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NATIONAL ASSEMBLY HANSARD 23 June 2016 42-71

PARLIAMENT OF ZIMBABWE

Thursday, 23rd June, 2016

The National Assembly met at a Quarter-past Two O’clock p.m.

PRAYERS

(THE HON. SPEAKER in the Chair)

MOTION

BUSINESS OF THE HOUSE

THE MINISTER OF HEALTH AND CHILD CARE (HON.

  1. PARIRENYATWA): I move that Order of the Day, Number 1 be stood over until all the Orders of the Day have been disposed of.

Motion put and agreed to.

MINISTERIAL STATEMENT

CHALLENGES IN WORKING RELATIONSHIPS BETWEEN

MEDICAL AID SOCIETIES, AHFoZ AND PROVIDERS OF

HEALTH CARE SERVICES

THE MINISTER OF HEALTH AND CHILD CARE (HON.

  1. PARIRENYATWA): Thank you Mr. Speaker Sir. Yesterday I promised that I would make a Ministerial Statement on the situation and challenges between the health insurers and health care providers and the way forward.

Hon. Speaker Sir, of late you have heard, largely through the media, of challenges in the working relationships between medical aid societies and representatives of individuals or by the Association of Health Care Funders of Zimbabwe called (AHFoZ) and providers of health care services particularly doctors as represented by the Zimbabwe Medical Association (ZiMA).  The challenges as seen from the providers, that means the doctors and others, arise mainly from the following areas.

  1. There have been disagreements over tariffs for various areas of service provision.
  2. Payment by insurance to providers based on the insurers preferred tariff rate.
  3. Delays in meeting payment for services rendered.
  4. Referral of clients by insurers to preferred networks of providers in their clinical and laboratory facilities.
  5. Conflict of interests by insurers by way of building, owning and running medical and dental clinics, hospitals, pharmacies, laboratories, radiological centres, rehabilitation units, optician clinics and other related health centres.
  6. There has been disregard of gazetted fees by the insurers.
  7. Unfair and crippling taxation and recovery practices by ZIMRA based on claims lodged by providers to insurers which claims are yet unpaid and outstanding at time of taxation.

I will now go to the challenges as seen from the insurers and this is  their own perspective:

  1. There has been disagreement over tariffs for various areas of services provision.
  2. Charges by providers that are way beyond what the insurers can afford.
  3. Demands by providers from patients for cash payment upfront while the clients are holding valid insurance cards.

So, discussion on the above mentioned issues, some of which are  now long standing in nature have been ongoing albeit very slowly with a resultant near stalemate situation.  Last week, ZiMA announced that they will, with effect from the 1st July, 2016, stop accepting medical aid cards and charge cash all patients seen by their constituency.  The trigger situation to this is the taxation and subsequent garnishing of providers’ accounts by ZIMRA for tax obligations which are deemed due based on the act of submission of a claim by a provider to an insurer regardless of whether this has been paid or not.

Providers claim and having in some instances provided a proof that their claims usually remained un-paid for periods in excess of the statutory 60 days and sometimes for periods of up to 6 months or more.  Resultantly, providers felt they were being taxed for what they have not earned.  Clarification with ZIMRA indicated that ZIMRA was acting within the law and the challenge was in fact between the provider and the insurer and could therefore not absolve providers of the obligations for taxation; its timing, the resultant default status and the garnishing of accounts thereof.

To get out of this technicality and its consequences, the providers then decided on resorting to cash charges as announced until such a time that their insurers where ready to meet their obligations in a timeous manner.  This situation will obviously disadvantage and stress the client who is rightfully insured but has to be exposed to out of pocket expenditures.  As a regulatory authority, my Ministry called for an urgent meeting to resolve the looming crisis and we had a marathon meeting of three and a half hours to prevent further deterioration of the situation.  An important stakeholder, the Minister of Finance and

Economic Development, Hon. Chinamasa, was present at this meeting.   The matters detailed as before were tabled and discussed.  We all realised some issues needed more time and further engagement but we sort to immediately avert the potential crisis that will be ushered in by the cash up position.  We therefore implored ZiMA to give engagement more time.  The Minister of Finance and Economic Development would look into how the taxation timing issue could be handled and the insurance were going to scrap the preferred provider approach and for those in arrears to work towards a framework to pay for claims within the statutory 60 days.

Both the providers as represented by ZiMA and the insurers as represented by AHFoZ as well as individually for some sort to reprieve to feed back their constituencies and revert to me with agreed positions on the proposed way forward.  The discussion during which we all agreed on the need to protect the interest of the innocent client and patient were candid and frank.  I am optimistic that ZiMA will give due consideration to our plea and I expect feedback on Monday, 27th June.  We also agreed and committed to meet more regularly and address all the contentious areas methodically, including the regulatory provisions to address some grey areas not well articulated in the current Statutory Instrument.

To this end, my Ministry has embarked on the process of crafting a Bill for regulation of medical aid societies. The principles have been passed by Cabinet and the drafting process has started.  We will consult widely in that process.  I will keep this august House updated.  I thank you Mr. Speaker Sir.

HON. P. D. SIBANDA:  Thank you Mr. Speaker.  We also want

to thank the Minister for the statement.  In his statement, the Minister appears to be getting towards a solution.  However, I just need some two clarifications.  Firstly, why did the situation have to deteriorate to the level where ZiMA have threatened not to accept medical aid cards whilst you were there?  Were you not informed or privy of the situation that there was disagreement between the insurers and the health providers? –

[HON. MEMBERS: Inaudible interjections.] –

Secondly, you seem to indicate that part of your solution is that insurers must meet their obligations within the statutorily provided timeframe.  How will the insurers be able to do that looking at the fact that most of the employers including Government is not remitting the deductions that are taken from members to the insurers?  How then do you expect the insurers to meet their obligations on time?

*HON. CHINOTIMBA:  Thank you Mr. Speaker. Minister, I

heard you say that the Ministry wants to develop a policy.  I wanted to find out how long it will take for them to develop that policy?  What measures have they taken into consideration in order to expedite the process?  How long will it take to craft the policy because people are suffering?  That is what I would like to understand, since he mentioned that he wants to develop a policy to ensure that it does not deteriorate to a situation that was referred to by Hon. P. D. Sibanda because this is now an effect of what happened. So, how long will it take because Members of Parliament from both sides agreed that, yes, people are dying and we expect you to expedite that policy and I do not think any of the Members of Parliament will be against this policy. We want that policy crafted as soon as possible.

HON. ZIYAMBI: I need a clarification on the issue of ZIMRA and our medical doctors. He spoke about ZIMRA requiring payment on claims that have not been paid and I think it is an issue that can be resolved urgently because under the current economic environment, you cannot expect a doctor who has not been paid to go to the bank to get a loan to pay ZIMRA when he has not been paid.  If it can be addressed quickly, maybe our doctors can work and allow the other issues to be resolved in due course. He did not clarify exactly as to what was the position of the Minister of Finance and Economic Development and ZIMRA in that regard because I think that is an issue that the Executive can take up and make a resolution quickly.

HON. P.D. SIBANDA: When we do budgets in this august House, normally we prioritise as Members of Parliament health delivery and the education sector. I want to find out whether you are being allocated the monies which you are supposed to be allocated in the Ministry. What do you prioritise on because now, this is affecting or costing the nation?

HON. HOLDER: I just wanted some clarification from the

Minister of Health and Child Care regarding the subscriptions that are contributed by individuals to Medical Aid Societies. For instance, civil servants and Members of Parliament know that Treasury through SSB, deducts medical aid contributions – is the money going to the medical aid companies or not? Secondly, is it true that Parirenyatwa Hospital for sometime was not accepting PSMAS medical aid cards. I just need a clarification on that.

HON. DR. MASHAKADA: Thank you Excellency, for this

opportunity.

THE HON. SPEAKER: Did you say Excellency?

HON. DR. MASHAKADA: Yes.

THE HON. SPEAKER: That title is used in the Middle East and West Africa. The Honourable Speaker is Honourable Speaker.

HON. DR. MASHAKADA: Mr. Speaker Sir, first I want to thank

the Minister for his wise statement. We all know that he is a registered medical practitioner but he has risen above that interest and showed that the statement is really balanced. I want to thank him very much for his balanced statement but I have some clarifications that I am seeking.

The first clarification is that normally when ZIMA and AHFoZ fail to agree on a particular tariff the practice has been that they agree on a temporary co-payment which will be paid by patients over and above the acceptance of the medical aid. In this relation, can the Minister help the two parties to agree on a reasonable co-payment which does not hurt patients in order to break the impasse?

