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NATIONAL ASSEMBLY HANSARD 12 MAY 2022 VOL 48 NO 45
PARLIAMENT OF ZIMBABWE
Thursday, 12th May, 2022
The National Assembly Met at a Quarter-past Two O’clock p.m.
(THE HON. DEPUTY SPEAKER in the Chair)
HON. MARKHAM: Thank you Madam Speaker. My point of privilege is pertaining to the recent changes in the pricing at Pomona Waste Dump. We hear that City of Harare has only got seven out of forty-six trucks working carrying waste. This has given rise to some very efficient private owned waste management companies varying between one truck and some of them twenty or ten in number. These deliver to Pomona Waste and only when a truck arrives there, they pay ZW$7000. Private individuals arriving there are also charged up to ZW$600 for delivery. However, yesterday and this is my concern – the prices changed and those delivering were advised that the prices had risen from ZW$7000 per truck load to US$40 per tonne. Apart from that, there is no weighbridge at Pomona so the tonne cannot be weighed; so what they intend doing is charging US$40 by the tonnage that the truck can carry, irrespective of whether it is full or half full. So, a 20-tonne lorry will be charged US$800 for a delivery but of bigger concern is that when carrying waste, you are not carrying a tonnage. The actual figure is a third of the load. So a cubic metre of waste is anywhere between 250kgs -300kgs. This is an absolute rip off and I ask for a Ministerial Statement from the Ministry of Local Government to explain why this is happening. I thank you.
THE HON. DEPUTY SPEAKER: Thank you Hon. Markham. May the Government Chief Whip convey the message to the responsible Minister?
BUSINESS OF THE HOUSE
HON. TOGAREPI: Madam Speaker, I move that Orders of the Day, Numbers 1 to 5 be stood over until Order of the Day Number 6 has been disposed of.
HON. TEKESHE: I second.
Motion put and agreed to.
PRIVATE VOLUNTARY ORGANISATIONS AMENDMENT BILL [H.B.10, 2021]
Sixth Order read: Adjourned debate on Second Reading of the Private Voluntary Organisations Amendment Bill [H.B.10, 2021].
Question again proposed.
HON. TOGAREPI: I move that the debate do now adjourn.
HON. TEKESHE: I second.
Motion put and agreed to.
Debate to resume: Tuesday 17th May 2022.
BUSINESS OF THE HOUSE
HON. TOGAREPI: Madam Speaker, I move that the rest of the Orders of the Day be stood over until Order of the Day Number 29 has been disposed of.
HON. TEKESHE: I second.
Motion put and agreed to.
REPORT OF THE PUBLIC ACCOUNTS COMMITTEE ON THE COVID-19 PANDEMIC AND UTILISATION OF PUBLIC RESOURCES
Twenty-ninth Order read: Adjourned debate on the Report of the Public Accounts Committee on the COVID-19 Pandemic and Utilisation of Public Resources.
Question again proposed.
HON. MADZIMURE: Thank you Madam Speaker, I want to thank the Committee for the report. I have a number of issues that I feel strongly should have been covered in the report. The first thing was because here we are talking of funds that were meant to mitigate the issue of COVID-19, therefore the report should have included first the amount of money that was available, the budget of mitigating those measures and this should have also included all the money that was collected as donations. So this should have been the starting point. We must have been told how much money was available, how much money was made available by Treasury and how much money was made available through the donations. This should not have been a difficult job because if it was from Treasury, obviously the Ministry of Finance and Economic Development should have budgeted for it.
If there were donations, we know that whenever money is donated to Government and meant to be used for public use or purposes, it is recorded. There is a lot of money that was donated. There was a lot of equipment that was donated and this Madam Speaker, should have been accounted. I know or suspect that it was recorded and the Ministry of Finance and Economic Development should have made those records available.
Going to the use of the money Madam Speaker, one gap that existed from the time when the issue of COVID-19 arose was making sure that Parliament was not working. Madam Speaker, there should not be any time when Parliament cannot assemble and do its work. I think that is the reason why we have such a damning report. If you look at that report, it tells you that it was free for all. Whoever wanted to benefit from this fund benefited, whoever wanted to enjoy himself benefited.
Madam Speaker, we had a lot of Committees which had chairpersons and if you look at the report it even says the Ministry officials, especially the Ministries of Finance and Economic Development and Local Government and Public Works and maybe Health and Child Welfare were not forthcoming as far as coming to give evidence to the Committee was concerned and this is a serious concern Madam Speaker. I suggest that in the absence of the evidence from the people who were supposed to give evidence, this report is not a complete report. Something needs to be done again because the moment you have a situation where the Ministry officials are not prepared - which means they do not want to divulge the information, you cannot complete an investigation without such important contribution from those people
If you look along the report Madam Speaker, you have situations where there is no reconciliation at all. What you only hear of is money that was paid and that is all. There is no reconciliation. There are no records actually of that particular money and the Public Accounts Act is very clear. An officer who released the money knows precisely what records were generated and those must be made available. If there is no reconciliation, then that person who released the money is accountable and there are measures that must be taken against that officer because it is total negligence. Therefore, as recommended by the Committee, in some cases action must be taken against those people.
When you go to the issue of the beneficiaries, there was no written down procedure of identifying the beneficiaries. As a result, one would just sit in his warehouse and start writing names and the evidence is there, where you probably have 20 names and surnames having one cell phone number through which the money was going to be sent to the individuals - there was no reconciliation it was possible. So money intended for the 20 people was paid to one individual and this has not been solved up to today Madam Speaker. We have people who received money using various names and those who were actually responsible for writing down the names obviously knew it.
So Madam Speaker, even though it was an emergency it was still important that the issue of submitting names for the beneficiaries was done in the right way. The Ministry of Social Welfare has a very good system where they have always interacted with the less privileged people in our communities and in this case they were only going to add one thing that you have been disadvantaged, that you are now not going to work and you include those people on top of the people that were already known to be the less privileged people in our communities. So it was still paramount that a proper system was used because if we now look at what actually happened, if I go back to Kambuzuma we have almost nobody who benefited from that particular fund. That one is a very important issue.
Madam Speaker, we have got one company that is written down in the report which was paid three times on one invoice and this was an amount that amounts to more than US$9 million. Just imagine you supply services that are worth probably US$400 000 and you are paid three times on that particular invoice and it is known and that money has not been paid up to today and there are no measures indicated in the report to say they are being taken for this particular company to pay back. Now the question is, who owns this company and again it is not disclosed who owns that company and money must be paid back.
Madam Speaker, it is important that whenever there is a fund it is properly managed. Why, because this is what inspires other organisations, other institutions to contribute to the Government of Zimbabwe, but if anyone is going to go through this report Madam Speaker, and we have another disaster no one is going to give us money. You have several situations where people from the quarantine centres who were meant to go back to their homes, same destination, yet the amount of money they were given as bus fare was different. Sometimes, one would get $10 and another one is given $40 for the same trip. You look at the information to say, how we reconcile this. Sometimes there are no names of those people who received but the amount of money is there, there are no people who signed for the money. There is no evidence and this is not good for us and for the country. We are talking of individuals who benefitted, we all did not benefit from it and why up to this day, no action has been taken?
We have situations where people would go to a supermarket and pay for groceries and not even collect it. There is evidence in this report that OK Supermarket was paid some money for goods which were not collected to date. This is in the report Madam Speaker and we have not done anything about it. Is it because we do not care because the money is not from our own pockets? Those officials who did that should be made accountable. We also have situations where services were provided to a quarantine centre and there are no records of how many people were there. How do you then charge this certain amount of money for services given to a number of people who are unknown? It was free for all. It was very possible because Hon. Members had no time to ask the responsible ministers here in Parliament because it was said to be dangerous for Parliament to converge.
However, in almost all other countries, they made sure that even if it was money to be spent, Parliament was informed, it debated and authorised the expenditure. Now it tells you how important this House is and how dangerous it is for Government to operate on its own. If the Government was efficient enough, by now we could be hearing of people who are in Chikurubi because there are a lot of people who became so rich such that they are destroying hills in Chishawasha building their houses. We ask questions on where they got so much money when everybody else is suffering. We still have quarantine areas which even went beyond the period because no one cared about how to wind up business at the quarantine areas and money continued being paid to those quarantine centres.
Whilst the report has a number of recommendations, I think there is a lot that needs to be done, especially on this report itself. The responsible Minister must come to this House and say how much money was used for COVID, how much was received, what were the donations received and this Parliament must be told. There must also be a detailed response to this report. It is important that all the gaps that are there be filled by a comprehensive report from the Minister to say, where you are saying we did not do reconciliation or there were no documents for us to do reconciliation for this amount of money, here we are, this is what happened. If we do not do that, we run the risk of being labeled a country that cannot be helped. Not everyone is a thief, I assume that we are very honest people but we have bad apples who take advantage of situations.
From the report, I cannot even see how much money was paid to those Committees which were going around looking at how prepared we were, it is not included in this report. How was the money being accounted for, how were they being taken care of? It is a problem. There are a lot of gaps that we have. We may not, in our lifetime, come across such a situation but whatever we are going to come across, we have had Cyclone Idai and we had issues which were not resolved, especially accountability issues. In this particular case, this is a terrible report which needs to be addressed as soon as possible to make sure that we remain bankable and we can still, as Zimbabwe, approach the international community when faced with a pandemic or disaster for them to respond and help Zimbabwe. Thank you Madam Speaker.
HON. DR. NYASHANU: Thank you Madam Speaker Ma’am. I rise to support the motion by the Committee on Public Accounts, particularly on their recommendations. I happen to be part of that Committee and I also felt that I needed to add my voice in view of Chapter 17 of our Constitution. I see that there has been a total disregard of the principles of the Public Finance Management and I find that quite worrisome. The officials in the Ministry show that they have not been adhering to any principle at all. The manner in which public finances were used is quite disturbing.
Madam Speaker Ma’am, the Public Finance Management Bill is before us here in Parliament and we feel that if we have an Act before us, and we have employees in ministries who do not adhere to legislation, they are taking us back to Stone Age not civilisation and I find it very worrisome. I want to add my voice this way, that there are various recommendations that were made by the Committee but I also feel that very punitive measures must be taken on those officials involved. We cannot have public finances which a Ministry or a particular employee fails to account for. At such a time, we want to provide as much as we can, the much needed public services to our people. I thought I should rise up to add that our public finance management principles must always be followed and if there is this kind of deviation, surely some kind of punitive measures should be taken. I rest my case Madam Speaker Ma’am.
HON. T. MLISWA: Thank you very much Madam Speaker. I would like to add my voice to this report which really, as most Members have said, talks about governance issues. Governance issues are critical in any establishment, and it is pretty clear we have totally been blinded with corruption to a point that governance issues are not important.
Madam Speaker, it is like people are on a fast lane to just plunder resources, and the worst thing is to plunder resources that are meant for the public. This report Madam Speaker Ma’am, as other speakers mentioned – this is where we were supposed to show the nation that we are a nation of principles from a financial point of view by ensuring that things were done in a proper manner. COVID was at its worst, we could not meet at Parliament. We behave kunge makudo apinda mumunda pasina mupurisa, pasina munhu. Achingoba chete. This is what we have been reduced to. This way of plundering resources is not different from makudo. We are supposed to be people protecting makudo kuti asabe, asi isusuwo tave kuita semakudo tavakuba. Honestly, it leaves a lot to be desired on such a way of operation.
Madam Speaker, any country is helped when it does handles welltheresources given to them. This has certainly put Zimbabwe amongst one of the most corrupt nations because at a time when the whole world must be helping, you now help yourselves instead of helping the people who are suffering. COVID was a global pandemic which, at the end of the day, we also had to benefit. Madam Speaker, we wonder why we are not given support by most countries because we are known for plundering resources that are meant for the public. The public are innocent, and being innocent, they are the first citizens to be taken care of. This report is indicative of a system that has a head that has rotted, and everything below the head rots. The reason why I am saying that is the Ministry of Local Government and Public Works is supposed to be the custodian for ensuring that systems are put in place to ensure that things that come through them are accounted for.
Madam Speaker, it is the same thing as someone who is at a funeral and they are tasked to keep the money for bereavement then they use the money for personal benefit. So if you use the money for personal benefit, how are the intended beneficiaries going to benefit? Ubuntu is important, corruption has hit the sector so bad that we are no longer considered kuti tine hunhu, hatichanyara. We are competing in terms of stealing, it is like in this Second Republic, people have said, for five years, we want to see who would have stolen the most. We have a situation where people are running faster than Hussein Bolt over 100 meters to get to the five years just to see what resources they have.
Madam Speaker, the COVID pandemic itself, the Auditor-General’s Office, many a times has come up with reports that talk about bad governance. The recommendations are not implemented but who is supposed to supervise the recommendations? How many reports Madam Speaker, are coming through Portfolio Committees? Parliament has done its best, and with limited resources, Parliamentary Committees still meet. I must applaud your Parliament Madam Speaker, for a Parliament of genuine people who have been reduced to coupon vendors. Where you cannot even get to your destination because you are holding onto a coupon to ensure that you sell it to get more money but we do not plunder. The CDF for the people, no negative response has come out of your Parliamentarians, yet we have access to that. We are leading by example at a time when everybody, especially the Executive is on a looting campaign. They are no different from Cecil John Rhodes who plundered, and plundered – now what are we left with?
Madam Speaker, who will police the police? Now that this report is out, the public is waiting to see what will happen. Once again, the very same story, political connections, and no one is arrested. I am the Chairman of APNAC; I was at a workshop today – saying that all these reports coming through; how come no one is arrested? ZACC is arresting, and the Prosecutor-General’s Office is hiding the dockets. It chooses. The Patriotic Bill moves faster in this Parliament than the ZACC Bill. Why is the ZACC Bill not in this Parliament? It is because you know that those Executive members will all end up in prison – they protect themselves. What revenue does the Patriotic Bill bring? Yet the ZACC Bill will cut on all corners but we have people caucusing over a Patriotic Bill. Yet we are not coming up with laws to deal with corruption. I have not seen anything from the ruling party to come up with punitive measures of dealing with corruption, which basically talks about them being part of the corruption, and aiding the corruption.
Madam Speaker, if you look at the duplicated beneficiaries – Mutare District Social Welfare database. It is sad. It even talks about the Accounting Officer having received names of the beneficiaries – 18 beneficiaries paid under the Mangwe District Department of Social Welfare received duplicate NetOne lines each loaded with ZWL$600.00 for payment of COVID-19 relief allowances. There was no evidence that communication had been made to the relevant Net1 office so that the error which might have resulted in the beneficiaries being paid twice could be rectified – that is an example. When no one is making an effort to rectify the situation despite you having done something wrong, you still continue having a walk in the park.
Madam Speaker, it is pretty clear that the recommendations that have been put before by the Auditor-General’s report be implemented. We have a Portfolio Committee responsible for Defence and Security and Hon. Mayihlome is the Chairperson, and a war veteran - a ZIPRA cadre who liberated this country. Who is he scared of? He liberated this country to make sure that things go well. They must be brought to book. There must be no sacred cows because the senior generals are telling you not to bring this one before – he is doing a disservice to the sacrifice that he put in the country.
Madam Speaker, it is your Parliament now through the Portfolio Committees that must be seen to be calling people before it to be exposed. Madam Speaker has power - Section 117; 118 and 119 of the Constitution talks about the power that Parliament has. This is the time that Parliament must show that there are no sacred cows. Everybody must be held accountable, and in being held accountable, they must be brought before the Portfolio Committees, and recommendations must come through. While the recommendations say investigations must be instituted, let that be the case. How many recommendations have these Portfolio Committees spoken about have been conducted? Investigations, but nothing happens. So we must be careful to also be part of this because when recommendations are done in these Portfolio Committees, they must be followed through and do not pass any budget before these recommendations are done. We are also an accomplice to these issues and we must ensure that investigations are done without fear or favour.
