining sustainable development goals, experts say.

Domestic public resources are a more stable and sustainable source of income, as they also strengthen a legitimate relationship between citizens and the state and foster good governance, hence the focus on mobilising domestic public revenue has been a leading action for the financing for development.

This can easily transform the country into an upper middle-income economy as espoused in Vision 2030 while the implementation of the African Union’s Agenda 2063 hinges on Africa’s ability to mobilise sufficient, predictable and timely financial resources.

Experts drawn from civil society, Government officials, Parliamentarians from across the region and the civil society who converged in Kariba a fortnight ago for the African Forum and Network on Debt and Development (AFRODAD) 2020 Summer School, agreed the country and the rest of the African continent are endowed with vast natural resources ranging from minerals, good climate and tourist attractions with potential to turn around economies and achieve sustainable development goals.

However, more still needs to be done for Zimbabwe and the rest of the continent to achieve economic upturn from the resources available.

Speaking at the Summer School, chief economist, Revenue and Tax Policy Department, Zimbabwe Treasury Mr Tapiwa Gumbo, indicated that challenges such as illicit financial flows, structure of the economies dominated by the primary sectors and highly informal, policy design challenges and tax administration inefficiencies among others hamper sustainable DMR.

Many companies and individuals evade taxes and when caught, majority go free due to weak legislation and poor forensic investigation capacity.

“Economies that are dominated by primary industries largely depend on mining and agriculture with minimum value addition. You just produce and export without doing much to value add. People produce tobacco and just take it straight to auction floors.

“Zimbabwe exports unprocessed minerals (chrome and PGMs, Zambia exports unprocessed copper, Nigeria and Angola export unrefined crude oil while Mozambique exports unprocessed gas.

“This implies that the tax base is relatively low compared to countries with large manufacturing or industrial base that generate more employment and incomes,” he said.

Gumbo indicated there is a positive correlation between the degree of manufacturing and the level of tax to GDP ratio in Africa.

Already, the region is collecting approximately half of what Organisation for Economic Cooperation and Development (OECD) countries are collecting in percentage points of the tax to gross domestic product (GDP) ratio.

The OECD countries comprise 37 nations in Europe, the Americas, and the Pacific and its members and key partners represent 80 percent of world trade and investment.

OECD countries tax to GDP ratio is at 34,3 percent and that of Latin America and the Caribbean (LAC) countries is pegged at 23,1. African countries tax to GDP ratio is 16,5 percent despite holding some of the world’s largest mineral deposits.

However, more diversified African countries such as Mauritius, South Africa, Swaziland, Tunisia and Morocco with higher manufacturing value added per capita tend to have
higher tax revenue.-ebusinessweeklyc.oz.w