The second question is, I do not know what is wrong with Medical Aid Societies investing in the economy, for example, building clinics, hospitals and pathology facilities because it is an investment which helps the public sector that cannot provide these services. So, if you have got funds that can be invested to build those facilities, it is better because it will serve the nation. You find that some Medical Aid Societies will actually abuse membership subscriptions but if they can invest in medical infrastructure, I thought that is helping the country as a whole.

The other question is, is the Minister aware that doctors also through ZIMA, have not helped the situation. At times, they have been pushing up the costs of medical aid because they have been over servicing clients. That practice of over servicing clients to maximise on their earnings has to be investigated. You find that a patient can go to a doctor and present himself or herself with flu symptoms but what the doctor does now, is to prescribe a lot of unnecessary medicine on a simple symptom like flu. It is a rampant practice –[HON MEMBERS: Inaudible interjections.]- Hon. Dr. Parirenyatwa will know what I am talking about. So, I think you can educate us on that trend. I thank you.

HON. MLILO: It is good to note that our Minister of Health and Child Care is taking action with regards to the worsening health woes in the country. I would like to applaud him for that. I would like to believe as well that the measures he is prescribing are more of long term. In the interim, what is it that your Ministry is doing to create an ease of access to health facilities for these people that are on medical aid and at the same time, what is the Ministry doing to decongest the already congested hospitals because most doctors are now turning away patients and they are ending up going to seek attention in Government hospitals. I thank you.

HON. S. CHIDHAKWA: Honourable Minister, you talked of the

disregard of approved tariffs and indeed, this has been going on for a very long time. Is that not a criminal offence? Certainly, it is and what are you doing as a Ministry to try and protect the public?

HON. MARIDADI: Thank you Mr. Speaker Sir, I was worried because I am the mover of this motion. I wish to draw …

THE HON. SPEAKER:  What is the worry about; I have recognised you and you should be very happy.

HON. MARIDADI:  I was worried because it was too long in coming Mr. Speaker Sir.  I want to draw the Minister’s attention to a number of issues.  Firstly, can you explain to us the cost structure of health delivery in Zimbabwe in relation to other countries?  I say this because I have heard that the health delivery cost in Zimbabwe is very high as compared to other countries.  I would like the Hon Minister to address that.

Secondly, I also want to refer the Hon. Minister to issues of antitrust laws and conflict of interest as well as competition because when the Minister gave his statement, he raised a number of contentious issues.  One of them is that there are preferred service providers by health insurers and those health providers are the people who own those health provision facilities.  That is a matter that was raised by the Minister and was also raised in my interview with the doctors.  I would like the Minister to address that.  My solution however is that, because there is disagreement on the tariff to be paid by the insurers and tariff that doctors accept, can you not then find specialists like actuaries who can look at the tariff and come up with a win-win situation for both the doctors, medical insurers and the general public.  There are so many people that are keen to help the Ministry in this country.

Lastly, the people that I am talking about are players in a football match.  The most important person in a football match is the man in the middle, the referee who in this case is the Minister.  With all due respect, Minister, you must always be on the ball.  We do not want the situation to deteriorate.

THE HON. SPEAKER:  Order, order Hon. Member, just a minor

reminder.  Our Standing Orders advise that we refer to the Ministers as

Hon. Ministers all the time.  Thank you.

HON. MARIDADI:  The Hon. Minister is the most important

person in this whole issue because he is the referee in terms of gazetting tariffs, adherence to the tariffs and calling to order those that disregard tariffs.  The Hon Minister is the man in the middle and he must continue to play his role.  Thank you Hon. Minister, Dr. Parirenyatwa.

HON. MUNENGAMI:  Thank you Hon. Speaker Sir.  Just to remind you that it is Munengami and not Muvengami.

THE HON. SPEAKER:  Oh ndicharipa.

          HON. MUNENGAMIMondisimudzawo kakawanda musi

wechitatu semuripo wacho. - [ Laughter.] -  Thank you Hon. Speaker.  I also want to thank the Hon. Minister, Dr. Parirenyatwa for the statement.  I, however, want him also to take note that because of the bad relationship which has arisen between the doctors and the medical aid societies, the situation has reached a point where the percentage which the medical aid societies are paying to the doctors – I will give an example of PSMAS.  They may have received 1% from Government and instead of them paying 1% to the doctors in a balanced and fair manner, they have reached a stage where they just pay their preferred doctors instead of ensuring that each and every doctor gets the same amount.  Currently, what is happening is that if there are two doctors at a certain place, one doctor is paid by the same service provider while the other one is not paid.  This has reached a stage where those doctors that are not being paid have to pay like 10% for them to get their own payment.  This is the situation as we speak.  So, I think it really needs your urgent intervention.  I just wanted him to take note of that Mr.

Speaker Sir.

HON. CHIMANIKIRE:  I would also like to thank the Hon.

Minister for the timeous statement that he has given to this House.  However, talking to some of these doctors, you get worried.  I would want the Hon. Minister to clarify what remedial action is going to be taken because some of these doctors have had their houses auctioned by ZIMRA.  Is there any means of recovering what they have lost due to penalties coming from ZIMRA over issues of unpaid taxes where they have not actually been paid what is due to them?

Secondly, I just want the Hon. Minister to inform the House whether we have recovered anything from Cuthbert Dube and his board, over issues of overpaid allowances because I have not heard that mentioned anywhere.  This is where the whole story started and failure to pay the doctors was because the board was actually feeding its pockets and not feeding the service providers.

THE MINISTER OF HEALTH AND CHILD CARE (HON.

  1. PARIRENYATWA): Thank you Mr. Speaker Sir. I would like to thank all the Hon Members for their very pertinent questions regarding this issue.  The first question came from Hon. Sibanda on where we were when this crisis was brewing?  I think the simple answer is that medical aid societies and the doctors have been talking since
  2. I remember when I was a practicing doctor myself, there was the National Tariffs and Liaison Committee which really addressed the issues between doctors and medical aid societies. So, this is not a new issue.  It has always been a brewing issue.  It needs appropriate legislation.  What is happening here is that, in the Ministry of Health and Child Care, it is very difficult to apportion certain people to just look at medical aid societies.  What we need is an Authority that oversees, regulates and has a full time job to look at medical aid societies vis-à-vis doctors and other providers.  So, this is a brewing problem which has been on and off.  We have been negotiating and last year we put a gazetted price.  The doctors wanted to be paid $60 while the insurers wanted to pay $21.  In the end we gazetted $35 and this is the amount that is still there now.  So, it is not that we have been away but we have been negotiating.  Unfortunately, once the two parties do not agree, they do not agree and that compels us to come up with a rate that we then gazette, which we have done but still is causing its own problems.

The other issue that was asked was on the Government’s obligation to pay certain medical aid insurance their quantum.  Government is supposed to pay to medical aid societies, particularly to Premier Service Medical Aid Society (PSMAS), which in turn pays the providers.  This has not been easily forthcoming, it has been problematic but continued negotiations between PSMAS and the Ministry of Finance and

Economic Development are ongoing, considering the economic crisis that is there now.

Hon. Chinotimba wanted to know how long it will take to craft this Bill and make it into law.  Let me say that, five weeks ago, the principles of the Bill were accepted and passed in Cabinet.  We now have got a draft in place that will be circulated to all stakeholders, including yourselves Hon. Members, to give input and it will then depend on that process.  Once that process is done and we want it done quickly.  I will try to find out from you, Hon. Members how we can expedite the Bill to become an Act so that it is effected in good time.  In the meantime and this has been asked again that in the meantime what are we doing?

What we are doing is clearly to say if medical insurers and providers can agree on a new tariff that is affordable to the medical aid societies and acceptable to the providers.  If you can accept that and make sure that once you accept it you are then able to pay the providers regularly, timeously and you have agreed between the two of you, there is no need for us to Gazette, we will take the new tariff.  We are trying therefore, through our negotiations, to make sure that there is some agreement, some rapprochement where the two can agree and come up with a reasonable tariff so that the patient does not have to suffer a copayment.  As it is now, when we say $35.00 the insurers are saying we will only give you $20.00 so the patient must pay $15.00 up front and those co-payments are unfair to the patient and this is what we are trying to sort out.