One of the recommendations talks about the Zimbabwe Republic Police (ZRP) and the Zimbabwe Anti-corruption Commission (ZACC) should institute investigations on the issue of duplicate beneficiaries with the view of prosecuting those guilty of any wrongdoing within the 180 days of tabling this report. Hon. Members in this august House have the responsibility of ticking and making sure that these recommendations are implemented. This is tax payers’ money which is going towards making this country better.
The biggest cancer in this country is corruption. We need to fight it together by supporting the Auditor General’s (AG) office. The AG has done a remarkable job in exposing these but they are not complemented. Parliament is then seen to be that friend that aids corruption at the end of the day. The payment of COVID allowances in Manicaland Province – those must come through. The Committee showed very clearly that there was no system of accountability in the receipt of allowances from the Head Office and there was no reasonable justification for the provincial offices failure to adhere to a simple accounting procedure. It would appear that the omission was deliberate and therefore a dereliction of duty. When this comes through from the AG’s office – this is 50% of the evidence before the courts. Why are these people not being brought to book? Why is Parliament not calling the responsible law enforcing agents and say here is the report?
Madam Speaker, you know that when you appear before a Portfolio Committee, you take oath. In taking oath, the Minister of Finance is here; half of the work which the law enforcement agents are supposed to be doing, we do it for them because one has taken oath - the Hansard is also there. Use that to say this is what you did. They cannot say no because they took oath. We must be seeing law enforcement agents in Parliament sitting there taking notes, rather than them going around looking for bribes because of the tough economic environment. We must be having them here to listen to the reports and recommendations and taking notes. This is the House of records, facts and truth. Why are they not here, taking on some of these reports so that their job becomes easy?
The Minister of Finance is here and he must be asking them but how much money do you need for investigation when Parliament does half of the job? The Minister of Finance must cut their budget in terms of investigations – they are going on bicycles and everything yet they can be posted here. We need police officers and ZACC officers posted here in Parliament listening and going after those thieves. They have got police stations around the country and this is what should happen but they are not serious about their jobs. I am glad the Minister of Finance is here – he must say that Parliament is here and the AG is doing its role in doing half of the investigations; why are you not there?
As I conclude, I want to talk about the recommendations. In future, the Ministry of Local Government and Public Works should work closely with officials from the Ministry of Public Service, Labour and Social Welfare, the ZRP and ZNA to ensure that there is maximum security for inmates in quarantine centres. This is important. The reason why I touched on this is that all of us can be inmates at any time. A prison is like a church. No matter where you belong, you can be in prison for failing to pay maintenance. I am worried that most Members of Parliament with the salaries they are getting – I do not know if the Minister of Finance knows that some MPs are taking home 5 000 to 10 000 RTGs after PSMAS would have taken their money. PSMAS has not at all spared us...
THE HON. DEPUTY SPEAKER: Hon. Mliswa, you are left with five minutes.
HON. T. MLISWA: PSMAS has not at all spared us. I am wondering how those who are paying maintenance have not been picked up yet because surely when you are taking home 5000 RTGs, how do you even pay maintenance? I say so because the Minister of Finance is here and if he can make that the remuneration of MPs is looked into - it also helps the corruption issue that we are talking about. A duty free car with a loan from the bank taken at auction rate – the people who take money to the auction rate are criminals. Can Government pay for the PSMAS; school fees – at least pay for four children. At least the aspect of corruption is out of the system because corruption is also pushed by lack of resources and as a result, it becomes very difficult for parliamentarians to exercise oversight when they are not well remunerated.
Thursday is like a funeral day for MPs. They do not know how to get home. Fortunately, I have a farm with a few cattle but I do not know those if they have got 19 children, how will they go home? At least God has blessed me with a number of cattle and so forth but what about those who have not been empowered from the land reform – our colleagues from the right? They never benefited from the land reform, they cannot grow maize or sugar beans and cannot keep anything. How would you feed your family? We are fortunate and we are grateful to the former late President R. G. Mugabe for giving us empowerment of the land which we have today.
Some of this corruption is created by lack of resources. As a result, people see that as an opportunity to now steal from resources meant for the people but if they are well remunerated, then you do not see much of that happening. I am glad that the Government Chief Whip is also listening to this and I pray that one day, he will also put himself as an ordinary MP and not an MP who has a package of a Minister then it becomes difficult to fight for those who have got a pittance, yet you are a ministerial package remunerated.
The final recommendation – if you hear the conclusion of the AG’s office is that this report is a result of a thorough scrutiny of the AG’s report or evidence gathered from officials in the ministries of Public Service, Labour and Social Welfare and Local Government and Public Works. The Committee’s recommendations to the ministries and those issues referred to the ZRP and ZACC should be taken seriously. Generally, the Committee was concerned about the record maintenance – so we still have a Government which is not maintaining records. We are talking about a paperless Government. Up to now, the records are not there. If records are there, they are pulled out...
THE HON. DEPUTY SPEAKER: Your time is up Hon. Mliswa.
HON. T. MLISWA: I want to thank you Madam Speaker for giving me that opportunity.
(v)HON. CHIDAKWA: Thank you for affording me the opportunity to add my voice on this very important debate. By listening to this report, I felt like burying my head in sand and cry that we are a nation that does not have shame. What have we become as a nation to the extent that we think of benefiting out of a pandemic? What else has been looted out of the citizen’s eye? This report from Public Accounts is very important because it has exposed us as leaders that we are leaders of a corrupt nation. The AG has been pointing out corruption for a very long time and nothing has been happening to those who would have been pointed out. We always talk about zero tolerance on corruption but we act on the opposite direction. Why do we then waste money on the Auditor-General’s reports? They are always pointing out these anomalies to corrupt activities but nothing is being done to the perpetrators.
I want to talk about what happened in Mabvuku. Only a handful of the citizens got the relief funds. I tried to represent my people Madam Speaker but I got a cold shoulder, not knowing that someone is busy looting that money that is supposed to be relieving the citizens of Mabvuku and Tafara. Madam Speaker, my heart bleeds when I am listening to this report. I pray that for the first time, this Parliament must make strong recommendations basing on this report. Let us act on the recommendations by the Public Accounts Committee. Let us act in defence of the citizens that have entrusted us through voting for us to be where we are today. They spent hours on a voting queue to give us this mandate. Let us defend them. Let us protect their interest and act in their defence as Parliament. Corruption is a serious cancer and it has also brought this economy to where it is today. We must act to stop these activities. We must act as Parliament and the time is now. It is my prayer that we act on the recommendations by the Public Accounts and as Parliament, we must make strong and serious recommendations that will send a strong message to would-be perpetrators. I thank you Madam Speaker.
(v)HON. GANDAWA: Thank you Madam Speaker for giving me the opportunity to speak briefly on the report that was done by the Public Accounts Committee. The report is quite worrying if you read through the concerns and issues that were raised by the Committee in terms of plunder of resources that we saw. It is worrying that we have a whole Ministry with a permanent secretary whom we would have expected to put proper systems in place to manage funds within that particular Ministry and resources that came through for COVID-19. People that suffered the blast of COVID-19 in the rural areas ultimately lost out to this kind of corruption that is reported by the Public Accounts Committee. I recall vividly when the Minister of Finance came to the House and we asked him about the ways and procedures he was going to follow through to ensure that the public is going to benefit from COVID-19 support that was coming through. The Minister spoke algorithms, I am not sure if they are there to support the public or they were there to ensure that people were going to steal and make misappropriation of funds like what we see in the report. It is quite worrying Madam Speaker. People in the village, people of Hurungwe North did not benefit a cent. If you read through the report, there is a column where there is abuse of office by members of the Ministry in Chinhoyi. Public goods that were meant to be distributed to the ordinary citizens, staff members of a Ministry go about distributing those items to themselves. I think that is so wrong Madam Speaker. We would not expect seeing members in that particular Ministry still seated in offices. They must be fired. I pray that the recommendations of the Committee must be taken through in its manner and spirit. Thank you Madam Speaker.
(v)HON. P. D. SIBANDA: Thank you Madam Speaker for giving me this opportunity to also air my views on the report by the Public Accounts Committee pertaining to the use or abuse of resources that were meant for COVID-19 and to alleviate our population from the vagaries of that international disease that has affected our country.
Madam Speaker, I recall vividly that from the time that COVID-19 started, our country, like all other countries globally, was made to benefit huge sums of money that were coming from international and global institutions meant to assist the population and to alleviate them against all effects of the COVID-19 pandemic. I still remember Madam Speaker, that the Minister of Finance was all over the media gallivanting on how transparent the Government was going to be on the use of these resources. I still vividly recall that a journalist Hopewell Ching’ono became a victim of law-fare in this country after he made allegations pertaining to abuse of COVID-19 funds by certain individuals that were named. I also vividly recall that those individuals were arrested but their matters were just fizzled away or they were not found guilty in what some people have said the manner the matters were couched were meant to expect these people at the end of day to go scot free. At this particular juncture, when the Auditor-General goes into books and then exposes all this level of rot, this is the implication that we get Madam Speaker. Firstly, we become a country that cannot be entrusted with international resources because the moment they land in volts and pockets, they do not end up going to meet the intended designed purposes. That is the impression that we are painting to the international community, to all well-wishers that would want to stand with the country in times of need. We are simply saying to them when you send it to us, we grab it like vultures, those that have got access to it and they run away with it. At the end of the day, the intended beneficiaries no longer benefit. It is quite sad Madam Speaker that even as we see these exposures being made by Auditor General, we are alive to the fact that even the distribution of those resources themselves was quite inequitable. Indeed, if we can get deeper, you can see that most of the areas in this country did not get a fair share of those resources. Those resources were abused in the manner that has been exposed by the Auditor General.
What is the way forward Hon. Speaker? I think we have become an august House that merely browses through reports from the Auditor General. We do not really bite with our teeth in terms of our recommendations to ensure that the responsible officials that are mentioned in this particular report are then made to account for their actions. For example, if there is duplication of payments, the question then becomes who are those people that were being paid twice? Are they people who are living and exist or they are ghost names that were simply being advanced by top officials in order for them to loot the money for themselves. We need to look into that.
Hon. Speaker, it is my view that the police should take up that matter and follow up the report. Let us see arrests being done. Let us see prosecutions being done. When the prosecutions are being done, let us not do them in the manner that the former Minister of Health and Child Care, Dr. Moyo was done. The manner that these allegations were put forward, was really put forward in a manner that was meant simply to make sure that the case does not kick off. That speaks volumes of the candidness of our police and prosecuting authorities in ensuring that we fight corruption. I do not know whether the police and the prosecutors act on their own or they act under the instructions, especially looking at the fact that the COVID funds themselves, actually the allegations went up to touch even the first office in this country.
Hon. Speaker, it is my submission that the recommendations should include a timeline within which the police and other authorities should apprehend those people that are mentioned in the report and those people have to be arrested. Let members of the public be able also to see that indeed serious action is being taken against these people that abuse. As long as no action is taken against those people, Hon. Speaker loads of other reports from the Auditor General will come but they will end up just being piles and stock piles of paper that are filing and gathering dust in our offices without anything happening.
I also want to encourage the Auditor General to go beyond merely looking at the abuse in terms of who stole the money. Let us look at the distribution aspect. How were these monies distributed in terms of provinces of this country? Was the distribution itself fair or it was meant to show favor and disfavor to certain provinces? Hon. Speaker, this is my contribution towards this report. I thank you.
(v)+HON. MATHE: Thank you Madam Speaker for giving me this opportunity to add my voice on this debate on the Public Accounts report. Our country must respect the resources that we are given. People should not steal. Some of the issues have been said by other Hon. Members. Madam Speaker, from the report I noticed that there is a lot that transpired on COVID funds.
His Excellency, President Emmerson Dambudzo Mnangagwa clearly stated that he does not allow any corruption on this. The recommendations which were raised by the Public Accounts Committee should be followed 24 hours and be finalised. The COVID- 19 funds which were supposed to assist people did not clearly do so. Those allowances were benefiting the top leaders of the communities. Some suffered because they were not assisted with those funds. People who were supposed to get COVID- 19 funds did not get that.
In rural areas like Nkayi, I do not remember if there is anyone who got assisted from the lists that they submitted. Those who got a few goods were laughing at each other. The Ministry which was supposed to look into this issue was supposed to go beyond and assist people in the rural district areas. Madam Speaker, it is unfortunate that a few corrupt individuals are taking advantage of State resources at the detriment of the intended beneficiaries. There are some officers who abuse their offices and engage in corrupt activities. So many things were allocated to districts but the COVID funds did not cascade down to people in rural district areas. These funds were supposed to be disbursed to their intended beneficiaries, however those who were given the task of distributing these funds did not do so, instead they appropriated the funds. The unfortunate part is that MPs and Councillors were not involved in the administration and disbursement of these funds, which culminated in the abuse of such funds which ended up benefiting people who were undeserving. The law should take its course and perpetrators of such corrupt activities should be brought to book. They must not be protected, in the past we have seen such individuals being elected but this should not be the case. There should be a full investigation to ascertain what took place during the COVID -19 era so that those who committed crimes are prosecuted. I would therefore like to implore the responsible authorities to go through the lists of perpetrators so that they are able to prosecute basing on evidence because some people might be on the list whilst they are innocent. I would also like to suggest that the funds which were not be disbursed should then be distributed so that the intended beneficiaries benefit from this noble initiative…
THE HON. DEPUTY SPEAKER: I think we lost the Hon. Member. She is no longer there.
HON. TOGAREPI: Madam Speaker, I move that the debate do now adjourn.
HON. MATHE: I second.
Motion put and agreed to.
Debate to resume: Tuesday, 17th May 2022.
STATE OF THE ECONOMY, RISING PRICES, CURRENCY VOLATILITY AND ACTIONS THAT GOVERNMENT IS TAKING TO STABILISE THE SITUATION
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): Madam Speaker, I have the pleasure to present a Ministerial Statement as requested by some Hon. Members in this House. This is a Ministerial Statement on the state of the economy, the rising prices, currency volatility and the actions that Government is taking to stabilise the situation.
Before I go to that, let me hasten to say that on the IPEC Bill, the comments that were put across by Members of this august House last week also mean that we have to amend beyond amending Clauses 2, 3 and 4 and we stopped the Committee Stage deliberations at Clause 4 which pertains to the functions of IPEC. We also have to amend Clauses 5, 6, 8, 9, 10 and 32 (b). The comments actually imply that we have to amend those. The Attorney-General’s office and my staff in Treasury are still working on that. We are also still consulting on the issue of the regulation of NSSA. What is coming out is that NSSA was established under a separate Bill as a stand-alone institution under a separate Act. But we have to think of how to connect the two Acts, IPEC Bill and the NSSA Act. There is something that needs to be legally worked out and I am still consulting the AG’s office. I wanted to report on that and to say that we will resume the Committee deliberations next week on Tuesday.
Now moving on to the state of the economy, Government is working tirelessly to ensure there is economic stability. As you may be aware, we are faced with a challenging global situation emanating from the global tensions that have escalated into conflict and rising global inflation that we have been experiencing since the last quarter of 2021. Also coupled with our historical domestic imbalances, this has created challenges in terms of economic instability seen through the currency volatility and spilling over into price volatility.
