Value for money audits pay dividends

The value -for-money procurement process has enabled Government to save 30 percent of what it could have spent more since August 2022, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said on Wednesday.

This process, which entails scrutinising all invoices in order to pay the correct market price, has significantly improved efficiencies and cost savings, Mthuli said.

He revealed this in his presentation during the Pre-Budget consultative seminar held in Harare on Wednesday.

While Mthuli did not provide the exact amount, the Government spent about US$4,5 billion in eight months to September. The amount includes the employment costs which accounted for about 50 percent of the expenditure.

He said the Government had been able to achieve huge savings by reviewing its procurement processes and implementing stricter due diligence procedures to avoid paying for overpriced products and services.

The Government was also working on strengthening the Public Procurement Act and relevant regulations and introducing an e-procurement system following reported numerous cases of some irregularities.

“Since August 2022, the Government has made substantial savings, approximately 30 percent, through the implementation of value-for-money on procurement of public goods and services,” said Mthuli.

“This is being achieved through the review of the procurement processes, including the requirement to exercise due diligence to avoid paying for overpriced products.

“Government is currently working on strengthening the Public Procurement Act and relevant regulations, including the introduction of the e-procurement system.”

In addition, the Government has standardised the prices of goods supplied to all State departments. This has helped to ensure that the Government is getting the best possible value for its money.

“The Government’s value-for-money procurement efforts are having a positive impact on the Zimbabwean economy. By saving money on procurement, the Government is able to invest in other important areas, such as education, healthcare and infrastructure development,” said Mthuli.

The Government has been cracking down on Government contractors that were unscrupulously overpricing their goods and services.

In August 2022, the Government suspended payments to contractors that were overpricing and announced that it was taking drastic measures against errant contractors.

The contractors were also accused of channelling their proceeds from Government contracts into the parallel market, thereby causing domestic inflationary pressures by undermining the local currency.

On the economic performance, Minister Mthuli said despite the impact of drought, floods and Covid-19, the economy was on a positive growth trajectory.

In 2023, the economy is projected to grow by 5,3 percent, driven by agriculture and mining.

However, in 2024, economic growth is expected to slow down to 3,6 percent from 5,2 percent, mainly due to the expected impact of the El Nino phenomenon.

Since the 2019 drought, the agriculture sector has been on a growth trajectory.

The success is on account of climate-smart conservation agriculture practices under the Pfumvudza/Intwasa scheme.

This is coupled with the continuation of input support programmes for farmers, improvement in extension services, mechanisation and irrigation development.

The contribution of the mining sector in the economy has been steadily increasing from 11,5 percent of gross domestic product in 2018 to current levels of 13,2 percent.

Similarly, the sector has been on a growth trajectory since 2020.

The growth is driven by increased output across all minerals and the discovery of new minerals, (lithium), as well as investments in additional capacities.

“In terms of investments, the mining industry has surpassed the US$12 billion industry,” said Mthuli.

On the manufacturing sector performance, there has been a steady increases in capacity utilisation.

“Industry capacity utilisation has been at 10 year highs in 2021 and 2022,” said Mthuli.

He noted that internet and data traffic and subscriptions have consistently grown and become an integral part of the economy.

The growth is indicative of Zimbabwe’s rapid adaptation to the “Digital Age”, as the internet has become an essential tool in day to day life and commerce, said the minister.

Mthuli said the exchange rate and price have stabilised in response to policy interventions made in May and June.

The stability is also attributed to the introduction of the gold coins and Gold-backed Digital Token (ZiG) for value preservation purposes and are now for transaction purposes as well.

Zimbabwe’s broad money, increased from $2,3 trillion in December 2022 to $13 trillion in July 2023.

This represents a growth of 465.22 percent.

The growth in broad money was driven by expansions of 639.3 percent and 157.4 percent in foreign currency deposits and local currency component respectively.

The growth in the foreign currency component was due to an increase in the US dollar value of foreign currency accounts (FCAs) as well as exchange rate depreciation.

Credit to the private sector also increased during the same period, which is a positive development towards private sector-led economic growth.

Zimbabwe’s imports are projected to increase to US$10.6 billion in 2024, up from US$9.6 billion in 2022.

This represents an increase of 10.42 percent over the two-year period.

The increase in imports is expected to be driven by higher grain, fuel, electricity, raw materials, and machinery imports.

Exports are projected to grow to US$8 billion in 2024, up from US$7,5 billion in 2022, representing an increase of 6.67 percent over the two-year period.

The growth in exports is expected to be driven by key minerals such as gold and platinum group metals (PGMs).

The current account surplus is projected to close at US$248,5 million in 2023. This is slightly lower than the US$305 million surplus that the country registered in 2022.

The current account surplus is a healthy development for the Zimbabwean economy. It means that the country is earning more foreign currency than it is spending.

This provides the country with liquidity to meet import requirements, maintain currency stability, and support multicurrency regime.

“The country is doing relatively well in terms of export receipts as compared to comparable countries in the region,” said Mthuli.-ebusinessweekly