Hon. Ziyambi Ziyambi talked about ZIMRA.  Yes, it is true, it has really compromised a lot doctors and I think it touches on what you said Hon. Chimanikire.  What has happened is when a doctor sees a patient and fills-in the medical aid form, that form goes to the medical insurance.  It is a claim that the doctor has made but he has not yet received payment and ZIMRA was garnishing the money at that point.  They were now saying no, no, no because you made this claim, we are going to take tax from that.

On Monday, when we sat with Hon. Chinamasa, he clarified that it is supposed to be done annually and not per every claim.  Then the doctor should be able to say what were their losses are, which claims were paid and which were not paid then you have a realistic sum which is then taxed there from.  During the meeting Hon. Chinamasa actually allocated an officer to work with the doctors, so there is now already a liaison between the doctors and the Ministry of Finance and Economic Development.  I think that the issue of ZIMRA, for that purpose, will be sorted out.  I am not sure how the issue that you mentioned about the garnishing and selling of houses can be sorted out.  Perhaps there are other people who are more qualified to define how that can be sorted out.

Hon. Sibanda you asked about the allocation of money to the Ministry of Health and Child Care.  I must emphasize again that we are getting from the GDP, an average of 7.5%.  The stipulation the world over and what was agreed by Africa at the African Union was that 15% of GDP should go to the health delivery system, then we prioritise.  Our priority has always been prevention, prevention and prevention in all its forms and of course to look at the human resources for health, drugs and medicines, communication - including transport and ambulances, disease burden including HIV, Malaria, Tuberculosis (TB) and of course to look at the non-communicable diseases - those are our priorities and that is how our allocation should be.

We are saying to ourselves, this issue has been touched upon about how are you going to alleviate the congestion?  Maybe I will come to that one later on.

Hon. Mashakada you talked about the issue of co-payments, that if

Zimbabwe Medical Association (ZiMA) and Association of Healthcare Funders of Zimbabwe (AHFoZ) do not agree then there will be copayments.  This is what is happening now and we do not like copayments at all, because they make the patients suffer.  The patient has already paid their insurance, now they go to the doctor and they are asked for more money.  We think it is unfair to the patient.  So as far as we are concerned, we were forced because they did not agree, we were forced to put up a tariff as a Ministry and regulator, but again it is giving its own problems.  Again we hope that they will break that impasse by some agreement and I hope that when they come on Monday, because when we parted on Monday the doctors and medical insurances were going to meet under the National Tariffs and Liaison Committee and I hope that on Monday we will have good news that they will have agreed on some way of breaking this impasse.

Hon. Mashakada you also say what is wrong in the medical aid or medical insurance investing into businesses like hospitals, clinics, pharmacies, laboratories and others?  This is a very contentious issue among healthcare providers themselves.  The healthcare providers are saying if you take a specialist Urologist, for example he is saying look, I have trained for this, that is my core business and I do it with the passion that I have.  Now the medical aid comes in, they do not actually have money invested elsewhere, they take money from the clients and that is the packet they make.

After that now, when people are paying their money, instead of that money being benefited into the medical industry, what they are doing now is to say right, as a medical insurance we are now going to put up a pharmacy, so we prefer our clients to go to that pharmacy.  Those pharmacies that are not under that are then compromised because even payment will be preferred to those pharmacies.  So there is thorough conflict of interest that you are an insurance that is giving money to a provider and yourself as a provider – there is that conflict.  The Bill that we are crafting seeks to address that issue of conflict and I am certain that the issue that you are saying is an investment is well accepted but how can the medical industry benefit from that investment without bringing in conflict, so that is where I think we are.

The issue of over-servicing of clients, yes, it is a thing that I think we have said there should be an appropriate audit.  It is true a lot of medical aid societies have put up what they call, managed healthcare.  They actually have their own doctor who then monitors what other doctors are saying or doing, then they say you are over-servicing here.  This person came with a cough and you instructed them to return in three days with the same condition.  Why did you not refer or do something else?  So I think it is a fair issue but I think it is being addressed by the insurers and doctors themselves as part of ethics.

Hon. Mlilo, what is the interim measure?  I think I have already touched on the doctors and medical insurers.  Then you say how are you decongesting hospitals?  What is the Ministry doing?  What we are doing, and I have said this before - that if you look at Harare, Bulawayo, Gweru, Mutare and all the provincial hospitals are congested.  A lot of them do not have district hospitals like Parirenyatwa and Harare Central hospitals.  So a patient is seen at Budiriro Clinic and if it is a challenge they are immediately referred to Harare Central hospital because there is no interim or middle hospital where they can be treated.

So what we have done is, and we have already started in Mabvuku

Polyclinic, to say look at all our Polyclinics in the country, whether it is

Ascot in Midlands or Pelandaba in Bulawayo all those Polyclinics or Kuwadzana Clinic.  When you go to that clinic now as I speak, if you walk into that clinic, you will find that the services that they are providing are very and I am saying this word with a lot of respect, are very basic, I will say basic because they could do a lot more.  Those Polyclinics could do a lot more.  Instead of mwana anenge awonekwa paHighfield Clinic akaminyuka ruwoko pane kuti mumutumire kuHarare hospital for an X-ray, because that is the only other place where they can go.  Ondosvikoita queue up for just a fracture, “onoita queue up kuti aitwe x-ray paHarare Central Hospital.”  We are saying no, no, no, Budiriro Clinic should have X-ray machines, laboratory and a Doctor who stays there full time. That is how we are de-congesting and trying to assist.  This we will do in the rural areas as well so that we are able then to say we have built up capacity.  We cannot just say we cannot do it because there is no capacity.

In the rural areas, the same thing should happen.  We have got district hospitals that are surrounded by clinics or health centres.  We are now saying from the health centre, we must go to the villages and build up village health posts.

Hon. Chidhakwa I must apologise, I did not quite catch your question.  You said something about disregarding of tariffs.

HON. S. CHIDHAKWA:  You talked about some doctors

disregarding the set out tariffs.  My question is, is that not a criminal offence?  Why are those people not being arrested?

HON. DR. PARIRENYATWA:  If you ignore what we gazette, for example if what we gazetted was $35, and is not being honoured, that is a problem that should be addressed.  Yes, it is a big challenge.  Hon. Maridadi, you talked about the cost structure in the country.  It is true that our health services in the private sector are extremely high, even the drugs here are much more expensive than in other countries and this is reflective of our whole economy.  So I think you are right.  It is very painful for us and particularly for some of us in the Ministry to send a patient to India to get a prostatectomy done when it can be done here. We can remove a prostate here but we are sending people to have a prostate removed in India, which is much more expensive.

Therefore we are saying to ourselves let us just resource our health services a bit more, get personnel who can work in those institutions and are adequately remunerated.  We can then be able to say to ourselves we can do more services to our people.  You are right, the cost structure in the country is very high.  The anti-trust laws and the Competition Commission – this is all being looked at.  I think you are right about actuarial assessment of tariffs.  This is what we have agreed on with doctors and the service providers that we cannot come up with a tariff from nowhere.  We have agreed that there should be an actuarial determination of tariffs.  However, that is long term, we wanted an immediate solution and the actuarial assessment of tariffs is coming in.

Hon. Munengami talked about the relationship between doctors and medical aid societies.  We have said it is not right for medical aid societies to channel payments to preferred doctors.  That is one of the things that the doctors mentioned.

Hon. Chimanikire, I have already said I am not sure how to manage the issue of remedying the issue of auctioned houses.  You finally asked about the issue of Cuthbert Dube.  This is part of the audit report that has come up and I think it would be a follow-up from the audit report.  Thank you.

*HON. MUZONDIWA:  Thank you Mr. Speaker.  Minister, I heard you talking about Cuthbert Dube.  There are rumours that you were also given money by PSMAS.  Is it not the reason why PSMAS

ended up experiencing financial challenges?  Thank you.                           

THE ACTING SPEAKER:  Order, order.  Hon. Member, do you think that is a clarification that you would want from the Minister – [HON. MEMBERS:  Inaudible interjections.] – No.

HON. P.D. SIBANDA:  Thank you Hon. Speaker.  I think my first question was not satisfactorily answered by the Hon. Minister.  My question is, where was the Minister until the situation deteriorated to the level where it is now – [HON. MEMBERS: Inaudible interjections.] -  The Hon. Minister answered only on the part of the disagreement between the medical service providers and the insurers, which he said started in 1992.  I am sure the coming in of ZIMRA and the garnishing of accounts of medical practitioners did not start in 1992; it started two or three years ago.  I am basically saying, why did the Minister have to wait until ultimatums were given by medical service providers?  Where was he?