Let me start with the global economic situation. The IMF which originally projected global economic growth at 5.9% in 2021 to 4.4% in 2022 mainly based on the assumption of successful global vaccination programmes has now revised the 2022 global economic growth projections downwards to 3.6% and this is as of April 2022, while I was in Washington last week. Basically, the revision was done and published globally. The downside revision was mainly on account of the ongoing tensions around the world and obviously the opening up of initial global supply chains. Now, disruption of global supply chains across many areas, consequently, energy prices have jumped sharply.
Russia supplies about 19% of the world’s natural gas and 11% of the world’s oil. So, Brent Crude Oil prices have increased to as high as $129 per barrel from around $77 per barrel in December 2021. There is a similar trend when it comes to natural gas and fertilizer prices. Inevitably, this situation has caused imported inflationary pressures on the local economy, for example domestic fuel prices have also been increasing reaching a peak of $1,75 per litre. Wheat prices also surged by nearly 24.5% from a figure of US$390.5 per metric tonne up to US$533.2 per metric tonne. This was in March 2022 alone and this is a record high in the last 14 years. Furthermore, since we import the bulk of our fertilizers, the rise in fertilizer prices has had obviously a negative and further negative effect on the agricultural cost of production and ultimately on food prices at the end of the day. I take it that most Members of this House are farmers and understand what I am talking about when it comes to the impact of these fertilizer prices.
I must also say that if we look at the US dollar which we use in this country as a transacting currency despite growls that I hear that let us dollarize but everyone is using US dollars. They have already US dollarized as far as I am concerned. The US dollar has strengthened to its highest level since the year 2002. This is due to increasing interest rates in the United States in response to record levels of inflation in the USA. USA inflation country came out at 8.3% recently and this is close to the 40-year high which is 8.5%. They are already at 8.3% and the only way is up. Interest rates will go up further and surpass the levels that we saw during Paul Volcker’s time in the early 80s. I am spending a bit of time on this because therein lies part of our challenge as a developing African country. We are importing global inflation whether we see it in the USA, Europe or Asia. There is what we call global spill over into our countries and these started way before the tensions that you see in the eastern part of Europe. They started in the last quarter of last year. And typical of them, interest rates go up in an economy like USA and other markets follow. What happens is that liquidity is drained from emerging markets in developing countries back to the safe haven of developed counties, especially United States dollar assets. So the more the United States dollar strengthens, the more it attracts investment in United States dollars. So you see more purchases of United States Treasury Bills and so forth right across the world because then it also becomes a safe haven because of global tensions but also it is a high yielding currency. Those are our facts.
On a positive note Madam Speaker, Zimbabwe is blessed with many minerals and I must say that the mineral prices so far are holding up starting with the precious metals. Gold is doing quite well and then the PGMs and also the base metals are holding up well so far. So what will happen is that we will have a positive impact from export revenues from these minerals, but of course we are having the negative impact from imported inflation from the global supply chain.
Let me turn now more specifically to the domestic economy having talked about the global spill-overs. Domestic economic performance in 2021 witnessed a great improvement with GDP registering a growth of over 7% which is above the 3.4% average growth for sub-Saharan Africa. This was mainly due to a favourable 2020/2021 agricultural season and higher international mineral commodity prices. A stable micro-economic environment improved access to foreign currency through the foreign currency auction system and better management of the COVID-19 pandemic. All these factors contributed to a good performance in 2021.
In support of the economic growth industrial capacity utilisation for 2021 which surged to 66% from 47% was recorded in 2020 and already in 2020 that was an improvement from the previous years where it was a low as 30% if not lower for some of the areas. In some of the best performing areas in terms of improvement in capacity utilisation are the drinks, tobacco and beverages sub sectors which recorded the highest level of capacity utilisation in 2021 of 79%. The 66% was just the average but these sterling performing sectors recorded as high as 79% in 2021. Then we have other sectors such as food stuffs, chemicals and petroleum products which recorded more than a 20% increase from 2020.
Furthermore, the country witnessed a strong external sector performance driven by exports and remittances. The country exported goods worth US$6 billion in 2021 compared to US$4.4 billion that was exported for the same period in 2020. So that is quite a notable improvement in our expert performance.
The country’s external sector fundamentals continued to show resilience as evidenced by a strong current account position in 2021 and figure estimates so far point to a current account surplus position of USD926.8 million for 2021 which represents a 36.6% increase from the USD678.3 million level that was recorded the previous year 2020.
In terms of public finances, revenue collections amounted to ZWL481 billion against expenditures of ZWL545 million resulting in a budget deficit. These are estimates, we are still finalising the figures, resulting in an estimated budget deficit of about ZW$64.1 billion and that is well within the 2.5% of GDP very easily. In fact, it is just about 2% of GDP. So our budget deficit position for 2021 in terms of current estimates and we are finalising, is in a very comfortable position for the third year in a row.
On the exchange rate and inflation front, traces of volatility in the exchange rate and inflation started to emerge towards the end of 2021. The current inflationary pressures are being sustained mainly by exchange rate depreciation accounting for more than 60% and also due to rising international prices, as I have explained, the global spill-overs. Inflation is also now being driven by expectations of higher inflation and exchange rate depreciation in the future. Prices of goods and services are being quoted with a premium. This results in a self fulfilling upward movement in general prices of goods and services in the economy.
I had a chart here Madam Speaker, showing the movements in inflation, I could not get my team to create slides which I could have shown on the screen, but I think we all know that inflation has been rising and I have made that pronouncement.
So what actions have we taken as Government in response to this volatility and some of the shocks. In response to the current global situation and internal shocks, the Government together with the Central Bank specifically, adopted several policy measures to stabilise the currency and lower inflation, including among other things fiscal consolidation and restraining growth in reserve money. Policies that are currently in place including those that we announced recently include;-
- Reduction in the strategic reserve levy on domestic fuel price from US12.7 cents to the current level of US8.7 cents, this is per litre for 2022. This was beginning January 2022 and this was done through SI 31 of 2022. We also released 30 million litres worth of strategic fuel a few weeks ago to further stabilise fuel prices. So this measure is meant to respond to the sharp increases in fuel prices.
You may have noticed that other countries have caught up with us now in terms of these high fuel prices. I have noticed that for example in Malawi, fuel prices are now higher than Zimbabwean prices for the first time in a long while. It just shows the extent of the challenges that everyone is facing, our neighbours are facing and they have also officially pronounced that they have exhausted their strategic stocks and that is why the consumer is now having to bear the full brunt of the increase in the FOB prices.
- Fiscal consolidation is the second item. Fiscal consolidation continues and is guided by the principle of cash budgeting and we are living within our means because we feel the economy does not have enough borrowing space both in terms of the quantum of resources and the pricing of those resources in terms of the interest rates on Treasury Bills.
We have stopped any recourse to the Central Bank overdraft facility. Since the 1st January, 2019 Central Government or Treasury has not drawn down any resources from the Central Bank overdraft window and it will remain that way for a few years to come.
- We have continued with our partial dollarisation system in the sense that you and I, all of us are free to transact either in the domestic currency, the Zimbabwean dollar or the United States dollar.
- We also have a coordination Committee which we have called Liquidity Management Committee between the Central Bank and the Ministry of Finance and Economic Development to manage the injection of liquidity in the economy.
Let me explain further here on this point. For example, if we pay contractors for what they are doing in terms of building dams, roads and so forth, the Committee then makes sure that we regulate how much is eventually paid into those accounts and it is smoothed over maybe a couple of payments or three payments so that we do not then give too much resources, some of which may end up in the parallel market. So the Liquidity Management Committee is doing this and I think so far it is doing its best. I now move on to item 5; what we have also done is that Treasury is continuing to pay in foreign currency for expenditures with foreign components to reduce activity in the parallel market. For example, for any Government department that perhaps wishes to import whatever, we know that the liability is eventually in hard currency. Treasury pays that Ministry or the suppliers in foreign currency directly so that we do not have monies moving into the parallel market. The same thing applies to contractors that I will say we are now paying some of our largest contractors about a third of their bills in hard currency and the remainder in local currency to minimise the impact or potential impact on the parallel market.
Number 6: We have also tightened the monetary policy. Currently our M-zero target or Reserve money target is now zero percent per quarter, which means that we have no wish to see M-zero growth at all, perhaps until the end of the year. Of course, policies will always be reviewed; if we are still tight then maybe we might loosen but for now, it is zero percent growth in money supply to make sure that we maintain this tight monetary policy stance accompanied by a tight fiscal policy stance.
The next point is that, Treasury, together with the Grain Marketing Board (GMB) have improved the management of grain procurement which previously has remained one of the drivers in the parallel market. We are making sure that the payments are snoozed out and there are not too many large payments which were ending up in the parallel market. What we noticed was that, when you pay farmers and they end up buying things in the shops, some of the retailers would also aggregate those resources and some of the resources then end up in the parallel market. So while we are paying each farmer a small amount- but when you aggregate it, it has a large impact in the market if aggregated by a retailer or a set of retailers. We also realised that it is a problem and we started managing that last year.
In the purchase of grain, Members of Parliament will recall that we had a large grain surplus last year in terms of what we had budgeted for. So we had to find a way to pay for that grain. We actually had to create what we call silo certificates to make sure that we match the grain that is bought to the Treasury Bills that we had to issue to raise money to buy the grain because we did not have monies from taxis so we had to borrow to buy that grain using silo certificates. The idea is that whenever the grain is then sold by GMB subsequently, the process of that sale should go towards retiring those Treasury Bills. So you link the issuance of Treasury Bills to the grain that has been bought in the first place.
Another measure is that we will make sure that all mining royalties are now payable in Zimbabwean dollars up to the limit of 50% of the royalties due. This again is meant to promote the use of the domestic currency ahead of the USD or to make sure that we maintain a balance. I might say at the moment, we noticed that most transactions in Zimbabwe are conducted in domestic currency, as much as 70% of transactions are conducted in domestic currency - [AN HON. MEMBER: 70 what?] – 70 percent of transactions but then what happens is that some transactors then quickly want to convert to USD as a savings currency – [HON. MEMBERS: Inaudible interjections.] –
THE DEPUTY SPEAKER: Order Hon. Members.
HON. PROF. NCUBE: Up to 70% of transactions are in Zimbabwean dollars, we have got the evidence for this. If I can proceed to the next point – [HON. MEMBERS: Inaudible interjections.] – that all duties and taxis – [HON. HAMAUSWA: Une maZimdollar muhomwe here.] –
THE DEPUTY SPEAKER: Hon. Hamauswa, order.
HON. PROF. M. NCUBE: That all duties and taxis on the importation of designated motor vehicles are now payable in Zimbabwe dollars up to 50% of the duties and taxes payable. This measure was meant to both promote the use of domestic currency ahead of the hard currency but also to give relief to our citizens who feel that 100% duty in hard currency was difficult and we have responded to both of those imperatives.
Another measure taken is that all domestic taxes due from exporters on their export receipts are now payable in both foreign and local currency in direct proportion to the approved export retention levels. This means that for a minus where the retention level is 40/60, so 40 is in domestic currency and 60 is in – rather they have to liquidate 40% of their foreign currency and they keep the 60%. When they liquidate that 40%, that becomes ZWL, again they should pay their taxes, the remainder is then in foreign currency.
The restoration of lost value on bank deposits by compensating individuals who had funds in their bank accounts of up to USD1000 and below – we started doing this basically last year where we have so far allocated resources to the tune of USD400 000 and we targeted depositors who had deposits in deposit taking microfinance institutions and people are coming up and claiming what is due to them, that will be completed. I must say that we have done a similar measure on the pensions fund where again IPEC has been running the programme and have advertised and pensioners are being compensated accordingly up to USD400 000. We will make another allocation again this year.
In his speech and announcement on recent measures, the President directed us to look into how we can also compensate those who lost deposits of up to USD100 000, we are working on a framework that we will announce soon. So we are committed to compensating citizens for their loss in deposits and in pensions due to the currency reforms of February, 2019 when we introduced the ZWL. Another measure is to clear the foreign auction backlog fully by May, 2022, end of this month. Going forward, the Reserve Bank will ensure that all foreign currency allotments are settled timeously within 14 days and that the auction system only allocates or allots available foreign currency. You will notice that this week, two days ago, the Reserve Bank allotted USD26.8 million and this is what they had on that day and already they are beginning to allocate what they have and that is the kind of Ballpark figure, 25 million/26 million Ballpark figure and payments for current allotments going forward should be paid within 14 days.
I move on to another measure, we have reviewed the willing buyer-willing seller trading limit to a maximum of $5000 per day with a limit of $10000 per week per individual, this is up from the $1000 figure. We have introduced a differential tax system on the IMTT tax, again this is meant to promote the use of domestic currency against the hard currency. So 2% for domestic currency and then 4% for the use of the hard currency. Further, we have also reviewed the foreign currency cash withdrawal limit for amounts above USD1000 from the current 5cents per transaction to 2%. The settlement of foreign currency tax obligations in local currency at a willing-buyer willing-seller rate. So this will become the rate at which these liabilities are settled. Here Madam Speaker Ma’am, we are emphasizing that the willing-buyer willing-seller window is assisting us in the price discovery or process, and enabling us to close the window between the auction rate and the parallel rate.
I move on to outlay other measures, and the next one is the liquidation of the surrender portion of the export proceeds to be settled at the willing-buyer willing-seller exchange rate so that 40% that is liquidated into domestic currency ZWL$ is settled at the willing-buyer willing-seller exchange rate.
We have also said that we will suspend third-party country payments on foreign payments. This really means that if you want to pay someone in Malaysia – I am just using Malaysia as an example, the money should go straight to Malaysia; it should not be routed via India for example because that then creates opportunities for money laundering. We want to make sure that we minimize that – we have just come off the Financial Action Task Force (FATF) Grey list.
The other measure that has been taken and was announced in the statement by His Excellency recently is the temporary suspension of lending by banks. This was meant to deal …
HON. MUSHORIWA: On a point of order Madam Speaker.
THE HON. DEPUTY SPEAKER: Hon. Mushoriwa, what is your point of order?
HON. MUSHORIWA: My point of order Madam speaker is that
when the Hon. Minister of Finance and Economic Development presents a Ministerial Statement, he is supposed to confine himself within the legal framework that is available in Zimbabwe. Most of the things that he is saying are not backed by a legal framework and Hon. Speaker, it would be wrong for the Hon. Minister to come to this august House saying something that he knows is illegal.
I know you will say that we are supposed to ask but we cannot ask
an illegality. He is supposed to present things that are backed by law. Was there a Statutory Instrument? Those are the things that he is supposed to …
THE HON. DEPUTY SPEAKER: Hon. Mushoriwa, you time
will come to seek clarification from the Hon. Minister.
HON. MUSHORIWA: The intention is for the Hon. Chairperson to direct him …
THE HON. DEPUTY SPEAKER: No, take your seat, you are out of order please take your seat. May the Hon. Minister proceed?
HON. PROF. M. NCUBE: Thank you Madam Speaker Ma’am.
I proceed to just emphasize that we have issued a temporary suspension of lending by banks. We have also instituted further discipline or measures that will ensure discipline in our Zimbabwe Stock Exchange, the domestic stock exchange, by prohibiting inter-account transfers between client sub-account with a broker, and also third-party funding of client sub-accounts. We have also reviewed the Capital Gains to make sure that there are higher taxes for any liquidation in terms of investment holdings before a period of 270 days.
We have also enhanced market discipline and want to review some of the civil penalties upwards, and institute appropriate legal changes to elevate some of the financial crimes to become criminal offences which automatically attract jail sentence.
Finally, I want to say something about the public transport system which also was an issue that was mentioned by His Excellency that this has been opened up to private players. A Statutory Instrument will be issued to make sure that they comply with certain regulations but this has been opened up, and we will also support these transport or bus operators by making sure they can import their vehicles duty free for a period of at least 12 months. I hope that this House will be supportive of that measure so that we can support our ordinary citizens with transportation facilities.
Further, I must say that Government is planning to issue – this is just further information – a USD-denominated bond on the Victoria Falls Stock Exchange. I think investors will find the bond attractive, we will do that but also we are very keen to develop a yield curve for fixed income securities in USD on the Victoria Falls Stock Exchange. I must also hasten to note that the Financial Action Task Force (FATF) removed Zimbabwe from the list of countries that are considered to be insufficiently compliant in implementing the Anti-Money Laundering and Counter Financing of Terrorism Standards. This was done on 4th March, 2022 following the successful implementation of the FATF Action Plan.
A few words on COVID-19, Zimbabwe together with the global community has been under attack from the COVID-19 pandemic since 20th March, 2020 which posed several challenges retarding the full attainment of the desired economic outcomes. To mitigate the impact of the disease, the Government has spent over US$140 million on the procurement of 22.4 million vaccine doses, and this is enough to vaccinate the bulk of our population or least 60% of the population which is herd immunity. Madam Speaker Ma’am, we have an additional 10 million doses that have been donated to Zimbabwe by the Government of China. We have not taken delivery because we still need to exhaust what we have. So we have enough vaccines to vaccinate everyone, and everyone can also receive a booster shot. I hope that members of the august House are beginning to receive their booster shots, and I encourage them to do so if they have not. I certainly have.
Government also appreciates the continued support coming from development partners to compliment efforts in addressing the COVID-19 pandemic. To date, the Government has received US$150.5 million from development partners, which has been spent on COVID-19 related expenditures. Zimbabwe also received US$961 million in the form of SDR allocation, as you know; I presented how this money has been spent in terms of socio-economic, infrastructure, productive sectors as well as supporting our contingency fund for the future, and making sure that we bolster our foreign reserves.
I now conclude, it is my sincere hope that the global situation will improve in the near future, and domestic prices will also normalize, and so will foreign prices. Our business community and the general populace will act responsibly in relation to these prices and exchange rate movements. In the meantime, we are monitoring the developments, if the situation worsens, Government will not hesitate to act in other areas, and intervene to cushion against price increases and exchange rate volatility. I thank you. – [HON. MEMBERS: Hear, hear.] –
THE TEMPORARY SPEAKER (HON. MAVETERA): Thank you very much Hon. Minister. I am going to indulge Hon. Members for any points of clarity that they may deem necessary.
HON. NDUNA: Madam Speaker Ma’am…
THE TEMPORARY SPEAKER: Hon. Nduna, may you please put on your mask?
HON. NDUNA: Thank you Madam Speaker Ma’am… - [HON. MEMBERS: Zvanzi put on your mask!] – Thank you for your protection. – [AN HON. MEMBER: You cannot proceed without a mask!] – Thank you for your protection Madam Speaker Ma’am. I just have a few points of clarity. The first one is to applaud the Minister on the issue of – [HON. MEMBERS: Inaudible interjections]-
THE TEMPORARY SPEAKER: Order Hon. Members.
HON. NDUNA: On the issue of public transport, mass transport system – because we were losing about US$300 000 per bus to neighbouring countries around us but the issue of duty free importation of mass transport system is going to make it effective, efficient, resilient, robust and very good. I applaud the Minister on that.
The second issue is on the issue of blocked funds. You spoke about a third of monies both to contractors and other service providers in United States dollars in order to cushion the effect. What is your thinking around the issue of suppliers, in particular the Committee that I chair on Local Government, Public Accounts – they have about 100 pieces each supplier whose funds were blocked and they did not get them from the auction floor but they have an obligation towards the local authorities to embark on solid waste management and construction of their road systems. What is your thinking on that since you have released some funds on the blocked funds in order to expunge the issue of those blocked funds?
The third one is the issue of inflation, what could be the effect of curtailing or removing the usage of United State Dollars on our economic and business circles? I am alive to the fact that in some countries US$1 is equal to a 1000, may be kwacha or shillings and they do not use the United States dollar except that they change it on the Bureau de Change or in the bank. What could be that effect if we went that same route to, first and foremost, change our foreign currency and then use the RTGs on the local business transactions?
On the issue relating to the price of electricity versus the expansion of the Hwange 7 and 8 – what do you envisage is going to happen to the price of our electricity because this has a lot to do with the upward issues of inflation?
Lastly, our fuel is not reducing in price versus the global trends. When it reduces per barrel at the global market, there is no similar movement in Zimbabwe. Do you see us reducing our fuel price in tandem with the global trends in the very near future? Those will be my five small questions and points of clarity. I thank you.
*HON. NYABANI: Thank you Madam Speaker Maam. I would like to suggest solutions that may assist the Minister of Finance. Our economy is agro-based. The price for cooking oil has gone up yet it comes from cotton seed. I think cotton farmers should be paid more so that we can get seeds for cooking oil. If you encourage people to grow cotton and pay them, we will not import crude oil from other countries. Farmers should be given the seed and everything else so that they produce more cotton; 25% of raw materials come from agriculture. Fertilizer costs more than a tonne of maize; ploughs are also expensive. When you look at the producer price for maize, it is very little. The important thing is bread and butter issues. I think production or the wealth of the nation can increase.
Our borders are very porous and goods are being smuggled into Zimbabwe. I am happy that some ZIMRA officers were arrested in Beitbridge. The country is losing a lot of revenue because of borders such as Nyamapanda, Plumtree and others – I think these borders need stringent monitoring so that we are able to get revenue.
Farmers should be given incentives because they are the ones who are driving the economy as our economy is agro-based. The farmers are concerned because there is no money and this will enable them to work harder. I thank you.
HON. BITI: My points of clarification to the esteemed Minister of Finance are three or four. The first one is that anything that is done by the Government and the authorities must be done within the four corners of the law. The decision taken to ban or suspend bank lending has not been done by force of law. There is no Statutory Instrument (SI), even if there was, that SI would clearly be unconstitutional because our Constitution guarantees the right to freedom of trade, freedom of the profession and the right to labour. The increase in capital gains tax on trades under 270 from 20% to 40% requires amendment of the Income Tax Act and only Parliament can do that. Parliament has not passed such an amendment. The increase of Intermediated Money Transfer (IMMT) on United States dollars from fifty cents to 4% on the United States dollar also requires an amendment to Section 22 (G) of the Income Tax Act. Only this Parliament can do that and we have not done that. So my point of clarification is why is the Minister taking and announcing measures which have not been anchored on law and changes by Parliament?
Secondly Madam Speaker, what is the rationale of banning banks from lending? The core business of banking is lending money. How can you possibly hope that you can control money supply when you are shutting down banks? The consequences are drastic and dramatic. Companies have shut down. Tongaat Huellet has stopped supporting out-grower farmers, indigenous farmers, black farmers who sell sugar to them. Surrey has stopped purchasing commodities from small scale farmers, small scale chicken producers, small scale cattle producers, small scale pig farmers like myself from them because of the move on banking. Their overdraft facilities have been suspended; so to Fivet, so to many other companies in the world. Madam Speaker, you cannot cut your nose to spite your face. The decision to ban lending on banks must be reversed. It is unlawful. It is unconstitutional and it also does not make economic sense.
I now come to the third issue Madam Speaker, which is the interference with the Zimbabwe Stock Exchange. Brokerage business as we know it, for all intents and purposes, have been banned. Brokers are middlemen. They operate with flexibility. Anyone who deals with them, you know that you give them full mandate. Once you proscribe their activity, they will not trade. As I am talking to you right now Madam Speaker, the Zimbabwe Stock Exchange in the last three days has lost $3 billion. If you look at the counters, the stock exchange is haemorrhaging. The move to increase the level of capital gains tax to 40% on all sales of shares that takes place in less than 270 days does not make sense because we are in a hyperinflationary environment. Anyone who buys shares on the stock exchange, you buy for short term. You buy short trades because you cannot hold on to your share because of hyperinflation. There are only two counters that you can hold on possibly for longer than three to four months. That is Old Mutual and Delta. The rest of the trades are short term and because of that, you have crippled the stock exchange. If you cripple the stock exchange, you have crippled a source of capital formation. So you have killed two sources of capital formation, the banking sector and the Zimbabwe Stock Exchange. Which country in the world Madam Speaker, can grow when it has stifled and suffocated capital formation?
Fourthly Madam Speaker, is the Government’s introduction of yet another exchange control regime. We have the official auction system. An auction presupposes free entry both on the supply side and on the demand side. The auction is the perfect method on price discovery yet the Minister stands this afternoon and says the open market, willing buyer willing seller is being introduced for prices discovery. That is the function of the auction. Madam Speaker, business people now find themselves in the situation that: you have got the official exchange rate determined by the Dutch auction system. Then you have got an open market system. You also have got Fourth Street, the parallel market system. Then you have got the blended rates used by supermarkets. You then have got the Ecocash rate and the ZIMRA rate of around $275.
This is on top of the multitier pricing system that already exists in this country. If you go into a shop, garage or somewhere, there is a price for USD cash, there is a price for RTGS, there is a price for official auction and there is a price for swipe. How can a country survive Madam Speaker, weighed down by the weight of a multitier exchange regime and a multitier pricing system? We said to the Minister when he de-dollarised and enacted SI 33 in February of 2019, that do not introduce the auction system. Just float the Zimbabwean dollar, it will find its mark and it will stabilise.
Hon. Nduna spoke of countries like Kenya where the exchange rate has been stable at 1:6000 for decades because they allowed it to float. The introduction of the willing buyer willing seller basis is a back door attempt to introduce a floating system. Do it properly. Liquidate the official auction system and just float the Zimbabwean dollar. Madam Speaker, I appeal again once more for the Minister to act inside the law. Everything he has done is illegal. Everything he has done needs to be approved by Parliament. He cannot do it through Statutory Instrument.
I come to ZUPCO Madam Speaker. The monopoly of ZUPCO was introduced by Section 4 (2) (e) of the COVID regulations, SI 83 of 2020. If the Government is genuine about introducing other players which we welcome because we are suffering as commuters, Section 4 (2) (e) must be repealed. It has not been repealed. We appeal that Government must act within the law and the Government must respect this august House. We are Members of Parliament, elected to do and carryout the functions defined in the Constitution. How can we wake up as Members of Parliament and be told that banks have been banned? It is unconstitutional and we hold the powers. How can we wake up and be told that Capital Gains is now 40%? How can we wake up and be told that intermediated money transfer tax is now 4%? How can we wake up and be told that to withdraw your own money, USD$1000 you have to pay a 2% levy? We cannot rule by decree Madam Speaker. This is not a monarchy. Minister Muthuli is not Muthuli 1. Thank you.
HON. MUDARIKWA: Thank you Madam Speaker. Some of the issues I wanted to say have been already said by other Hon. Members. The main concern, the current crisis we face in this country because there is a shortage of foreign currency. If we had enough foreign currency, we will not be talking about the exchange rate this and that but we have people who are producing. The exporters have no export incentive. To export is like you are committing a crime. If you export $100, $40 is taken by Government on an auction rate which then does not end there. We are now charged 4% IMT tax. What for? I have already given you 40% as an exporter.
Mostly exporters use foreign currency to buy consumable for us to export. Now you charge me 4% IMT tax and the disadvantage now is that I cannot compete globally because you are carrying a load of taxes. We pay 2% royalty which goes to Government. The purpose of royalties is to develop and to say that is my contribution. I am operating in the country; I am contributing 2% of my gross income. Obvious in mining there is MMCZ taking commissions. In other sectors of the mining industry there is 5% export tax. We want to create an environment where exporters are comfortable so that we do not argue.
I remember at one time there was some form of export incentives every year. We are giving some incentives to importers. I was in Windhoek and at Walvis Bay, there are 192 trucks loaded with sugar coming to Zimbabwe imported from India by one of the beverage manufacturers. How does the sugar industry in Zimbabwe grow when we are already importing sugar that is available in Zimbabwe? One hundred and ninety two trucks full of sugar imported from India and we call those investors? Hon. Minister, this must be investigated, it is unacceptable. In the end we will start importing Ministers because if we are importing things that we have got, you will start importing MPs. Certain commodities that are available in Zimbabwe must never be imported. That is my humble submission Madam Speaker. Thank you.
(v)HON. WATSON: Thank you Hon. Speaker for this opportunity just to get three or four points of clarity. Could the Minister confirm that when he says 70% of transactions are in RTGS, is he talking about formal transactions? Secondly, how is he so sure because this is an accusation that flouts the costs of business communities? The payment to infrastructure contractors, particularly road contractors, no matter how smooth they are paid in RTGS, they are forced to buy US dollars on the black market. He also said the ban on lending is temporary. How temporary is temporary, because it is already having huge and ripple effects, for example in the livestock industry. The other question I have is, did he speak of the backlog on the foreign exchange auction? How is it that they continually accumulate and then he says they will be paid back? The comment from the business person was, we paid that before. Thank you.
HON. MUTODI: Thank you Madam Speaker Ma’am. My point of clarity to the Minister is that before his assumption of duty as a Minister of Finance, he indicated that bad money drives out good money. He was referring to the use of a surrogate currency, the bond notes that we are using. Surprisingly, the Minister has maintained the use of bond notes. This means use of dual currency for the economy. What measures have we put in place as a country to ensure sustainability of this dual currency? We know it very well, he is a professor of economics but a dual currency needs to be delicately managed to ensure that we do not lose public confidence in the banking sector. The Minister must clarify the measures that he has put in place to ensure that the dual currency is sustainable?
Madam Speaker Ma’am, we have seen recently an exchange rate driven inflation. I want to thank the Minister and His Excellency the President for the temporary hold on bank lending. However, we need clarity on what is going to be done to ensure that critical manufacturing companies continue to survive and be able to provide goods on supermarket shelves? Why did it take a long time for authorities to realise that the primary business on the market was now buying and selling foreign currency? In the first place, who is supplying the RTGS dollars to the parallel market? Is it the banks? Is it the contractors that Government has engaged in the road rehabilitation programme? Who is actually supplying the RTGS?
With the contractors, it is clear that when you want to do a major project like the road development, obviously you need a long term loan to finance it. How are we financing the road project Madam Speaker Ma’am? If you are financing from our fiscal budget, is that not contributing to the exchange rate driven inflation because the contractors are being paid in RTGS and they seek the USD on the black market. That affects the ordinary person who is earning ZW$40.000 salary. Obviously, they are paying rentals and fuel in USD. We need clarity on that Hon. Minister.
The last issue I will talk about is the economic planning investment. Are we planning the economy? Are we estimating our macro-economic variables on time? How our money supply, our interest rates, inflation and other factors are going to perform over time such that not only the local people but also international investors can have confidence in our economy. Also the political risk factor, if you are driving towards attracting investment. We are competing for Foreign Direct Investment with other countries in the SADC region and Africa at large. How have you dealt with the political risk factor? Are we sure that the lack of title deeds on farms is helping us in any way? I humbly submit Madam Speaker Ma’am.