My second question is on the issue of medical insurers investing in medical facilities.  Is that not caused by the fact that medical service providers are charging exorbitant fees?  Therefore, medical insurers in order to reign in the costs, have decided to invest in their own medical facilities.  Finally, maybe I need to be educated.  What are the advantages of price fixing in the medical field?  Why do you not allow free competition so that medical practitioners can charge whatever they think is good for their business instead of fixing prices?  Thank you.

HON. B. TSHUMA:  I followed the Minister very well on the regulatory gap involved in this matter.  There has been a particular incident where employers - and Government has been unexamplary in this matter, where employers collect remittances from employees and they do not remit to the insurance companies.  I want to know from the

Minister what was there in his offer in terms of providing for that gap?

Thank you.

+HON. D.M NDLOVU:  Thank you Mr. Speaker.  My question is

directed to the Minister.  I wanted to know whether he knows that most of the doctors are not accepting medical aid cards, they want cash up front.  After that, you will be directed to go and buy medication using cash as well.  If you get the medication, you have to take the receipt to the medical aid society on your own and we never received a refund.  The second question second is, in the medical field we have a proverb which says prevention is better than cure. If the Minister has to wait for the damage before taking any precaution with the signs that were there, indicating that there was a problem with the doctors not accepting the medical aids. For example, using the proverb that I gave, why did they not try to take precautions measures before having such damage? What is it that is being done on such issues Minister?

HON. HOLDER: I did not hear the Minister respond to my questions. First of all, my question was is it true that people with PSMAS were not being accepted at Parirenyatwa Hospital? The second one was on whether our remunerations were being paid to the relevant medical societies. Were they getting the money from where we get it from?

  1. PARIRENYATWA: Hon. Holder, it is true that at one stage Parirenyatwa was owed over a million dollars by PSMAS and was not in a position to take some. We are now saying to Parirenyatwa, all cards for medical aid for our patients should be accepted and then other means of getting that money back should be found.

*Hon. Muzondiwa, you talked about the issue of Cuthbert Dube and that I also received some money from him as well. It is an important matter to me and it actually hurt me quite a lot and for a time,

I actually withdrew into myself because it is not true that I did that – [AN. HON. MEMBER: Inaudible interjections.] – Aah, mira ka ndikutaurire. The truth of the matter is that PSMAS has been having relationships with doctors for a long time and with me for a very long time. I have been in practice since 1984, working with medical aid societies. We have developed a very good relationship with some of them. One of the things that have happened is that when you are working with medical aid societies and they do not pay you for five months, you get quite a lot of problems and this is what happened.

My surgery went and said can we have this payment done. The medical aid service said yes, we will pay. They did not pay and as you do that you are accumulating your own debts. We then pleaded with them to pay. When they paid, we then said, it is like they have been having your money for so long and then we said is it allowed also to have an advance payment – [HON.D. SIBANDA: Vamwe vasiri kuwana, as the Minister responsible?] – So, what then happened and it is very professional routine practice – [HON. MEMBERS: Inaudible interjections.] – No, I think it is good that we discussed but everything was done professionally with appropriate code of ethics. There was nothing out of form and it was all reconciled properly.

What I find Mr. Speaker Sir is that sometimes there is no understanding of the workings between doctors and insurance companies – [HON. D. SIBANDA: Between the Minister and insurance companies.] – So, in short everything was done very professionally and I can assure you that everything was signed up. There was no – and everything was paid as scheduled. In fact, I do not think I need to explain any further. Everything was done and you can ask the medical society itself. Everything was done accordingly.

HON. CROSS: This matter will be the subject of a Public Hearing next week between the Committees of Public Accounts and Health and the Minister will be summoned to those Committees to explain his position. I think today is not a suitable subject for this platform.

THE TEMPORARY SPEAKER (HON. MARUMAHOKO): I

thought as much that this is not the platform for that question.

  1. PARIRENYATWA: The other question that has been asked

is on the issue of price fixing, providers and insurances to investigate. This issue will be addressed in our Bill. We will be addressing the issue of conflict of interest, price fixing and auditing. This will be part of the issues that will be discussed.

HON. B. TSHUMA: Mr. Speaker, my question was not responded

to.

THE TEMPORARY SPEAKER: Is it not the one that has just been responded to?

HON. B. TSHUMA: No.

THE TEMPORARY SPEAKER: Because you were talking.

What was your question?

HON. B. TSHUMA: Minister, I enquired what was the offering in his provisions here in terms of remedying a situation  where employers were collecting money from clients and not remitting to medical aid societies and as a result, they were not able to pay the service providers.

He did not respond to that.

THE TEMPORARY SPEAKER: The Minister has responded

and he explained all that.

HON. B. TSHUMA: Excuse me, I am not exactly drunk. I have been following the proceedings closely and the Minister did not respond. Please.

THE TEMPORARY SPEAKER: Hon. Minister, did you not

respond to that, I thought you did?

  1. PARIRENYATWA: I responded, but this is an issue that will be taken up as well through our Bill and seal all these conflicts.

ANNOUNCEMENT BY THE TEMPORARY SPEAKER

NON-ADVERSE REPORTS RECEIVED FROM THE

PARLIAMENTARY LEGAL COMMITTEE

THE TEMPORARY SPEAKER: I have to inform the House that

I have received from the Parliamentary Legal Committee Non-Adverse Reports on the following Bills; Local Government Amendment Bill and the Pan-African Minerals University of Science and Technology.

HON. MUNENGAMI: On a point of order. My point of order is

that, if I remember very well, this issue on the Non-Adverse Report of the Local Government Amendment Bill was raised by Hon. Gonese yesterday as a point of order. The presiding officers, especially Hon.

Deputy Speaker Chinomona who was there, said they were going to take up this matter and discuss it. The meeting which actually came up with the Non-Adverse Report was not properly constituted in terms of the Standing Orders and Rules and even Hon. Gonese specifically stated that.  The Hon. Speaker accepted that.  So, I am surprised that the very same issue which was discussed and agreed is now brought in Parliament through unscrupulous means.  Can we have clarification on that Hon. Speaker, thank you?

THE TEMPORARY SPEAKER:  Order, Hon. Member, before

you rise up with such information, you should do your research first, the Committee set this morning and they have agreed.  So, there is no reason why you should stand up and say what you are saying.

HON. MUNENGAMI:  The reason why I raised this issue is because of what happened yesterday.  After Hon. Gonese had spoken about this issue, he even told the Speaker that Hon. Majome and himself were not going to be available and they agreed that they were going to meet on Monday, 27th June, 2016 with regard to this Bill – [HON.

MEMBERS: Inaudible interjections.] – it is upon that understanding that I have raised this issue.  It is there in the Hansard.    It is upon that understanding that I am rising to raise this point of order.

THE TEMPORARY SPEAKER:  Order, order, let me explain

that instead of Monday, they have met this morning – [HON.

MEMBERS: Inaudible interjections.]

Hon. Munengami having stood up.

THE TEMPORARY SPEAKER: What else do you want?  Can

you take your seat please, they have met this morning and came up with

this.  

HON. MUNENGAMI:  No, no, we have to do things according to what has been agreed….

              THE TEMPORARY SPEAKER: Order, order, Hon. Members,

the Committee met this morning and they formed a quorum – [AN HON. MEMBER:  Vachiita meet vamwe vasipo.] – and then brought up this.  So there is no ways one would want to rise up and say – [HON.

MEMBERS: Inaudible interjections.] –

Hon. Maridadi having stood up.

            THE TEMPORARY SPEAKER: Do you sit in that Committee?

HON. MARIDADI:  No, no Mr. Speaker, yesterday when –

[HON. MEMBERS:  Inaudible interjections] – this issue was raised, it was raised quite elaborately by Hon. Gonese and he said he was not available today – [HON. MEMBERS: Inaudible interjections.] – when this matter was raised yesterday as a point of order, it was agreed.  Hon. Gonese then left for Mutare immediately after raising this point of order and Hon. Majome, another member of PLC was out on Parliament business and she only came back this afternoon.  The reason why PLC’s report was contested in this House was because two critical members of that Committee were not available – [HON. MEMBERS:  Inaudible interjections.] – what has changed.  It was agreed that the Speaker was going to give a ruling.  The ruling has not been given and then that report is smuggled through unscrupulous means.  Mr. Speaker, this is unacceptable.

Mr. Speaker, allow the Chairperson of the PLC to come here and give us an understanding.  Thank you.