HON. T. MLISWA: Thank you very much Madam Speaker. My first point of clarity is, Government embarked on import substitution and that is the reason why they encouraged farmers to grow maize, which means that you save on foreign currency and failure to empower farmers, you spend more foreign currency. Why have you not taken a deliberate measure to pay farmers in foreign currency? The reason why I am saying this is that Government is the biggest culprit of the black market trade. The monies that you pay us in RTGS, we go on the black market to get foreign currency to be able to replenish our inputs because everything else is bought in foreign currency, fuel, fertiliser, labour, et cetera. How then can I be able to sustain my farming programmes when you are not paying me in USD? Right now, we had a bumper harvest. Why can we not sell that maize to other countries so that we generate foreign currency? Zimbabwe was an agricultural hub, which meant that we could export and make money from what we did. The critical issue is to incentivize the farmer. Once you incentivize the farmer, you have enough for domestic consumption and the excess you export. The weather is great, the soil is great, the tobacco is the best, the food in Zimbabwe is non-GMO but we seem not to be taking advantage of that. We accuse the farmers of not being productive, yet once again they are now well remunerated. The other issue, why not deliberately pay the farmers in US dollars because you will get back, if it is a surplus, you will export and everybody is looking at Zimbabwean food. You will get that money back in retrospect. The Indigenisation Act, do you think it was a mistake to suspend it or repeal it because it empowered people with 10%, the communities, workers as well and the international community has been sold to that. Whether you like it or not, the former Late President R. G. Mugabe was consistent on it and people came on board.
The Second Republic came on whether they had an appetite to appease the foreigners; they are not there when they need help, you are sinking. This was to say that we will bring more investors; have you done an analysis to see if investors have come in and foreign direct investments projects which are all there? How much have they brought into the country? You must be honest, you must access other than them getting national status and bringing things duty free in containers and selling. The indigenous of this country cannot sell anymore because the very same company that you empowered, the Chinese company that does tiles, where do they bank? It is a question, where did they put their money but they are busy exporting all the tiles. Everything is leaving the country being exported but no money comes in yet it is national status. What have you done to do a follow up on those companies?
The other issue is, the only business in town is auction. There is facilitation fees, we have come up with policies that have made people become lazy, and criminals in the process. What are we doing to follow up on the auction money that people get, companies, the institutions which are supposed to be doing that? You will see that people are bringing in new cars, buying houses, the value of houses has gone up from 800 million to 1.5 million yet the economy is not pumping. Where is that money coming from? It is from the auction rate where people are getting this money yet not utilising it for the intended purposes. The big companies like INNSCOR, you give them money on the auction rate yet they are generating foreign currency from the food that they sell, what is the point? Who are you trying to please? So the smaller ones are now dying yet the bigger ones are getting bigger and bigger. INNSCOR reported profits in an environment like this but you still go on their knees by giving them foreign currency, what for?
The other issue is the aspect of production. Production is what we have been saying, what have we done about production that has been the theme? Tomatoes from Murewa, where are they going and where is the processing plant so that they can export these tomatoes outside; that has not been happening.
The issue of two percent IMT tax that Hon. Mudarikwa said, why do you punish people who work hard and who are exporting? It seems it is a sin to work hard and to export in this country and then you punish 40%, who would want to invest in a country where you are punished for exporting, instead you must be given an incentive. So we need to closely and honestly look at our policies. There is no way investors can come in a country where we are constantly panicking. These statements made were of a panic nature and for you to get out of them, it will be another five years because there is no more confidence. You blame the people for not banking, is it their fault that they are not banking when you have such policies which you are coming up with?
Banking is about lending, it is a panic statement and I think this Government is seasoned enough. These are liberators of the struggle who have sacrificed their lives. His Excellency sacrificed his life to liberate this country and he must not be put in a panic mode and now there is nothing to respond to this. I think there is need to do a retraction in terms of review because finally, when statements are made by any Government or any institution, there must be a point of review that - are they negatives or positives? It does not hurt for you to review and say no, some of the policies that we made have a negative impact on the people and the economy. These pronouncements require a review and an honest one, because the confidence of the people is gone; it will take another five years. We are going towards election and when people are approaching elections, the only thing that they think about is they do not eat the slogan; they look at the economic situation of the country. In 2008, there was Government of National Unity, the economy stabilised and ZANU PF in 2013 won by two thirds, people did not vote for the slogan but they said, moving forward – with this economy in place, such policies will put Government out of power without knowing.
HON. TOGAREPI: Thank you Madam Speaker. Surely, I want to say as a short term measure, the suspension of lending could be helpful but as a long term or even in the medium term, it may have challenges. I would also want to say Minister, what is the source, where is the US dollar that people are chasing in the market, where is it coming from? Is it not coming from RBZ where they have it on the auction floor then take a little bit of it, take it back to the market, mop the Zimbabwean dollar then take it back to buy more foreign currency? I think Minister, we need also to deal with the source of the Zimbabwean dollar and US that are in the market.
On the issue of people with huge bank balances, where are they getting this money? Are we dealing with that because they are the source of the high demand for US dollars that then drive prices because the black market now drives the prices? So, I suggest that we deal with the issue of people with huge monies, where are those monies coming from?
The other issue, are we also not exposed to money laundering, people who are cleaning their monies in the market? What I have seen for the past three to four weeks, the exchange rate had gone up to more than 400 – [AN. HON. MEMBER: It is now 600 mudhara.]- but I was checking it has gone below 400, meaning this effort that you have put in place may have stifled the supply of Zimbabwean dollars that was chasing the US dollar. So I think we need to fine-tune that but obviously aware that we need lending in the banking sector for us to be able to see production. As a last issue, what can Government do to encourage those with foreign currency to bank it? I was buying something in Mbare and I saw people with huge sacks of US dollars. Can we not come up with ways to encourage these people to bank that USD so that we deal with the rampant price increases because of people chasing the black market rate.
Minister, as a short term, I feel it is working but in the long term, let us find a way that will allow people to borrow as usual and the banking system to do its work. I think the issue that we are not dealing with at the moment is to allow the financial system to work. We need to encourage a situation where people bank their money and to realise that it is a risk to be using the USD as a country because we cannot manage its supply in our market. It can come in and distort our economy but we cannot do anything because we have no control of that money and its supply in our economy. So we need to find a way to move away from the USD and deal with our own currency. I thank you.
(v)HON. C. MOYO: My first issue is on fuel and the Hon. Minister said Malawi’s fuel is now more expensive than ours. My question is: was the Minister comparing with our ZWL or USD viz-a-viz Malawian Kwacha. In fact, the Hon. Minister promised us ZWL fuel stations, where are they? Secondly, I no longer have confidence and trust our Hon. Minister of Finance because he released a 2020 $100 note this year in 2022. Why, when the $100 note is no longer enough to buy a loaf? I no longer trust him, maybe he has already printed a $1 000 note. Can he clarify on that? The third one is about the industrial capacity utilisation which goes to 60% from 47% but unemployment rate remains at 95%. Are there any –
THE TEMPORARY SPEAKER: Hon. Moyo, may you go straight to your point and repeat yourself as the Hon. Minister did not hear you.
(v)HON. C. MOYO: The Hon. Minister highlighted that the industry capacity utilisation goes to 66% from 47% but unemployment rate remains over 95%. Were there any jobs that were created so that they can equalise with the 66%? Lastly, there is clearance of the foreign currency auction floor. Why do we not release the foreign currency in 48 hours and if we do not have foreign currency, we should simply not dollarise.
HON. DR. MASHAKADA: I want to thank the Minister for the Ministerial Statement on the State of the Economy. I want to raise four pertinent issues in pursuit of the statement. The first issue is that we all know that in your NDS1, one of the pillars is supporting supply value chains in the economy. In other words, boosting production supporting productivity and one of the key issues is the question of the private sector’s access to finance which has been banned or stopped at a time when private companies or firms cannot access offshore funds or lending. To what extent is this policy reversal going to impact on NDS1’s objective of promoting or strengthening supply value chains? I need your clear answer on that.
The second observation or clarification; is the Minister aware of the fact that most of our problems in the economy are caused by exchange rate volatility, especially the fact that price discovery is being interfered with? Why can Government allow free float? Let us abandon managed float and fixed exchange rate because it has not worked. All these distortions are being caused because price discovery mechanism cannot reveal itself or operate efficiently without any hindrance. Can the Minister consider introducing free float to make sure that there is a market determined supply and demand of foreign currency on the market? This will curtail the black market rise or margin between the official exchange rate and the parallel market rate. The reason why the parallel market continues to grow is that the margin between the official and the parallel is rising because of lack of competitive price discovery and mechanism, especially on the auction floor.
The third issue is to do with currency. Our currency is also the centre of our macro-economic problems. A currency, as you know, must fulfill the medium of exchange role and the store of value role. In our case, ZWL or mono-currency is not a store of value. No one wants to hold it because it cannot store value. What measures is the Minister putting in place to make sure that there is credibility in the mono-currency and that it stores its value.
The fourth issue regards money supply growth. I agree with you that M-Zero has been vaccinated and therefore, its transmission mechanism on inflation has been checked but if you check M-1 growth is now at the centre of money supply growth. So what are we doing to curb the growth of M-1 and its impact on inflation?
The fifth issue is that you alluded to imported inflation. Yes, I agree imported inflation may cause inflation to some extent but if you look at the CPI now, there has been a mutation of the Consumer Price Index. It is no longer food inflation. If you look at the CPI, things like education are now on top of price rises and so on. We need to revisit our Consumer Price Index basket and the way we measure it so that we do not continue to harp on imported inflation and food prices when actually it is other things that have now overtaken in terms of the consumer basket. Thank you.
HON. MARKHAM: Hon Speaker, I am a simple man, so my questions are going to be very simple. We talk of the ease of doing business here yet we are introducing more taxes. We are talking of encouraging exporters – exporters just stood up there with 40% retention. They now have IMTT taxes to pay. We are not encouraging exports but discouraging exports, particularly in the agricultural line. We are actually encouraging imports because importers can go to the auction system and get discounted money, which is also being supported by the retention from people who export products. So we have got a major issue there which is the runaway exchange rate and I am talking of the parallel rate exchange rate. Since January it has doubled from $200 to $400 but we are not arresting it. We know where the problems are and it comes from the auction system which is a subsidised pricing system. The RBZ should know and does know the people involved in taking the money and not using it for the purpose it was granted for. We have people with multiple companies bidding for money, taking the money out and get straight onto the street with the money. We know that but what do we do? We introduce more taxes and hammer the exporter. We can talk about manufacturing growth but our tax base is dwindling. I have a major issue with that. How do we arrest it? We have no choice but to let it run because we have not closed off anyone who spares zim dollars. What are they going to do? They cannot get the stock exchange short term or get to the bank. So the only option is to buy foreign currency which is the only place they can park their extra zim dollars. Surely that makes sense.
I have two more issues pertaining to the ZUPCO and GMB. Both are monopolies, have taken huge amounts of money out of the fiscus and they are all for subsidies. The spatial planning budget in local government has overrun last year by 170%, clearly because of ZUPCO yet we continue with it and do not change it. I have a problem with a mechanism with due respect Hon. Minister, of announcements in the middle of the night on a weekend. It is five days down the line and we still do not have a statutory instrument. Without a statutory instrument, what is the law? It is being covered but my issue is this, what is the law with the statutory instrument when the RBZ and the Ministry are already issuing exceptions, for example exporters of tobacco and cotton when we do not have a law. How can you do that? We are already giving exemptions to a law that does not exist. So what will happen is that it will grow. Instead of being an exception, it is going to become the rule and we will achieve nothing but who suffers? Not one person has mentioned the increase of 100% in the parallel rate. Not one person has mentioned the pensioner or salaries. If the parallel rate has gone up 100%, your salary has decreased 50% because all goods in this country are priced on the parallel rate. If you have got a pension and you are a pensioner receiving ZW$7000 in January you are now receiving the equivalent of ZW$3500. We have not addressed the issue of the runaway parallel rate and these issues will not address it but complicate it. I thank you.
*HON. MUNENGAMI: Thank you Mr Speaker Sir. The Minister is going out whilst we are seeking some clarification. We need answers from him because the last time his deputy could not answer a single question and you are well aware of that. My clarification...
THE TEMPORARY SPEAKER: He will take notes for the Minister.
*HON. MUNENGAMI: I want to ask a very simple question. A man called Neruwana who resides in my constituency in Glenview used to buy a bottle of cooking oil at US$2 and from US$10 he would get US$8 change. Today he is buying 2 bottles of cooking oil and gets US$1 change. That is the people’s concern and not the jargon that the Minister is elaborating. The people just need to know why and where that is leading us. I have asked that question before and I am asking it again but from the Minister’s response, he has not been able to answer the question I have posed. People just need to know why the prices have gone up and the plans government has in place to curb the price increases.
The other bad thing that I have noticed is people lying to each other, especially MPs on the other side. I feel embarrassed because the Chief Whip lied and said the rate has gone down...
*THE TEMPORARY SPEAKER: I do not think that is in line with the clarification that you are seeking. Please withdraw your utterances that the Chief Whip lied.
*HON. MUNENGAMI: I will withdraw the words Chief Whip but I will change the word ‘lie’ to ‘misrepresent’ because he said our rate has gone down and that is not true. Those are the lies that I am talking about because the rate continues to shoot up. That is why I am saying as we debate here we should be truthful so that our country can move forward. We should not pat each other on the back when someone lies but we should tell the truth and ask whoever lies to tell the truth, that is why I said he lied because he said the rate has gone down yet it is shooting up.
Lastly Hon Speaker, the Minister did mention the action they have taken and the tax rates being charged. What is going to give me the incentive to want to bank my money? If I get my US$100 and take it to the bank they will charge me 4%, so I will keep my money in the pillow. So what is the point? So I plead with the Minister to explain how the price rises will be sorted out. It should be easy to respond to, so we can move on. I thank you.
(v)HON. MOKONE: Thank you Mr Speaker Sir. I also rise to raise issues of clarity. Minister, since you announced the new measures, prices in shops have skyrocketed beyond the reach of many. In that regard Minister, their salaries have remained stagnant, be it in RTGS, be it in United States dollars, it did not increase. I would like to know from you what measures you have to help especially the civil servants so that at least they can manage to take care of their families because as of now, they are actually suffocating. I am sure you know Hon. Minister, that most of these civil servants are engaged in programmes to capacitate themselves with most universities around the country. So as such Minister, they are failing to actually pay their fees because the RTGS that you are now giving them is too little.
The other issue that I have is the issue of you banning lending from banks. Minister, can you not see that we are slowly going back to the period of 2008 where we could only find fire wood and tissues in the shop shelves? Those are my submissions Hon. Speaker. I thank you.
THE TEMPORARY SPEAKER: Order Hon. Members, this Pajero AEP4871 is blocking other vehicles, please go and remove it.
(v)HON. MKARATIGWA: Thank you Mr. Speaker Sir. I just want to also share my sentiments or my reaction to the raft of measures that are currently obtaining in the economic space. I subscribed fully to the intervention but there are major concerns coming from various sectors and I cannot help but also share my concern as an MP who represents not only the communities but also the business sectors. I am also personally a business person and when you look at where we are coming from, interventions may be necessary to deal with indiscipline, financial discipline that is occurring, but what I do not subscribe to is the indiscriminate way that it has to be implemented because when you look at it, think of the real innocent businessman who is trying to actually run a business ethically according to the laws of the land, complying to every other requirement, be it monetary, fiscal or general business practices now being suffocated by the sudden and drastic intervention.
Think about that family, that parent who is fending for his family looking for borrowing to have school fees, borrowing for medical purposes. Someone will have to borrow to ensure that he provides the right education for his children, someone who has to borrow because they honestly want to build a home for their families, someone who has to borrow because a dear family member is under life threat. All these have been put in the term ‘bracket’ with the culprits in business and when we look at it, there is no written sign that is actually required to deal with the inflation.