THE TEMPORARY SPEAKER: Order, order, it is over, let us

get serious.  The Clerk will read the Second Order of the day.

HON. P. D. SIBANDA: On a point of order Mr. Speaker.    

          THE TEMPORARY SPEAKER:  On the same issue?

HON. P. D. SIBANDA: Yes Hon. Speaker.

THE TEMPORARY SPEAKER:  I have made a ruling, it is over

– [HON. MEMBERS:  Inaudible interjections.] – Order Hon. Sibanda.

HON. P. D. SIBANDA: May I be heard Hon. Speaker.  I think what has been clear about this Bill from the beginning as we were following the public hearings that the Committee was carrying out – [HON. MEMBERS:  Inaudible interjections.] – It has come out very clear that this is a highly contentious Bill and in my view, in the face of the point of order that was raised yesterday by Hon. Gonese and for the integrity of the institution of Parliament, it is my very honest and humble view Hon. Speaker that the objection that is coming from this side of the House should be seriously taken into consideration.  The point of order that was raised yesterday by Hon. Gonese has not been dealt with, the status remains the same.  Therefore Hon. Speaker for you now to say that the House should accept the PLC Non-Adverse report, it is as good as ZANU PF smuggling its own Bill into Parliament – [HON.

MEMBERS:  Inaudible interjections.]  Therefore, Hon. Speaker, it is my view that ….

THE TEMPORARY SPEAKER:  Order, order – [HON. P. D SIBANDA: I have not finished, but Mr. Speaker why, I have not finished my point of order] – just take a seat.  Hon. Sibanda, I am giving order to the House.  Order, order, none of you is a Member of the PLC

Committee – [HON. MEMBERS:  Inaudible interjections.]

HON. P. D. SIBANDA:  On a point of order Mr. Speaker.  Thank you very much Mr. Speaker, my point of order is – [HON.

CHIMANIKIRE:  We do not know whether that Chairperson is ZANU

PF or not.] - The point of order is that there is no ruling as yet. The Speaker who was sitting there yesterday assured the House that the ruling will be there on Monday when all the members are involved. We are all Members of Parliament and it is upon our privilege of Parliament even if we are not part and parcel of the Committee, but that does not stop us from deciding on what we represent people for Mr. Speaker. Therefore, we are not going to accept that, that Bill is going to be passed in... –[HON. MEMBERS: Inaudible interjections.]-

THE TEMPORARY SPEAKER (HON. MARUMAHOKO):

Order, order Hon. Members. Let us hear what she is saying.

HON. P.D. SIBANDA:  Therefore, we are not going to accept that, that Bill is going to be passed in Parliament or whatever you are reading, we will not accept.

THE TEMPORARY SPEAKER: Order, Hon. Members. We will

ask you to go out very soon.

HON. MUKWANGWARIWA: On a point of order Mr. Speaker.

THE TEMPORARY SPEAKER: What is your point of order?

Order Hon. Holder.

*HON. MUKWANGWARIWA: Thank you Mr. Speaker. I want

to say to my fellow Hon. Members who are not members of the Committee – [HON. MEMBERS: Inaudible interjections.]- to conscientise them on the Committee itself. What the Standing Orders say is that three members of the Committee should be lawyers. So, Hon.

Speaker, three lawyers met this morning according to the Standing Orders, therefore there is no other ruling.

*HON. MAJAYA: Thank you Mr. Speaker. The Speaker said he

would give a ruling on this Bill. So it was important that we first hear the ruling that will be given, then we will take it up from there. Thank you.

MOTION

BUSINESS OF THE HOUSE

HON. RUNGANI: Mr. Speaker, I move that Orders of the Day,

Numbers 2, 3 ...-[HON. MEMBERS: Inaudible interjections.] -       THE TEMPORARY SPEAKER: Order, Hon. Maridadi.

HON. P. D. SIBANDA: Point of order, garai henyu pasi. Mr.

Speaker, with all due respect, I am not a member of the PLC, but I am a member of this House. As a member of this House, I am objecting to the production of that report.

THE TEMPORARY SPEAKER: Order, Order please! Resume

your seat.

HON. P. D. SIBANDA: Handisati ndapedzaka point of order yangu. I am not done with my point of order. –[HON. MEMBERS:

Inaudible interjections.]-

THE TEMPORARY SPEAKER: Order, Order Hon. Sibanda.

Hon. Members, Standing Order Number 40 requires that a notice be sent to all members a day before the meeting, which was done yesterday– [HON. MEMBERS: Inaudible interjections.]- Wait, Order please! Let me finish. – [HON. MEMBERS: Inaudible interjections.] - Order! Order Hon. Members! Order! – [AN. HON. MEMBER: Garai pasi.]- Order!

This issue was raised yesterday and the Chairperson said he was going to make a ruling – [HON. MEMBERS: Yes.]- And the ruling is exactly what I have said here that the Committee - [HON. MEMBERS:

Inaudible interjections.] - Order! Order please! I have not finished. Wait until I finish… Order at the back! Order please. I have said in terms of Standing Order No. 40, it requires that a notice be sent to all Members a day before the meeting which was done yesterday. This morning the Committee met with a full quorum and came to a decision.

HON. P. D. SIBANDA: On a point of order Hon. Speaker. That is

not the ruling, oh sorry.

THE TEMPORARY SPEAKER: What is your point of order?

*HON. CHINANZVAVANA: Thank you Mr. Speaker. We thank

you for your ruling but we are saying, the ruling you have made, there is no evidence that the message got to the Members that there will be a meeting today.  Furthermore, Mr. Speaker Sir, the member was absent on leave and those who were in the Committee could not be in two places at the same time in order to attend the meeting.

*THE TEMPORARY SPEAKER: Order Hon. Members there

please!  Hon. Member who spoke last, all the Members of the Committee were given the notice.

HON. CHIMANIKIRE: On a point of order, Mr. Speaker.

THE TEMPORARY SPEAKER: Order Hon. Member.

HON. CHIMANIKIRE: Thank you Mr. Speaker.

THE TEMPORARY SPEAKER: Hon. Chimanikire, can you

just take a seat.

HON. P. D. SIBANDA: I am aware …

THE TEMPORARY SPEAKER: I will recognise you later, just resume your seat I will give you a chance. – [AN. HON. MEMBER: Zvanzi order, gara pasi.]- Order please! Order Hon. Members! At the back there, order please. Hon. Members, please be advised that this Bill is not going to be debated today, it is not coming in today. So, I have made a ruling and it stands. – [AN. HON. MEMBER: Your ruling - iyo ndiyo isinga shande.]-

MOTION

BUSINESS OF THE HOUSE

HON. MATUKE: Mr. Speaker Sir, I move that Orders of the Day,

Numbers 2, 3 and 4 be stood over …

HON. P. D. SIBANDA: On a point of order.

THE TEMPORARY SPEAKER: I am not taking any point of

order. Resume your seat.

HON. P. D. SIBANDA: Mr. Speaker, I am allowed and I have got

a point of order.

HON. MATUKE: Mr. Speaker Sir, I move that Orders of the Day, Numbers 2, 3 and 4 be stood over until all the other Orders of the Day have been disposed of.

          HON. MUNENGAMI: I object.  I have objected and we cannot continue, you did it yesterday, remember, Hon. Mukwangwariwa, nhasi zvavakwamuri zvakurwadza but yesterday it was accepted here.

THE TEMPORARY SPEAKER: Order, order! Hon. Member,

may you resume your seat.  You have objected to the proposal, so we go back to Order of the Day, Number 2 on today’s Order Paper.

SECOND READING

MINERALS EXPLORATION AND MARKETING

CORPORATION BILL [H.B. 11, 2015]

Second Order read: Second Reading: Minerals exploration and

Marketing Corporation Bill [H.B. 11, 2015]

THE DEPUTY MINISTER OF MINES AND MINERALS

DEVELOPMENT (HON. F. MOYO): I move that the Order be stood over until Tuesday. – [HON. MEMBERS: Hear, hear.]-

HON. MARIDADI: Objection, because I want to debate.  I want to debate that – [HON. MEMBERS: Inaudible interjections.] -

THE TEMPORARY SPEAKER: Order, order!

THE VICE PRESIDENT AND MINISTER OF JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS (HON.