It is simple, when there is inflation and it is rising everyday above lending, it simply means people who are unscrupulous, people who are not ethical, who actually go and borrow so that it becomes a money making business. So there is need to intervene in good time. I have always advocated for an approach that entails recycled balance, a command approach. Many a time people do not like it, but perhaps there are times that they help but not that it employs 100% but I have at one time said to the Minister, you cannot leave the parallel market, your road port, the so-called black market to determine the exchange rate. You cannot leave the so-called unscrupulous business corporates to determine the exchange rate.
Yes, we have an interbank market. The interbank market at some stage was to guide pricing. For a long time, there had been clarity which was not regulated. The moment the Minister tried to regulate, to align the prices to the interbank market, what happened? Something that was costing $1 the price doubled to $2 because at that particular time, the perception, or it was quite evident that the black market rate was almost double the proper cost, the proper United States dollar pricing of a commodity, if you doubled it and multiplied by interbank rate, it merged the black market rate and this is exactly what happened.
So when you look at regulating and trying to compel the markets to observe the interbank rate, it was a good measure but in reality, there was no enforcement because when you look at the cost alone, the banking sector is responsible for small foreign payments and at the bank all the transactions are known, but when you say there is monitoring of the shops or of the pricing, then that is unlawful monitoring because they were allowed to get away with it when they doubled the dollar – [HON. MEMBERS: Inaudible interjections.]-
THE TEMPORARY SPEAKER: Hon. Members, please could you somehow shorten your contribution. Are there questions, are you raising areas of clarification?
(v)HON. MKARATIGWA: What I am saying is, when you look at it, bad business practice is actually being perpetrated by a few big corporates. These are the ones that are upsetting and they have got the borrowing power. They can hop from one bank to the other and be able to apply for borrowing. They are able to borrow and they are able to enter into arbitrage and fuel the black market. This is what I think the area of focus should be. If we focus on ensuring that they are actually perhaps monitored and made to account for their operations, for the distortions that they are causing because there are transactions they will be trading, it can actually help a great deal.
There are other sectors…
THE TEMPORARY SPEAKER: Hon. Mkaratigwa, I think your time now is just about to end, can you wind up please.
HON. MKARATIGWA: In conclusion, I want to look at the construction area where we have got new equipment that is being imported these days and most of the funding is out of the parallel market. Therefore, by coming up with punitive lending rates to ensure that we do not fuel inflation and there is a balance, it can help a great deal. Thank you Mr. Speaker Sir.
THE TEMPORARY SPEAKER: May I take this opportunity Hon. Members to say it is pointless for you to emphasise or re-emphasise a point that has been highlighted already. You can actually see that if somebody is contributing, if the Minister is not writing, it means that he has heard and is still hearing the same thing. Can we dwell on new areas of concern and new questions?
HON. HWENDE: Thank you Mr. Speaker. Firstly, I want to thank the Minister of Finance and Economic Development for the statement that he has presented to us. I also want to thank fellow Hon. Members from the other side because it shows that we are in agreement in that the matter is affecting everyone. My first question to the Hon. Minister is that the issue of suspension of lending has been mentioned but there is an issue that has not yet been clarified. Hon. Minister, is it not possible to interrogate the issue that the suspension is affecting applications that were already in progress and those that have already been approved so that at least these get a waiver and should be allowed to go through because these are applications that have already been done. Most company owners had already borrowed funding and promised to deliver goods on the basis that their loans have been approved. So if you happen to invoke this drastic move as you have done, it affects everyone despite the fact that we have witnessed lending companies suspending operations.
Hon. Members have also raised the issue of salaries, especially for civil servants. I know that you have increased the remuneration for the Zimbabwe Defence Forces by 37% but even the 37% - considering that the rate has spiraled and is now around 500%, that money is inadequate because the 37% comes to ZWL45 000 to ZWL50000. Are you not putting the country at risk that a soldier carrying a gun takes home ZWL50 000? All civil servants, I do not know where you stay Hon. Minister but you always talk of surplus. Are you not pained by the paltry salaries that you pay to people when you have a surplus, the very people who work for you day in day out? People are struggling with the ZWL40 000 that you are giving them and they are unable to even buy a bottle of cooking oil. They are unable to even buy fuel for their cars, pay school fees for their children to go to school, is your heart not pained when you see such?
I do not know where you stay Hon. Minister, I have heard that you stay at Meikles Hotel, hence you do not witness these challenges out there. As Ministers, you are not at all concerned, because you are always outside the country giving each other allowances of USD5000, so the RTGS salary is not of concern to you. My request Hon. Minister that you look into the matter and ensure that civil servants get remuneration that is adequate for the sustenance of their families.
On the issue of taxes, our taxes are too exorbitant. We have internet service providers – the other issue affecting the people is on the cost of internet data but if you look at the way you are taxing these companies, for every dollar, 35 cents is going towards taxes. The companies pass the burden to the consumers – with the RTGS salaries, children are unable to get internet data for their education because most jobs are also being done on the internet and that is not possible because of the cost of data. We urge you to look into those matters. I am not going to say much because most of the things have already been said.
*THE TEMPORARY SPEAKER: Thank you Hon. Hwende. I want to take this opportunity to thank Hon. Hwende because as you were debating, I saw the Hon. Minister jotting down notes showing that your issues are new. I hope that those who are going to debate after you will follow suit as you have set the pace.
HON. MADZIMURE: Thank you Mr. Speaker Sir. Firstly, I want to remind the Hon. Minister that Zimbabwe is towards achieving an upper middle income economy but looking at the measures that he has taken, considering that when Hon. Munengami requested for a Ministerial Statement, the nuclear bomb that he just released had not yet been released. During that period, our rate has gone up by 100%, meaning that the remunerations that people were getting had been reduced by 50%.
There is no middle income economy where one earns USD100, considering the demands of food, clothing and so on. Are we saying that we are no longer interested in an upper middle income economy because what is happening currently does not reflect that we are heading towards a middle income economy. We are actually regressing to the lowest income economy.
My other issue is that the Hon. Minister has said that our exports are now around over 6 percent and in his words; he said we have a surplus. Mr. Speaker, if you consider electricity, it is $1billion, medicine is $1billion, fertilizers are $1.5 billion. On the other crucial issues, if you look at the procurement of vehicles, it is a billion and all these are above $6 billion, what of other needs of the people? If you look at the women empowerment and welfare, it is being funded by the donor community and not the Government. This reflects that as Government, we are unable to look after our own people. So the Hon. Minister should be honest with us to come clear on the monies that he is referring to as surplus, what is it exactly that we are exporting that has increased in cost?
The Hon. Minister said that capacity utilisation of the industry has gone up from 40% to over 70% and that is supposed to match with increased employment. Why is this assertion not reflective on the ground? There is no correlation between increased capacity utilisation and increased employment. On the issue of suspension of lending, what will happen to me if you do not allow me to borrow money? I have a big company that needs cash flow. How am I going to access the money? There is what is called illicit wealth. We are saying that many people have illicit funds. So most people are going to engage in illegal borrowing and that is going to lead to an illegal economy. What is the Hon. Minister going to do to ensure that this does not thrive until such a time that they open the banks for lending?
In conclusion, I may sound as if I am repeating but the Hon. Minister is not looking into the sustenance of the civil servants during that suspended period. It does not make economic sense even to me as a Member of Parliament. Even when I tell people that I am earning RTGS60 000.00 - it is nothing but I also do not think that as an Hon. Minister, that is how he is living because what is he is going to do during the short term to ensure that people are able to sustain themselves?
We mentioned the other time Hon. Minister, in terms of these temporary measures – it leads to disasters. This was during the time of Mr. Gono. What he is doing are half measures, if we look at ZUPCO. The Hon. Minister came here, and informed us that he was starting ZUPCO, and people would get franchise to operate in the transport sector. People celebrated that we now have a reliable transport system but now people have decided to move out of ZUPCO, and the Hon. Minister is coming here to tell us that it is a good policy that we have allowed other players to join the transport sector. Who benefited from the temporary period where ZUPCO had monopoly? Buses are a mode of transport but travelling from the rural areas is a challenge, looking at the middle income that we want to achieve. What went wrong that they have now seen that it is a good policy to introduce private players yet five months ago it was cat and mouse, and everyone had to use the ZUPCO franchise? The Hon. Minister has to explain to us why we are now abandoning that policy and the same will apply to the auction system.
Actually it is like a repeat that was played in 2006/2008, it is the same. What is going to happen to our contributions to medical aid? Right now Mr. Speaker, if I want an emergency operation to be done on me, I will find the cost is around not less than two million, and if I am not going to borrow, where am I going to get that money? Contingencies that the Hon. Minister has put in place to make sure that when such an emergency arises - this is how someone is going to survive. How are we going to do it? We have condemned the poor. Can the Hon. Minister answer? What is going to happen in the interim for people to access the most crucial services? Supposing you lose a house today through fire, and you cannot borrow. There is virtually nothing.
Can a country stand still? What the Hon. Minister is telling us right now is that we have come to a standstill – nothing will function. Big corporates survive on borrowing. Thank you Mr. Speaker, can the Hon. Minister respond to some of these questions?
*HON. TEKESHE: Thank you Mr. Speaker Sir. I want to thank the Hon. Minister for what he brought to this House. I also want to get clarity from the Hon. Minister on why we are experiencing price hikes in both currencies, USD and RTGS? Before the RTGS price would increase but the USD would remain the same.
*THE TEMPORARY SPEAKER (HON. MUTOMBA): You are not connected Hon. Member.
*HON. TEKESHE: I want to find out what measures the Hon. Minister has put in place to ensure confidence in the banking sector because I realise that the elephant in the room is the issue of confidence in the banking sector. People have foreign currency in their homes under the pillows, and buried underground. So I want to know what measures the Hon. Minister has put in place in restoring confidence in the banking sector. Before, banks used to operate but now banks are no longer operating because no one wants to bank their money. I also want to know if the Hon. Minister is happy with the auction system flow, if it is positive for him, we request that we be availed our CDF funds in foreign currency. Thank you.
*HON. HAMAUSWA: Thank you Mr. Speaker. The Minister of Finance and Economic Development mentioned that mining is contributing hugely to the fiscus but I did not hear him talking about the social impact of mining in communities that are being mined, and most areas are being left with huge holes. As I speak, there are mining activities going on in Warren Park. Yesterday, a school child died after falling into an open mining pit that was left by miners. The proceeds of mines are being seen in the Hon. Minister’s books but for people where mining activities are taking place, nothing is on the ground. So I want the Hon. Minister of Finance and Economic Development to investigate, and also has the law changed? Has the Government law now changed that mining just takes place without environmental assessment and also asking the residents the effects of mining. We have seen that the Chinese company has a mining right in Warren Park in Harare but there was no meeting on Environmental Impact Assessment (EIA). This is amazing to the people of Zimbabwe that mining is bringing wealth but the people in Zimbabwe are saying mining is bringing poverty to them because it is causing a lot of things and they are not gaining from it. If it was possible, the Minister should sit with other members of the Cabinet and find a way on how they should bring back the 10% empowerment to the communities where mining is taking place. That 10% can be used for land reclamation so that those mines will not endanger animals. In Zvishavane, animals are dying in those holes. The Minister cannot speak highly of such an activity which is impacting badly on the people.
I am sorry that it might seem like I am repeating but I am not. On the issue of ZUPCO, the Minister of Finance and his colleagues – our Constitution says that he is responsible and collectively as a Cabinet; when he brings this on the table, he did not consider that a lot of people were surviving on one kombi and they did not look at how those people were going to survive after removing kombis on the road. Where we stay, there are now a lot of thieves and robbers – we do not know whether some of them are the ones who were working for the kombis. Most of our children are now involved in drugs.
There are areas which are still developing and there are no roads like Hopley, Ushewokunze and so forth – ZUPCO buses and small cars cannot reach there. In Warren Park, there is an area called Parkview and it is on the west of Cold Comfort; there are no ZUPCO buses that go there. People in Harare walk two to three kilometres from those developing communities where there are no roads. If you go to DZ, there is an area called Matombo. If you go there, you have to go to White House first and then you get a small car to get to that area. When you put in place the idea of bringing the ZUPCO, you did not do thorough investigations. I think the Government is putting in laws without consulting the stakeholders. Henceforth, there should be stakeholder consultation and the kombis crew have their associations because we do not see any stakeholder consultations taking place. When you are here, we are looking for laws for good governance but we do not see that taking off because there is no consultation going on.
Lastly, there is a group of people that we are leaving out from what the Minister has presented. We see that the economy is largely informalised but you did not mention anything about the informal sector. There is an assumption that the informal sector or vendors always cause chaos. Those who engage in the informal sector have an opportunity to look after their families. I have observed someone who has been working in the informal sector since 2000 and has managed to buy properties and is able to look after his family.
Our Government is not doing anything about the informal sector. They just see them as perpetrators of chaos. Last week the police had a meeting that there should be a war against the informal sectors. Right now our councils do not have support from the Central Government. The market stalls that we have were built by Smith. The present Government did not put up any market stalls. I think we should also look at what the councils are doing. They are now afraid of this exchange rate. A vendor is supposed to pay US$40 per month to the Harare City Council. This should be investigated so that this amount comes down to US$5 or US$10. This means that this was done without any consultation. For those who are using the constructed market, they are supposed to pay US$70. This is very painful. If you look at most people in here, they went to school because their parents were vending. Vending is not only in urban areas but also in rural areas. You find that farmers from Rushinga come and sell their wares in neighbouring towns. We want the Minister to explain to us what is the informal sector in Zimbabwe and how is it going to benefit from the plans that are there.
Thank you Hon. Minister for being brave – you know how difficult things are. All MPs are crying. When the Minister spoke, no one heard how the economy is going to be addressed but I am pained because for us to come with a way forward, I have seen that most MPs have left but this is what people are crying about from our constituencies. It was going to be good if many MPs were present so that when we go back to our constituencies, we would report that the Minister had addressed our issues. I do not know how the MPs who are absent are going to get responses from the Minister.
(v)HON. S. BANDA: Thank you Mr. Speaker Sir for giving me time to debate. We are here because of something that is not happening for the first or last time. We have had the Minister of Finance and other Ministers coming in with statements that are supposed to turn the country in the direction that we want. We once had a stabilisation programme which we thought was a success but it dawns on us to say that was just temporary stability. Permanent stability is not yet here. The problem that Zimbabwe is facing, whether we like it or not, which I want clarification from the Minister, concerns the cause of all these things. The cause of these things is not the economy, social or environmental; if we check PEST, the cause is political, there is no political tolerance. We do not listen to what sense is being said, we listen from which side it is coming from, who has got the power. We do not listen to what the minority is saying. Maybe the minority at the time may be representing what the majority voices are saying. Mr. Speaker Sir, what I want to find out is, is it the economy which is the problem or is it the politics which is the problem? Can we not have Ministers even from the opposition? Can we not have other people who are not necessarily political being made Ministers so that what we will come up with is not a politicised Zimbabwe but we have got a country where all of us share ideologies even though they are different? If we come up together, we are going to solve this problem.
As we speak Mr. Speaker Sir, Zimbabwe is not the only country where devaluation is occurring. Zimbabwe is among a litany of countries where devaluation has occurred. In those countries, they do not face the problems that we have now because we are not united. Each one is fighting and we are tearing the country into pieces. The indiscipline that is there right now is because we do not see eye to eye. If we were going to see eye to eye Mr. Speaker Sir, then that will be the end to our problems. I want to check with the Minister what the problem is. Is it politics or the economy? I thank you Mr. Speaker Sir.