MNANGAGWA): Mr. Speaker Sir, in terms of our rules, the Leader of the House may interrupt debate in order that a Ministerial Statement can be made.  With the leave of the House, I move that the Minister of

Finance and Economic Development, be allowed to make a statement –

[HON. MEMBERS: Hear, hear.]-

MINISTERIAL STATEMENT

MEASURES TO ADDRESS CASH CHALLENGES

THE MINISTER OF FINANCE AND ECONOMIC

DEVELOPMENT (HON. CHINAMASA): Mr. Speaker Sir, this

august House asked me to do a Ministerial Statement on the cash challenges that the country has been facing over the past few weeks.  I am obliging that request, I had expected that I can only do it in the first week of July but I felt that, given the importance of this matter, I should issue this statement today.

Mr. Speaker Sir, my Ministerial Statement will cover four important areas regarding the cash challenges that the country is experiencing and has experienced in the past few weeks, and these are:

  • I will give a background to the adoption of the multicurrency system;
  • Background to the cash challenges;
  • Outline measures that have announced to address these challenges; and
  • An update on the implementation of the measure.

Mr. Speaker Sir, with respect to the background to the introduction of the multicurrency system, the House will be aware that we adopted a multicurrency system in 2009 in order to address the hyperinflationary challenges that the country was grappling with.  The system entailed the use of a basket of trading partners’ currencies that included and include the US Dollar, British Pound, the Euro, the South African Rand, Pula, the Japanese Yen, Australian Dollar and the Chinese Yuan, among other currencies.

Mr. Speaker Sir, just to remind this august House, that we did not adopt a full dollarisation strategy.  This therefore, meant that all the currencies in the basket were and are still acceptable medium of exchange in Zimbabwe.  This is an important dimension that we should all appreciate because the US dollar is part and parcel of the multicurrency system and not the sole currency in Zimbabwe.

Further, Mr. Speaker Sir, there have been calls for the adoption of the South African Rand as the transacting currency by many people.  The Rand remains part and parcel of the multicurrency system and economic players are free to switch to any currency as a way of managing their operation.  We do not intend to adopt a single currency but we will continue to maintain and bolster the strength of the multicurrency system.

Mr. Speaker Sir, let me give a background to the cash challenges which I attribute to the following factors:

  • The dominance of the US dollar in the multicurrency basket;
  • Heavy reliance on cash based transactions. There has been cash hoarding by some people, possibly due to lack of market confidence and also due speculative behavior;
  • We also use this very precious foreign currency, reserve currency for financing domestic transactions; and
  • Exogenous factors that negatively affected the country’s balance of payment position – specifically the drought which has put pressure on the demand for foreign currency and also the depressed commodity prices leading to low foreign currency earnings.

Mr. Speaker Sir, the basic principle for adopting the multicurrency system was missed along the way as economic agents preferred the US dollar over other currencies in the basket. I will share the data on the utilization of currencies in the multicurrency system since 2009.

  2009 2013 2015 2016
USD 49% 50% 70% 95%
Rand 49% 50% 30% 5%
Other 2% - - -
Total 100% 100% 100% 100%

 

This is the market deciding, not through any action on our part.  Now, these statistics Mr. Speaker Sir, clearly demonstrate that US dollar has remained the widely accepted and traded currency in Zimbabwe.  This exposure to the US dollar has been against the spirit of a multicurrency system.  The Central bank does not have power to influence the level of the US dollars through seignorage, that is printing of money.  The Government can only influence the supply of US dollars in our market through two broad channels:

  • Generation of US dollars through exports, inward foreign direct investments, diaspora remittances and international assistance and credit; and
  • Effective management of the little foreign exchange that we would have generated.

Sadly, this has been the country’s Achilles heel; and we have had to intervene.  Mr. Speaker Sir, our market on the foreign currency area was overly liberalised, anything could come and go out at will in terms of our foreign currency earnings.  So the interventions are in part to address that problem.  Mr. Speaker Sir, the country’s over-reliance on commodity exports has also been a challenge for us, given depressed international commodity prices.  Our top 20 exporters were largely drawn from the mining and agricultural sectors, mainly tobacco sectors, to some extent tea, and this accounted for 41.3% of our total exports as at 27 May, 2016.

My Ministerial Statement attaches a table 2, which sets out our top 20 exporters.  I have done so because later on I am going to dwell at some length on why the bond notes were introduced.  The reason is to boost exports, increase production and give incentives to those who are exporting.  Mr. Speaker Sir, I would like ask the indulgence of Hon.

Members to follow this Table 2 of our Top 20 exporters through the

Hansard, it is a long list.

Table 2: Top Exporters

  Name of Exporter Sector  USD Value  % of total Exports
1  FIDELITY PRINTERS AND REFINERS  Mining  

324,759,683

14,51%
2  ZIMBABWE

PLATINUM MINES

 Mining  

217,161,708

9.70%
3  MIMOSA  Mining  

85,466,435

3.82%
4  NORTHERN TOBACCO PRIVATE LIMITED  Tobacco  

65,296,194

2.92%
5  UNKI MINE  Mining  

42,483,718

1.90%
6  MARANGE RESOURCES  Mining  

24,201,392

1.08%
7  ZIMBABWE LEAF TOBACCO  Tobacco  

22,066,038

0.99%
8  MUROWA DIAMONDS

(PVT) LTD

 Mining  

16,298,380

0.73%
9  BINDURA NICKEL CORPORATION  Mining  

16,116,069

0.72%
10  INTERCONTINENTAL LEAF TOBACCO  Tobacco  

15,962,267

0.71%
11  AFROCHINE SMELTING P/L  Mining  

15,191,774

0.68%
12  MASHONALAND TOBACCO  Mining  

13,898,251

0.62%
13  BOOST AFRICA TRADERS P/L  Tobacco  

12,545,346

0.56%
14  ANJIN INVESTMENTS (PVT) LTD  Mining  

10,687,719

0.48%
15  BORDER TIMBERS LIMITED  Agriculture/Forestry  

7,989,793

0.36%
16  JIN AN CORPORATION  Mining  

6,975,096

0.31%
17  TANGANDA TEA COMPANY LTD  Agriculture  

6,902,815

0.31%
18  JINAN MINING (PVT) LTD  Mining  

6,890,191

0.31%
19  TSL CLASSIC LEAF (PVT) LTD  Tobacco  

6,625,944

0.30%
20  PADENGA HOLDINGS  Agriculture   0.28%
  LIMITED   6,327,988  
  SUB-TOTAL                                

923,846,801 

41.27%
  Other Exporters    

1,314,553,199

58.73%
  TOTAL EXPORTS                            

2,238,400,000 

100%

 

Mr. Speaker Sir, Zimbabwe has largely remained a cash economy.  Every transaction has to be supported by the physical money (notes and coins).  This practice clearly puts pressure on the financial system, making both banks and the Nostro accounts wash accounts, meaning that they only receive in order to pay out, which basically is what is happening in our financial system, especially salaries.  They receive from the Salary Service Bureau (SSB) and the next day they pay out.

People need to move away, we need to move away from this practice.

The appreciation of the US dollar also encouraged hoarding and exportation of cash since it is a safe haven currency or asset.  The US dollar had become more of an asset or commodity than a medium of exchange.  The US dollar in our economy has been imported for circulation purposes.  When it ceases to circulate, it is no longer serving the purpose for which we intend it to be.  That is where our challenge has been.

Mr. Speaker Sir, drought induced import requirements have also increase the demand for foreign currency.  Around US$80 million has so far been used to import grain.  The Increase in these imports is at a time when the international commodity prices of gold, platinum and diamonds are depressed.

Mr. Speaker Sir, with respect to measures that have been announced to address these cash challenges; as Hon. Members may realise from the discussion on some of the factors that contributed to the cash challenges, there are many interventions that can be adopted.  There is also need for Hon. Members to realise that measures can be shortterm, medium-term and long-term.

For example, supply side measures that involve stimulating domestic production are in the main, medium to long-term measures that have largely been the focus of our national budget and monetary policy pronouncements since 2013.  We are beginning to realise some benefits in a number of sectors – gold mining, manufacturing and agriculture.  We still need to do more in order to diversify our foreign exchange earnings, promote food security and reduce imports on products that can be produced locally.  This is an issue that we were debating during Question Time yesterday.

There are also some immediate measures that Government had to implement in order to sustain the current situation, otherwise there would not be any future to talk about when nothing had been done in the shortest possible time.

Mr. Speaker Sir, I will highlight the following measures that we have had to take:

  • Use of electronic payment system (plastic money);
  • We have had to persuade commercial banks to reduce reducing charges and fees on the use of Point Of Sale (POS) machines,

RTGS and mobile banking platforms;

  • We have had to put cash withdrawal limits;
  • We have introduced, as I have pointed out, an Export Bonus Scheme in order to incentivise exporters to produce more and export more;
  • We have enhanced interbank market foreign exchange management;
  • We have also promoted the use of banks; and
  • We are intensifying our domestic resource mobilisation and a Cabinet Committee to that effect is chaired by the Hon. Vice President Mnangagwa.

These measures are aimed at addressing ‘specific ills’ noted in my outline of the contributory factors to the cash challenges.

Mr. Speaker Sir, again with the indulgence of the House, I have attached a table; Table 3, which sets out in a tabular form the rationale for putting in the measures that we have introduced.

Table 3: Relevance of Policy measures

 

  Measure Rationale
1 Use of electronic payment systems (plastic money) Addressing heavy reliance on cashbased transactions.
2 Reducing charges and fees on the use of POS machines, RTGS and mobile banking platforms Reducing costs that militated against the use of electronic payment platforms
3 Cash withdrawal limits Discouraging hoarding and externalization of cash.
4 Export Bonus Scheme Addressing balance of payments pressures by promoting exports, while at the same time protecting the US$200 million Afreximbank facility from externalization.
5 Enhanced interbank market foreign exchange management We had an over-liberalised foreign exchange management system that has been fraught with inefficiencies and misallocation of the scarce foreign currency.
6 Promoting use of banks to facilitate payments Banks are an important part of the country’s financial system – there is therefore, need to promote effective financial intermediation which is key to sustainable socio-economic development.
7 Domestic resource mobilisation  To enhance the revenue generation capacity and administration of the country’s
    tax system.

 Promoting financial inclusion in order to expand the country’s savings base.

 

For instance, we have promoted the use of electronic payment systems and the rationale is basically to address heavy reliance on cashbased transactions.  We are reducing charges and fees on use of POS machines, RTGS and mobile banking.  This is to reduce costs that militate against the use of electronic payment platforms.  We have placed cash withdrawal limits to discourage hoarding and externalisation of cash.  In fact, when determining the withdrawal limits, we found that our limits, even the revised ones are still higher than withdrawal limits in the United States which actually print the US$. So, that comparison is very important.  In the United States, the limit is US$500 and now we have revised it to US$1000.  So, we are still generous, notwithstanding the fact that we do not print the US$.

We have introduced the Export Bonus Scheme in order to address balance of payment pressures by promoting exports while at the same time protecting the US$200 million Afrexim Bank facility from externalisation.  We cannot get the US$200million facility, put it in our economy, which is just a sieve and then the next day, the money is gone.

Generally, as we explain, people do understand.

We are also promoting inter-bank market foreign exchange management.  Mr. Speaker Sir, the problem we have had is an overliberalised foreign exchange market and what a lot of people have missed in the measures that we are adopting is that; we are now moving away, step by step from an over-liberalised foreign-exchange market to a managed one.  We want to use our hard-earned foreign exchange only for uses which are beneficial to the economy, and not to buy trinkets and other very useless product.  Kutenga mazhanje, ipwa, magaka.  Makambozviona kupi izvozvo. – [AN HON. MEMBER:  Matanga kuzviona nhasi?] – makambozviona kupi nyika inoshandisa foreign currency kutenga mbeva.  We are not saying if someone is a genius ku exporta mbeva dzanyatsogadzirwa mushe.  We encourage that, but that the source of this foreign currency is from gold exports and you cannot use gold exports to finance kutenga ipwa.

Mr. Speaker Sir, we are also promoting the use of banks to facilitate payments.  Banks are an important part of the country’s financial system.  There is therefore, need to promote effective financial intermediation which is key to sustainable social economic development.  As I have also pointed out on domestic resource mobilisation, this is to enhance the revenue generation capacity and administration of the country’s tax system and we also are promoting financial inclusion in order to expand the country’s savings base, in fact, also to promote savings in our economy.

Mr. Speaker Sir, let me now turn to the update on the implementation of these measures.

Update on the implementation of the measures

Use of electronic payment systems (plastic money).

The RBZ has since expanded the currencies on the Real Time Gross Settlement System (RTGS) payment platform.  We now have the United States dollar, the Rand and the Euro on this platform.

Treasury has already instructed Ministries, Government departments, local authorities and parastatals to introduce point of sale machines by 30th June this year and to accept all currencies in the multicurrency basket as part and in payment of the services or goods that they sell.  These are basically as part of Government’s efforts to reduce pressure on the demand for the United States dollar.

Cumulatively, Mr. Speaker, we now have 17 447 point of sale machines which are now operational.

A number of economic players including the SMEs, local authorities, parastatals have embraced the use of plastic money.

The low utilisation of electronic payment platforms in the past has been largely attributable to high charges and a culture where everyone wanted to move around with cash.

Reducing charges on electronic payment platforms 

The Reserve Bank of Zimbabwe (RBZ), the Banker’s Association of Zimbabwe, the Payment Systems Providers have since reduced charges on electronic transactions as follows:

Table 4:  New charges for electronic transactions

  Services New Charges inclusive of US$0.05
1 ZETSS (RTGS) Maximum of US$5
  ZIPIT (Electronic Funds Transfer) US$0.33 to a maximum of US$2.10
  POS transactions up to US$10 US$0.10
  POS transactions above US$10 US$0.45
  POS own bank customer Maximum of US$0.20
  POS issuer charges Removed
  ATM withdrawal Maximum of US$2.50
  Merchant Service Commission O to a maximum of 1% for local transactions
  Monthly administration or service fee 0 to a maximum of US$5 for individuals

 

Mr. Speaker Sir, the reduction in transaction fees is expected to go a long way in promoting the use of plastic money which is key to addressing cash challenges and promoting financial inclusion.

Cash withdrawal limits.

Mr. Speaker Sir, RBZ daily upper has been set at US$1000.   However, banks have been working within the limit depending on their level of liquidity.  We have seen withdrawal limits ranging between US$100 to US$500.

Export Bonus Scheme.

Mr. Speaker Sir, the sustainability of the multicurrency system in

Zimbabwe is dependent on the country’s capacity and ability to generate foreign exchange to meet its domestic and foreign requirements.  Development and promotion of foreign exchange revenue streams such as exports of goods and services and diaspora remittances is therefore, critical to enhance foreign exchange reserves of the country.

The above reality which I have just outlined together with the country’s trade deficit of around US$2.5 billion per annum requires a substantial policy shift to promote exports in view of lack of competitiveness of Zimbabwean exports due to global shocks and that include the strong United States dollar, the sharp decline in commodity prices and tighter global financial conditions as well as the precipitous fall of the South African Rand.

It is against this background that Government, through the RBZ, has introduced the performance related export bonus scheme of up to 5%, in some instances 2.5%, to be awarded to exporters of goods and services, to address the challenges of low productivity and promote exports with the overall aim of liquefying the multi currency system.

The export bonus scheme would be paid in bond notes in order to preserve the off shore US$200 million counter-cyclical facility that has been arranged to back the export bonus scheme from externalisation and or capital flight which has continued to negatively affect the economy since dollarisation in 2009.

Mr. Speaker Sir, the issuance of bond notes has a self control mechanism in that where there no exports, there are no bond notes.  In other words, the bond notes are issued relative to the volume of exports.  The bond notes, Mr. Speaker, would be gradually released into the economy in sympathy with export receipts through normal banking channels up to a maximum ceiling of the facility of US$200 million.  The ceiling will be attained when total exports are around 6 billion.  At the figure of US$200 million, the exports should move to US$6 billion and currently our exports are around US$3 billion.  Something that of cause I worry about because when we compare our exports with other countries in the region, we are very low.

Kenya exports US$20 billion and it has no minerals or metals except agriculture and tourism.  Mozambique is now around US$11 billion exports and so is Zambia and we are at US$3 billion.  So, we have a lot of work to do in order to increase the volume of our exports.

At the rate at which the country is exporting, we anticipate that bond notes equivalent to around US$50 million will be in the market by the end of December 2016.

The course of the facility, which is around 5% per annum on drawn down amounts, will be borne by Government.  The capital of the facility would be preserved from the proportion of the exports supported by the facility.

Mr. Speaker Sir, the bond notes which would start to circulate beginning October, 2016 will be at par with the United States dollar, meaning 1:1 with the United States dollar on the same basis as the bond coins and will be used and treated in the same manner as bond coins.