*HON. CHIDZIVA: Thank you Mr. Speaker Sir for giving me the opportunity. I would like to find out from the Minister what will be done regarding the GEMS fund that was launched in 2021, which requires that civil servants are given loans. What is going to happen to civil servants who have been getting loans after the ban? I want to know whether there will be compensation for the contributions that they made.
I also want to talk about agriculture. We are in the winter cropping season and land preparation for the next farming season has begun. We know that our farmers rely on loans, so what measures are being taken to assist farmers who rely on loans? Let me also say that there is the Women’s Bank and the Youth Empower Bank which are there to give loans to young people and women. This decision Hon. Minister, do you not feel that it is a decision which is not fair to women and young people? A lot of citizens cannot afford to pay school fees, whether universities or secondary schools. With this decision, does it imply that our children should not go to universities and schools? How are you going to address that Hon. Minister? Thank you.
HON. T. MLISWA:The important issue I want to bring to the attention of the Minister is, the Government has been taxing in USD, which means they are sitting on a lot of US dollars. Why has that money not seen itself on the auction to support the auction? The auction is also imperative in driving business but the backlog is because they do not have money yet Government is sitting on that money.
The Minister was very clear in saying that we have dollarised, which is something that we are appreciating from him today that we are using the USD. My point is, why have we not allowed the bulls to fight and see which one stands the ground? You cannot have two bulls or more in a kraal. Here we have got the Zimbabwe dollar which is a bull and it is on home ground and we have the USD which is foreign as well in that regard. Of course, we have local young bulls emerging, ecocash, bond and so forth. Why can we not allow the bulls to fight and see which one wins and we are able to say we dictated the market or the rate was dictated by what happened and so forth.
We seem to be coming up with stringent measures because each time you take a bull in a kraal and it still wants to fight, it will come back and fight. It even would come back with more vigour but let them fight. I have always said the economy or the rate is like a river. Let it flow in its direction. If it would spill into the Zambezi, then that is fine. If it can create a meander which then goes into Zambezi, it will not have the same impact. So, that is what I was saying that Government must be clear and there is inconsistency in terms of the rate. One minute you want to promote the Zimbabwe dollar, the next minute the very same Government is taxing in USD. Why can we not just allow things to flow and at a certain point things will map up in the direction that they should and we will not have all these problems. Admittedly, there are policies that we must look at. We also cannot be stubborn in terms of the economy and in terms of the rate. I think it is time to introspect and revisit on why we cannot allow things to flow.
If you look at 2019, the bond was 1:2 or 1:3 if you remember that. It was strong and it was the Zimbabwean people who had access to cash. Africans by their nature love cash. They are not used to these electronic banking. The cash was available and it was 1:3. We then came up with other monetary policies that then erupted. It was a volcano that erupted and we find ourselves in this situation. I know you have been thinking but it would be good like Hon. Hamauswa said. What is the way forward and what have we learnt from all this, the good and the bad. Make it a package and we move forward. What can happen must happen and what cannot happen, then it does not happen and so forth but allowing things to flow. Thank you.
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): Mr. Speaker Sir, I thank the Hon. Members for their various questions, input and requests for clarification. I will start with Hon. Nduna. He first of all applauded the moves we have taken or the actions we have taken in dealing with the instability, especially the issue around public transportation, allowing duty free importation of new buses and transportation of vehicles under duty free regime. Certainly, he was serious about this. We want to end the woes on the public transportation.
On the issue of blog funds, I did come before this House to say that let us approve these blog funds and then we issue bonds with different maturities and then we have now begun the process of paying these blog funds beginning with amounts less than USD1 million on a payment plan which we are paying in cash. Obviously, for the bond amount, we will pay upon the expiry of that bond because these are zero coupon bonds.
On the issue of payment of contractors, I did mention that about a third is paid in hard currency and the remainder in domestic currency in order to control activities in the parallel market by some of the contractors. You also wanted to know whether we could do the same with some of the Government suppliers and so forth. Yes, some of the Government suppliers are part of the blocked funds portfolio and as such, their liabilities or assets will be liquidated in USD according to our blocked funds repayment programme. So I could give further information if there is a specific supplier that you wanted to know about how they are being treated. I am happy to share that information because it is meant to be public information.
Moving on to another issue on inflation that perhaps we should remove the USD completely, I think I heard this contribution from a few other Members. At the moment we cannot afford to do that because we do not have balance of payment support, unlike other countries which have access to balance of payment support – that is the first thing.
The second thing is that other countries are also able to receive donor funding through their budgets. Our donors have clearly said they will not route funds through the budget. They do it through third parties such as UNOPS and other implementation agencies such as UNICEF. So we do not have a balance of payments and support that would then improve the picture of our finance but at the same time we realise that there is a flow of ZWL into the economy through exports, various means, remittances.
So we decided that we will create almost a virtual or balance of payments in support position through the introduction of the auction system or some allocation mechanism which allows us to harness USD from the public and companies through surrender policy as well as 20% surrender policy domestically. Surrender policy 80% for exporters and then 20% for retailers.
We then channel that USD on to those who need them, being the exporters and so far the auction has managed to deliver on that fund where importers have been able to access foreign currency. I am afraid at this stage we cannot just shift to ZWL regime only. Also shifting to a full domestic currency only would mean from now on no one then should be allowed to use USD in the shops and it will be then illegal in certain situations to be holding foreign currency.
It would also mean that we have to compel exporting companies to liquidate their USD deposits in the bank. We would have to do everything that a normal country with a domestic currency does. If you go to South Africa or any other country in the region right now, you cannot buy in USD in the shops. Banks are required to liquidate your foreign earning within a certain period of time and that is it.
However, we recognised that we still need the USD, so we have to behave in a way that allows the USD to circulate, to be held in the form of savings in the way we have been doing things. It is too early to fully eliminate the USD but one day we will move towards a mono-currency. We have a road map of moving towards the ZWL.
Then on the issue of electricity tariffs due to Hwange 7 and 8 stations, I do not see a change in tariffs upward, something that has not been announced by the Energy Ministry. On the contrary, we expect tariffs over time to drop as we supply the utilities, we will be able to supply more electricity in the market. We hope that the coming in of independent power producers should increase competition and for tariffs eventually should fall – that is what we have seen in other countries where tariffs have been coming down gradually. We anticipate the same.
Then on fuel, that fuel is not reducing in quantity or price and that perhaps our fuel prices do not respond to global prices. No, they do. If we look at the formula from ZERA for calculation of fuel prices, the global price enters the formula through the Free On board Bulky (FOB) price which is fluctuating in line with foreign movements in the global oil prices. There is a link there and we have been adjusting the fuel levy to cushion citizens but also we have re-introduced blending for petrol. . It is a road to ameliorate the rises in the petrol prices specifically.
Now turning to Hon. Nyabani – pay cotton farmers so that they can grow more cotton, I agree with him. I think that we should make sure that these farmers are paid on time so that they can do more. We also need industry to invest more in processing lint seed oil in terms of edible oils. We have seen over the years a shift towards using soya but we need to use more cotton, sunflower and also maize at some point. We consume corn maize but in Asia, maize is the largest source of edible oil. It is not soya, it is not sunflower, it is actually maize. Therefore, going forward as a Government we are open to really supporting these other value chains for increasing the output on edible oils.
Hon. Nyabani emphasised that we should support the farmers all the time because also their produce is what constitute about 75% of inputs. As a Government, we will make every effort to support the growth of value chains within the agricultural sector.
On cross boarder smuggling that we should deal with it, enforce discipline and deal with corruption. Again, I agree with him and we are dealing with everything to do that. If we look at the border post that we are building in Beitbridge through a private partnership arrangement, we will really go a long way in reducing corruption with improved systems and security.
Of course there is still the border fence, I agree along the Limpopo, they are not easy to patrol the smuggling but we are doing everything to deal with it, rotating the enforcement agencies. They do not stay there too long otherwise they will engage in corruption so we keep rotating them right across our enforcement agencies including ZIMRA as part of the strategy. However, it is never easy to stamp out corruption in full at our borders. Every country struggles with this one.
Then from Hon. Biti, he basically argued that we need the force of law to have instituted the measures that we put in place. If you look at the Exchange Control Act, it gives powers to the President to use certain powers to do certain things within the Exchange Control Act regarding gold currency, securities in terms of transfer property, dealing with certain payments and also in the transaction in relation to debt. This pertains to Chapter 22.05 in Section 2 of the Exchange Control Act.
So, using Presidential Powers, a Head of State is able to institute a whole variety of measures that he deems fit to deal with certain irregularities in the economy. This is what happened in terms of this announcement that His Excellency the President made on Saturday - and I have presented the measures that he announced so that we can debate them and I will provide some clarification here and there, but also, I must hasten to say that issue about bank lending does not necessarily have to be enshrined in a special S.I. although Presidential Powers can be used for that. There is something called moral suasion which is recognised in the Banking Act which says that if the Central Bank, the regulator so designated to regulate banks, is able to agree with the banking sector that a certain action should be taken and they agree to that, it is called moral suasion. It is allowed in law and that is what happened.
In fact, the Central Bank met with the banks on Monday this week on the back of that moral suasion principle to agree to curtail lending and this is a temporary measure. A question has been raised as to why this measure was put in place. This measure was put in place because we had noticed it as a Government that what we call the monetary transmission mechanism had been broken or was being interfered with. The way it should work is that whenever monetary policies institute are pronounced, be it in the form made of an increase in the policy rate of the Reserve Bank, that policy rate should translate into a new lending rate by the banks on the back of which they extend credit and that credit should find its way into the real sector of the economy.
We noticed that this credit was now being diverted towards speculation and towards unscrupulous trading, speculation in both the foreign currency exchange market and also speculation in the equity market. So the transmission mechanism was being interfered with in a way that was causing incredible instability in the economy. So we had to act and sometimes we use blunt instruments for nuclear weapons and that is what we did in this case. We said let us stop all lending and let us make sure that when we resume after a temporary period, naturally as we have said, this credit is properly directed onto the real sector.
We are aware that some players were basically ending up heavily invested on the market or let us take some position on the stock market. Stock market rallies 400%, 12 months or whatever the liquid at those positions or whatever they chose to and then take the proceeds onto the parallel market and the cycle begins all over again. So we are aware of the sort of causal nexus between those markets and that is why we had to use this very blunted tough instrument to deal with misdirected lending to the extent that it was not following the normal transmission mechanism of breaking credit to the real sector as the main mission of banks.
On the issues around tax and not being within the law, the banning of banks, what we have done is that it is literally within Presidential Powers and there is enough provision for the President to be able to intervene in the way that he did. So there is no question of not being within the law. The law allows this and we had to prick that bubble of speculation through the action that we took. Again from Hon. Biti, he says that broking has been banned. It has not been banned. Brokers can still trade. I do not know if Hon. Members are aware of what is really going on here.
A broker will have a single account with a bank, a trust account. Once that account is established, then they will have sub-accounts in the name of their customers and no one can see those sub-accounts except themselves and maybe their auditors. So what happens is that whenever there are any trades in-between those accounts or to payment of third parties, sometimes you do not see real movement in the account that is held by the bank. It is all within the systems of the stock broker. This creates almost an internal banking mechanism which is subject to abuse and it was being abused by certain parties in the parallel market. That is why we had to say let us ban this inter-bank movement and payment of third parties because it is fuelling the parallel market but also fuelling money laundering.
Other countries have done the same to make sure that they really tightly regulate the behaviour of stock brokers. There is no question that they have been closed and can operate. We just want some order and transparency in the spirit of dealing with speculation and in stopping or curtailing money laundering.
On the introduction of the willing buyer willing seller window, why it was introduced – we have always argued and the Hon. Members here have always argued that we needed to improve the price discovery processes. We decided that one way to do it is to introduce this willing buyer willing seller window which we believe will go a long way in improving the price discovery process and even informing the auction as to where the price of foreign currency should be pitched. Of late, you have actually seen the auction rate rise at a faster rate than before, perhaps pointing to the fact that this maybe this smaller window; the willing buyer willing seller window is sending the right signals to the auction market for it to adjust. Certainly, the willing buyer willing seller window is a floating window because you express the price at which you wish to sell foreign currency but also express the price at which you wish to buy. So it is clearly floating already. So the call for a floating exchange rate has been met through this willing buyer willing seller basis window.
On ZUPCO, that Government needs to repeal parts of the S.I. that introduced the ZUPCO monopoly, that is exactly what we will do. We will repeal that aspect of the S.I. that imposes monopoly and then replace that with something that says it has been opened or just repeal it and that will be the end of the story but let me assure you that the openness principle is met.
Hon Mudarikwa talked about the need to curtail imports. I thought that more than 50% of the goods on our shelves are locally produced, which means that clearly local goods are having an upper hand compared to imported goods. I thought that was solved and I do not know whether we need to do more in curtailing imports.
If he feels that we will look into it and see if there is need to do more, you also wonder as well when prices are rising at this rate as to whether we should not be opening up for imports so that citizens can import cheaper goods so that you are not squeezed by the higher prices for the goods that are found here locally. That balance needs to be better understood and we will certainly look into it. He has raised the issue but we will also try to balance it with what I have just added.
Hon. Watson talked about the bulk of the transactions and domestic currency that is the figures that I have that the bulk of the transactions are in domestic currency but of course, agents are using the USD versus domestic currency for different reasons. USD is mainly store of value and the ZWL is mainly for transacting purposes, transacting fast and then going back in the USD. That is what is going on but the fact of the matter is, the bulk of the transactions are in domestic currency but, why is there concern about this? We have allowed for both currencies to circulate and so they are circulating. I do not see any difficulty to that. She also wanted to know how temporary the ban on lending will be. She is asking for a timeline and I cannot give a timeline as to when we will resume but I can assure you that our mentality is that this is a temporary measure. In other words, it is not a permanent measure but we will analyse the impact of it and make adjustments where necessary and certainly go back to lending when we have decided or find that the impact is more negative than positive. Those are some of the guiding principles of us than ban. Hon. Mutodi, basically said that I once mentioned that bad money drives out good money, so what has happened to that principle. What I can read into his mind is that if Zimbabweans are let us say preferring the US dollar which is what I am hearing, that ooh Minister, everyone likes the US dollar because US dollar is a strong currency , we have allowed it to circulate. Then maybe good money is driving out bad money. I am also not sure again what the argument was when repeating what I said. Also when I said at the time I was referring to the bond note. You also said that the bond note is in circulation, the bond note is not in circulation, what we have now is Zimbabwe dollar, if you check the notes that we have been issuing of late, there is no word bond note. It is clear Zimbabwe dollar, we have the Zimbabwe dollar that is circulating and we are pleased with this measure but we have both currencies circulating. So I do not know where the problem is.
Hon. Speaker, on clarifying measures put in place for dual currency to be restrained. The measures that we have announced are part of that where we want to make sure that this dual currency works, as I said we have no choice but to maintain it. The President’s statement was clear that we are in this partial dollarisation situation now of the dual currency and we are taking measures to make sure that it is successful because of necessity, we have to have it.
On measures that we are taking on retailers, what we have found out is that some of these retailers are in the retailing business, yes but there are also in the currency trading business. What they do, we are aware of retailers who were borrowing at the interest rate of 100 percent in terms interest rate. That is a high interest rate and then in order to pay that interest rate and still make money, they then push prices in their shops up so that at the end of the day, it is a consumer who really pays that interest rate and they make a healthy margin and they keep that game going. That is why we also said let us curtail this lending because this lending is not only causing problems into the stock market or power market rightly as I said but also the growth in this broad money, M1, M2, M3 is finding its way into retailers pushing up prices because of the low interest rate. 100% is basically about zero at the moment in real terms. So, that is going on and that is the reason why we said let us curtail lending to deal also with the behaviour of some of the retailers in the first place. May be we take too long to react, we have been announcing policies from time to time when we see situation changes, we cannot announce every week we have to wait and assess.