They will be deposited into one’s United States dollar account where one can transact through RTGS, make foreign payments for imports of goods and services and transact freely within the multicurrency system.  It is also important Mr. Speaker Sir, to note that bond notes will not be forced on people who do not like them, especially when you are not an exporter.

Mr. Speaker Sir, it is critical to emphasise that the introduction of bond notes does not mark the return of the Zimbabwe dollar.  The microeconomic fundamentals or conditions for the return of the local currency are not yet right to do so.

Key fundamentals or conditions of the return of the local currency, let me just outline them.

  • We need to build foreign currency reserves to one year of import cover.
  • We need to balance our Government budget.
  • We need to have sustainable interest rates not like what we are going through where we have interests rates as high as 15% /16%. They need to be lower and if lower, sustainable. There must be high consumer and business confidence.
  • We must have sustainable level of inflation which at the current moment is not a problem. What we have a problem with is basically the opposite of inflation, deflation.
  • We need a healthy job market.

Enhanced Interbank Market Foreign Exchange Management.

  1. A foreign exchange priority list is now in place following work by the Reserve Bank and the Business Council as represented by the Confederation of Zimbabwe Industries (CZI), Zimbabwe National

Chamber of Commerce (ZNCC), and the Bankers Association of Zimbabwe (BAZ).

Table 1 Priority List for Foreign Payments.

Priority Level Foreign Currency Payment Category
Priority One (HIGH) i.          Net Exporters who import raw-materials or machinery to aide them to produce and generate more exports;

ii.        Non-exporting importers of raw materials and machinery for local production (value addition) that directly substitute import of essential finished goods;

iii.      Imports of critical and strategic goods such as basic food stuffs and fuel, health and agro-chemicals granted these goods are not available locally;

iv.      Repayments of offshore lines of credit procured to fund productive activities,;

v.        Payments for services not available in Zimbabwe; vi. Foreign investments (capital disinvestments, profits and dividends).

Priority Two

(MEDIUM)

i.  Bank borrowing clients in the productive sector who engage in critical and strategic imports
Priority

Three

(LOW)

i.        University and college fees.

ii.      Cash depositing clients in the retail and wholesale service industry.  The customers generate cash which can be recycled for local use or repatriated to replenish Nostro accounts

iii.    Other borrowing clients who have engaged in the importation of non-    strategic goods.

NOT

PRIORITY

i.  Capital remittances from disposal of local property ii. Capital remittances from disposal of local property iii. Funding of offshore credit cards

iv.    Importation of trinkets, low local content consumer goods and/or foods readily available in Zimbabwe including non-commercial vehicles, maheu, bottled water, tomatoes, vegetables

v.      Payments for services available in Zimbabwe vi. Donations.

 

Promoting the use of banks.

  1. RBZ has been monitoring cash deposit trends, within the various banks, where it was generally noted that cash deposits had declined by an average of 40% during the month of May 2016.
  2. There are reports which alleged that some players were selling cash, engaged in illicit deals, and were not depositing cash as required in terms of Section 11 of the Bank Use Promotion Act which states that:        “Every trader, and parastatal shall, unless it has good cause for not doing so, deposit in an account with a financial institution, no later than the close of normal business hours on the day following that on which the cash is received or on the next bank day, cash that is surplus to the requirements of the trader”.

          This is an Act of Parliament which this august House passed as an Act of Parliament and it is now being implemented.  So, whatever we are doing, we are basically invoking the law which is already on our Statute book.

  1. The RBZ’s Financial Intelligence Unit invoked Section 6 of the Bank Use Promotion Act [Chapter 24:24], and has launched an operation targeted on assessing banking trends by high cash generators that include wholesalers, retailers, mobile phone companies, and fuel dealers. The first phase of this operation started on Friday, 3rd June, 2016.

Now, I want to emphasise that as we target any of these operators, we are doing so to the extent possible initially in a very market friendly way.  We have no intention to close any business but we want them to see the light.  If they have not been observing the provisions of our law, we will bring that to their attention and ask them nicely to put in place systems that make them to comply.  Only after they have not, after we have given them a period of grace, then we may have to decent on them heavily.  But for now we do not want any businesses to close.

Domestic Resource Mobilisation Efforts

  1. Speaker Sir, domestic resources mobilisation entails harnessing financial resources from the local sources through taxes, savings and plugging leakages throughout the economy.
  2. Government is fully aware of the challenges facing our taxation system that include corruption, inefficiencies, illicit financial flows, declining tax base due to de-industrialisation and growing informal sector activities as well as relatively high effective tax rates.
  3. Treasury has since given the ZIMRA board a mandate to do

three things.

  • Increase the tax base; meaning they must come up with strategies that help them to collect taxes from the informal sector.
  • Automate the tax collection system; this means linking ZIMRA to the tax payers, electronically in real time and also they must take measures that is the board to  Combat corruption.
  1. Steady progress is being made in executing the mandate and this is evidenced by the following projects that are currently underway:
  • Rollout of the new Tax Management System currently underway is progressing relatively well. VAT refunds have been a major challenge for ZIMRA. The Tax Management System will help reduce human interface and as a result the level of corruption.
  • The first phase of the CCTVs project at Beitbridge Border Post has since been completed. This again is to increase and enhance transparency at that Border Post which is always congested.
  • A Cargo Tracking System will soon be rolled out in order to address the perennial problem of product dumping in Zimbabwe. It became clear Mr. Speaker Sir, that some trucks would declare at Beitbridge Border Post that they were destined for Zambia, DRC or Malawi but as soon as they cross the border, they would go to Mbare and dump the product there.  We had no way to understand what was happening.  We are now going to roll out this tracking system in order to track all trucks which say they are destined for destinations outside Zimbabwe.
  • A toll-free Hotline has since been launched as a way of exposing corruption.

What is coming out through this hotline is something that is very encouraging.   People are phoning and identifying themselves by name and giving blow by blow what they are alleging.  The beauty about such development is that at least we can have a witness to any corruption that we think has been committed.  In some cases they tell us what is going to happen and sure when we follow up, people then get caught up.  So, we believe that this will go quite some way to reduce corruption within the tax collection system.

Conclusion

  1. Speaker Sir, the policy measures seek to restore the fundamental principles of the multicurrency system in order to ensure that the burden of demand for cash is spread among various currencies in the multicurrency basket.
  2. These measures are expected to go a long way in addressing liquidity challenges by spreading the demand for cash among a wide range of currencies. We also expect the measures will stimulate local production which is key to sustainable economic recovery.  I thank you Mr. Speaker Sir, for your kind attention.

THE VICE PRESIDENT AND MINISTER OF JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS (HON.

MNANGAGWA):  I have no doubt that we have benefited from this very important statement from the Minister of Finance and Economic Development. It also contains about four tables of figures and measures that have to be studied. I believe that it is prudent for the House to allow Members to have access and study them so that we debate this issue next week. On the basis of that, I move that the debate be now adjourned.

Motion put and agreed to.

Debate to resume: Tuesday, 28th June, 2016.

MOTION

ADJOURNMENT OF THE HOUSE

THE VICE PRESIDENT AND MINISTER OF JUSTICE,

LEGAL AND PARLIAMENTARY AFFAIRS (HON.

MNANGAGWA):  I move that the House do now adjourn.

HON. CROSS: Mr. Speaker Sir, the country is in a deep economic and political crisis – [HON. MEMBERS: Inaudible interjections.] - I personally have at least ten issues which I want to ask the Minister to clarify. I want the assurance of the Leader of the House that the Minister will be available next week to answer questions. - [HON. MEMBERS:

Inaudible interjections.] -

THE TEMPORARY SPEAKER: Order! Hon. Members on my

right, please when I say “order”, respect the Chair. Honourable Cross, I think you should understand that the Minister of Finance and Economic Development is a straightforward person and he will be here to answer your questions next week.

HON. CROSS: The Minister told us yesterday that he is going to be out of the country next week.

HON. E. MNANGAGWA: It is very important that we debate the

issue on the table. We adjourned debate and that is past. I moved for the adjournment of the House. That is what is at issue.

HON. CROSS: I understood from the Minister of Finance and

Economic Development yesterday that he will not be in the country next week –[HON MEMBERS: Inaudible interjections.]- and this means we cannot seek from the Minister, clarification on crucial issues.

Motion put and agreed to.

The House adjourned at Eighteen Minutes to Five o’clock p.m.

until Tuesday, 28th June, 2016.

 

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