Again we are assessing the impact of what His Excellency announced and we advise him accordingly as to which are positive facts and negative facts. We will make adjustments but also we have more arsenal in our back pockets. There are three things which I wanted to institute which I had hold back on because we do not want to do too much, we want to do something and then wait and assess. Members should not think that we have run out of options, we still have more ammunition.
On how we are financing the road projects, we are using the budget and is that not fueling the parallel market; you know what, we have made a lot of progress here. Now half of our revenues are going towards infrastructure development. That is why we sustain growth and development. You have seen what we have done with the roads and other infrastructure. It should be like that, it was not like that; that was not right. We have 90% of Government revenues supporting salaries. Really to then complain that a successful public sector investment programme is not as successful is not correct, it is inconsistency.
Mr. Speaker, I did say that in managing the liquidity that is paid out to these contractors, we have a Liquidity Management Committee, we are smoothing it out so they do not push all of it into the parallel market, may be some of it but not all of it and then also at least a third is being paid in hard currency for those ticket payments for the dams. In fact, this week I signed a few, this morning I think I signed almost another USD12 million worth of payment to some of the contractors. Again we are managing this issue that they might go to parallel market but we should not criticize the fact that we have got these projects that Government is financing. We should applaud it.
On whether we are doing any economic planning or not, yes we are. The NDS1 Strategy is a five-year economic plan. The targets are very clear for all to see. A plan, yes, it can be revised and we have followed it to the T. I will be very happy to share the results of the implementation of that plan. I presented those to Cabinet about three weeks ago, in fact I think we should publicise it. I have the idea of a public engagement to tell the public as to how we are implementing the NDS1 targets and we have done very well overally as a Government in the first year of implementation, 2021. On competing for FDY dealing with political risk factors, as the Ministry of Finance, we focus on the economic issues and not political issues but I also do not understand what the Hon. Member is talking about. What are these political risk structures, I am certainly not aware, he could help us and explain what he meant.
I will now move on to Hon. Mliswa that Government has embarked on import substitution to support farmers, why not pay some of the farmers in foreign currency; well for tobacco and cotton, we have been doing exactly that but we would have to assess to see if we can afford as Government to expand foreign currency payments given the pressure we are already feeling in paying for infrastructure projects as well as salaries and other Government needs. We would have to assess that, so he has put that on the table, it is always good to have these proposals on the table. As Government, we then maul over them within the affordability envelope that we have.
On indigenisation, that repeal is not good perhaps we should have some indigenisation, when we repeal the Indigenisation Act, we only repealed the equity ownership element. The rest of the indigenisation measures are still in force. The whole Act was not repealed, it is only a portion which was repealed because investors kept telling us that we are not coming to Zimbabwe as long as there is that 51% rule, you have to do something about it. So, His Excellency responded through the mantra of ‘Zimbabwe is Open for Business’ which we then follow through with the repeal of that Section of ownership but the other empowerment provisions in the Act are still in force.
Then on the auction that it is causing rent problems, yes we are aware, that is how we have also worked hard to improve the price discovery process. In terms of the enforcement that was basically urging us to put in place and I agree that the Financial Intelligence Unit’s capacity has been beefed up. They are following on those who have been allotted foreign currency from the auction to really check if they are conducting businesses activities that they told us they are conducting when they were allotted that foreign currency. We are following up and we keep improving capacity of the FIU.
I think Hon. Mliswa also raised the issue of support for production and processing. You mentioned the issue of tomatoes in Mutoko, actually there is a processing plant in Mutoko now that has been put in place. We recognise that this is key, of course we need to do more for other products. I agree with him that we should do more and we will strive to do more as we seek to improve our value chain and value addition.
Hon. Togarepi applauded the actions we have taken but also urged that these remain short term, especially the issue around lending and of course we have said that this measure is a temporary one. Once things have settled, we will release the valve under the direction of the RBZ. He then asked about the source of the Zimbabwe dollars that are being used for speculation, actually we have tightened the supply of Zimbabwe dollars in terms of M zeros but where things were still loose - the growth of broad money is one of the reasons why we were compelled to take the action - we have taken in curtailing lending because it is now broad money that was adding to the parallel market woes. I mentioned the example of retailers who then used their access to broad money in terms of credit to use that having borrowed to push up retail prices and have the consumers cover their interest and they are still dipping the money and they kept going like that. We had to prick that retail sector price hike bubble as well. At least that was the intention and nothing else.
On the issue that - are we not exposed to money laundering, yes we are, hence these policies that we have taken.
On the issue of how we can encourage banking and foreign currency, of course one way is to further persuade the banks to increase interest in foreign currency deposits. That is one way. He mentioned that the USD is a risk for us to use domestically and that we should move away from the USD and imply that we must use Zimbabwe dollar only. We are not ready for that. We need to maintain the dual currency for now. We will get to a point where conditions are right, we have cleared our arrears and things have improved, we have credit lines opening up then we move towards a mono Zimbabwe dollar currency.
Hon. Moyo wanted to find out whether the prices in Malawi were higher than in Zimbabwe and this is in USD. Prices for fuel in Malawi for both petrol and diesel are higher in USD terms than in Zimbabwe as I speak. He talked about job creation, whether capacity utilisation increases have meant more jobs have been created. Yes, more jobs have been created. We are currently doing a job creation study to really get to the bottom of the numbers. Companies are telling us that they have been adding more people and new companies have been launched as well in the last two or three years as a result of the introduction of the Zimbabwe dollar which has improved their competitiveness.
He said that if we do not have foreign currency we should just dollarise. In other words, use USD only. We have been there before and there was a shortage of foreign currency. There were queues in the banks because there was a shortage of cash. Do you remember that moment colleagues? That is not a panacea. The panacea given our situation is dual currency but let us try to stabilise the situation to make sure that prices do not behave in the manner they are behaving. The exchange rate does not behave the way it is behaving.
Hon. Dr. Mashakada mentioned the issue of supporting value chains in line with NDS1 focusing on production and productivity and that curtailing lending is going to impact that and this will work against these pillars. As I said, this is a temporary measure. We will analyse it and see when we can lift it but we have to prick the speculative bubble that had emerged. He said most of our problems are caused by the exchange rate volatility and that we should allow it to freely float. That is what the willing buyer, willing seller window which is meant to improve our price discovery is meant to do and we are on our way there, if not there already.
He went on to say that the Zimbabwe dollar is not a store of value and what measures should be taken. I actually repeated the measures that were announced by the President including previous measures that were taken. So, measures are being taken to try to stabilise our currency and improve its value storage function. He was correct that M zero growth has been curtailed but broad money M1 has been rising. That is why we have taken the action that we have taken to curtail growth in broad money. He is also correct that in terms of the CPI, the weights are changing and we need to look at that and see whether we can also change accordingly that food inflation is no longer as heavy in terms of weight as before as other items have taken over. We also want to make sure that this change is not temporary. We need a sense of certainty. We do not want to change your CPI weighting now and then next month again you change it. You need some stability and we are analysing this issue. We are looking into it and he correctly identified it.
Hon. Markham on the issues around ease of doing business that some of these measures are in fact discouraging exports and so forth. We have seen growth in exports, as I mentioned up to USD6 billion in 2021. Something is going right. As I said these are policies that were put in place to deal with the speculative bubble and we take a look to see whether we need to fine-tune somewhere to make sure that our export drive is not curtailed. Judging by the 2021 figures, it is something that has worked very well because we have an increase in export growth.
He went further to say the problem is really the fact that we have a runaway exchange rate. Yes, that is why we have taken these measures. As one Hon. Member noted, he noticed that in the parallel market that rate has been kept and started coming down. We wanted to really do. That was the intention actually.
Regarding ZUPCO and GMB monopolies that these were detrimental and contributing to certain woes in the market, that is how we have opened up. We have lifted the monopolies and we would be following up with an appropriate Statutory Instrument (SI) to make sure that private operators can operate.
On GMB, GMB is a fund which is an instrument of Government for basically making sure that we have enough food and enough reserves going forward. It is also pleasing that insurance role – I do not think we have got many on GMB frankly but what it is, we have also opened up the market on the pricing aspect. We have introduced a commodity exchange which is not quite enough as such, but it will get bigger and improve as we go forward. For now, we have also said that anyone who has free funds can import grain. There is no problem there, it is not a monopoly of Government through GMB and others but any citizen or company can import grain. We are not monopolising that at all I can assure you. As I said, the SI regarding ZUPCO monopoly is on its way.
On the issue that the salaries are being eroded by the parallel market, we are aware of this. That is why again we are taking this action to stop the parallel market from running away because we are aware that retailers are using it in terms of setting prices on the shops. That is why we have also decided as a Government to pay part of the salaries of civil servants in hard currency and also part of the salaries for Members of Parliament in hard currency. Of course we will continue to increase as resources of Government allow but for now, we have acted because we are aware that inflation on the parallel market erodes the salaries.
Hon. Munengami said the ordinary person used to buy cooking oil at US$2 but now they are buying for US$5, why is this happening? You see one of the impacts of the global situation is on the increase on cooking oil. That is what is going on because some of this cooking oil is made from soya and so forth which are imported raw materials. So this increase in price globally is impacting the price of cooking oil locally. So, when we see inflation in the shops, it comes out on two things; foreign factors but also local factors. Those together are working against us. That is why we are also taking the action that we have taken.
Hon. Mokone, prices in shops are now higher, salaries are falling, I think I have dealt with the issue of salaries sufficiently. – [AN HON. MEMBER: But salaries are not increasing.] - No, no, we cannot increase salaries every week, we have adjusted salaries already. We are looking into it. We have a programme for salary reviews. We cannot break our programme, we need to be orderly.
Hon. Mkaratigwa, irked that measures being taken on shares are a cause for concern – ah! no, our intention was to click the bubble – so if what we are hearing that the market has lost or dropped by Z$3 billion because of the measures, that was the intention because there was clearly a bubble that asset price inflation, that is what it is called, asset price inflation was a problem that was linked to the parallel market and inflation in real goods and services in the shops. Hon. Mkaratigwa also mentioned that we should may be, be more targeted, I am using my own words now, but he used the word discriminate and so forth, more targeted and so forth, I think here he was referring perhaps to the ban on lending, et cetera. Once we have lifted the temporary ban, we will be more targeted but for now, we had to act using this blunt nuclear weapon instrument but we will be more targeted.
Hon. Hwende, allow for loans that would have been approved to go through and that it should not be suspended. This is exactly what the Reserve Bank of Zimbabwe announced that for loans that are already in progress or concluded or about to be concluded, they need to use a case by case approach for each bank to have these approved. That is what we will do. We will not do a blanket approval because we have to check as the regulator that we have so designated that these loans are really bona fide and targeting the real sector and sectors of need and not supporting speculative activities.
Hon. Hwende, on the civil servants’ salaries, he said that Minister, you said that you have a surplus, why do you not use it to improve salaries; actually what I said was last year in 2021, there was no surplus. Actually there was a deficit of Z$64 billion. So, there is no surplus in 2021. Surplus was the previous year which we then used to procure vaccines and the vaccine that he took, yakapinda kwaari yakabva kusurplus. So we used it wisely, this surplus of the previous year.
Hon. Madzimure, he mentioned middle income status is being eroded by the parallel market and inflation. He is right – [Hon. Togarepi having whispered to the Minister that he had only 10 minutes to automatic adjournment] - I am 10 minutes away from automatic adjournment, let me speed up. Of course they are threatening our growth, our development, that is why we had to act. So he is stating what we have also recognised that these volatilities are causing a threat to our development agenda. So we had to act that we empty $6 billion, literally he is implying where is this money going and so forth. Remember, this money belongs to the companies not Government but for us it is a macro-economic indicator of valuable of success. Some of this money is sitting in the banks, it is part of this US$1.5 billion which is in bank accounts and it is not Government’s money. We have no interest in it. We just wish that we will be lending more of it when we lift temporary lending. It is our hope that we will only benefit through this sector but it is not our money. However, we celebrate the success of the private sector because they are part of this economy, the largest part of this economy after all.
Connection between utilisation and job creation are dealt with. There is a connection, jobs are being created. We have just seen the jobs starting to verify certain things on ZUPCO. You also said that we ban ZUPCO before we benefit and so forth. When we created the monopoly for ZUPCO, the idea was to give citizens lower fares for transportation and this was achieved. Citizens were able to enjoy lower fares, riding ZUPCO buses than otherwise. That was achieved but we have a different challenge, which was that we had constrained supply of these buses, so we had to open up. That is what exactly we have done. We certainly responded.
Then I turn to Hon. Chidziva, I think on price increases both in US and Zimbabwean dollars, why? As I said that if you look at most of these US dollar price increases, they have to do with the global connection. The fact that we are importing global raw materials, we are affected by the global situation which is leading to imported inflation that impacts both US dollar and Zimbabwean dollar prices. We should pay the CDF in US dollars, it is food for thought. It depends on the availability of the US dollars within our budget of course and I am saying that at the moment, we are still constrained but it is a proposal that has been put on the table nonetheless.
From Hon. Hamauswa who talked about the social impact of mining, companies and so forth, EMA has a role here and they should be informed. I hope that the Hon. Members have reported this case to EMA, police and everyone. It looks like death was even invoked, it is quite a serious matter actually and I agree with him. The 10 percent ownership in mining will not solve this problem; this is just eliciting behaviour issue that should be dealt with, with or without ownership. If the community gets 10 percent, it does not improve this kind of situation, I really do not think so. On ZUPCO, yes that is where we have removed the monopoly, we have responded. The role of the informal sector, we recognised and we are doing everything to support it through our SME policy run through the Ministry responsible for SMEs, including building market stalls and so forth, it is an ongoing programme.
On Hon. Banda, the issue of economics or politics, well Minister of Finance deals with economic issues that is what I am dealing with, I am not sure that it is a political issue that is why we are dealing with the wrong policy here. On the games fund, I cannot recall who asked that question, I remember it is Hon. Chidziva, I mixed up the names. It has to do with phones. When I was reading the names using someone else’s phone, that is what happened. Ndimukanya Mr. Speaker Sir, I recognise. On the GEMS fund which is a fund meant to support civil servants; this is ongoing, civil servants are able to borrow from that fund, and they have not been curtailed from borrowing from that fund. I know we need to replenish it to increase its capacity and I have asked my team in Treasury to find resources and replenish it but this has not been stopped, it is still ongoing.
THE TEMPORARY SPEAKER: Hon. Minister please round up.
HON. PROF. M. NCUBE: Support farmers, I agree and in fact farmers are going to receive special dispensation in this suspension of lending whether it is cotton, tobacco, maize farmers, they will be looked after properly in terms of access to funds even this temporary suspension of lending.
Lastly, Hon. T. Mliswa, we have issued safety measures and we access how they are working if we need to fine tune, we fine tune, if we need to introduce new measures, we introduce new measures but for now, we have dual currency, we will continue with it. We use the phrase of two bulls fighting, let them fight and see who wins. They are fighting right now in this jewel US and Zimbabwean dollar are fighting and the bull fight his on and of course over time, we want to make sure a policy that Zimbabwe dollar becomes the sole mono-currency for use in our economy but that will take time. I thank you.
On the motion of THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE), the House adjourned at Six Minutes to Seven o’clock p.m. until Tuesday, 17th May, 2022.