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NATIONAL ASSEMBLY HANSARD 07 DECEMBER 2021 VOL 48 NO 17

PARLIAMENT OF ZIMBABWE

Tuesday, 7^th December, 2021

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

PRAYERS

(THE ACTING SPEAKER in the Chair)

HON. T. MLISWA: Thank you Madam Speaker and a very good afternoon to you.

THE ACTING SPEAKER (HON. MAVETERA): Afternoon, how are you?

HON. T. MLISWA: Madam Speaker, I am a Member of Parliament for Norton Constituency, elected by the people of Norton.  In being the Member of Parliament, my social standing is important.  My way of doing things is important and I have worked all my life to protect the good name that I have.  Madam Speaker, I read an article of the Grain Marketing Board Chief Executive Officer (CEO), Mr. Mutenha.

THE ACTING SPEAKER: Can you please connect, you are going on and off, I do not know why.

HON. T. MLISWA: Madam Speaker, he appeared before the Portfolio Committee on Lands, Agriculture, Fisheries, Water, Climate and Rural Resettlement and gave evidence under oath that I had maize seized, 40 tonnes which never happened; that the maize was seized in Selous, which never happened.  So, it is only proper for good governance and for two sides of the story to be heard that the Committee invites me to give my other side.  You cannot talk about somebody, mention them and not bring them to also give their side of the story.

Right now I am the Chairman of APNAC, which fights corruption and that on its own is corruption.  Basically, I was labelled as a corrupt person and I have to be given an opportunity to give my side of the story because it is painful that my name would come up before a Committee with witnesses taking oath to say that 40 tonnes of the maize was seized.  I say this, it was never seized, I have no seizure document, I am an honest farmer who takes my maize to GMB and that maize is on my farm as I speak.  So how can you seize maize and let it be on my farm?  I was never given any documents for me to take any maize to GMB. 

I have supported the Agrarian Reform in this country by being a productive farmer and taking my maize to GMB.  So, I would like to know and it is only proper Madam Speaker that my integrity and dignity, which is of utmost importance be upheld.  I have got children, I have got my mother who thinks she gave birth to a corrupt person, I have never been corrupt in my life.  It is not the first time, the first time it happened I was accused of accepting a bribe from Goddard.  A Privileges Committee was set up and I was cleared.  So who is really behind this?  Why are you using this institution of Parliament to settle personal scores?  Is it what it is there for?  I therefore require, and it is only proper Madam Speaker, that I be invited to the Committee to give my side of the story.  It is only proper because this Parliament will be rendered useless and will become a ground of settling personal scores.  I know that I am fearless in exposing people, but doing this to me, it will not stick, and it will never stick because I am not corrupt.  My day must be given to me.

Secondly Madam Speaker, it is with a heavy heart and Hon. Members will agree with me, on the passing away of the ZIDA CEO, Doug Munatsi who was patriotic and served this country in a manner which we have not seen.  Doug had his own wealth, his good name, he did not need to work for this country or be a civil servant but he took it upon himself that in the Second Republic, he would be part of it in ensuring that business was done in a professional manner.  I have known Doug Munatsi for many years, he was a great banker, the founder of BancABC and involved in many other activities. 

To me, it is quite sad that a man who then devoted his time and career to Government is no more today.  I am sure Hon. Members will agree with me that the passing away of Doug leaves a vacuum which will never be filled by anybody else.  It is in that spirit that we pass our condolences to his Family; his wife, children, mother and entire associates.  Doug was really a special person.  Doug, if you knew him, was not for politics but was for this country.  Doug was loyal to the President, he loved the President and as such, he wanted to serve under the President to ensure that this country moves forward.

The last one is for Dhewa Mavhinga who Madam Speaker, was an advocate for human rights.  A lot of people misunderstood Dhewa thinking that he was anti-Government but whenever you came up with reports, Dhewa would be able to do his due diligence and give you a proper report on what was going on.  It is sad that people who advocate for anything or activists in many ways in this country are said to be anti-Government. They are not anti-Government; they are the ones who the Government must be listening to, to engage so that there is a way forward.  Dhewa Mavhinga was a champion for human rights, internationally, locally and globally.  May his soul rest in peace and again, condolences to the family.  It will be a very difficult one to fill in for he was always for the people of Zimbabwe.  Democracy is critical.  The foundation of democracy is the one that observes people’s human rights.  As such, may his soul rest in peace.  Thank you Madam Speaker.

          THE ACTING SPEAKER: Thank you very much Hon. Mliswa. I am going to refer your request to the Portfolio Committee on Agriculture for them to be able to indulge you to that effect so that at least they can have an all conclusive report. Concerning the two people that you spoke about, may their souls rest in peace.        

+HON. MATHE: Thank you Madam Speaker. This year there is so much production on the land. All inputs for small grains, groundnuts, round nuts, maize - it is all over in the communities. Everyone has these inputs and everything is available. The Government is distributing these to its people. This is proper and it is good. This country which I represent in this Parliament should stand up and commend the President that we got inputs at the right time way back in November. Some are double dipping. I would like to commend the President who grows resources so that inputs get to the people at the right time and so that they farm at the right time with everything in place so that Zimbabwe may have a good yield.

          Secondly, I would like to put a point of privilege that this Parliament is in place and all Members of Parliament should use diplomatic passports. We debated the matter here and every Member of Parliament was issued with a diplomatic passport. My problem is, after all of us had been given diplomatic passports, did you actually teach us the significance of the diplomatic passports? That was not done. I have reasons which I will not express now. I would like to direct this Parliament that we be taught the symbolism of the diplomatic passport. These diplomatic passports, what does it symbolize? When you are out of the country with it, there are expectations from holders of diplomatic passports. Therefore, we request that we be educated about it. I thank you Madam Speaker.

          THE ACTING SPEAKER: Thank you very much Hon. Mathe for the two statements that you made in relation to the President and that is applauded and the second to do with Members of Parliament on the diplomatic passports. I think it is critical and that will be taken note of. 

          ^(v)HON. MOKONE: Thank you Madam Speaker. I stand on an issue of national importance. It is quite sad that while we are commemorating the 16 Days of Gender Based Violence, two pregnant women had been raped in Maphisa Hospital. This has happened twice in the same hospital. It is not only in Maphisa Hospital that his has happened. Sometime in July, a similar unfortunate incident happened in Manama Hospital in the same province. As Matabeleland South legislator, I am concerned about the safety of anyone in this hospital. This means that even minors can now be kidnapped in these hospitals.  I therefore plead with the Minister of Health to issue a statement ensuring the public that their lives are safe and are not in danger when they are in hospitals. The Minister of Home Affairs should consider security issues in the hospitals. It has happened in Matabeleland, who knows – maybe it might happen in Harare or Matabeleland North next time. So the Home Affairs Minister must make sure that perpetrators of this kind are brought to book. I thank you.

          THE ACTING SPEAKER: Thank you Hon. Mokone for such an important point of national interest. I am sure the Hon. Minister if he is going to come through and be able to furnish us with that Ministerial Statement to that effect and also the Minister of Home Affairs, they will be informed of your request so that at least they can take action on this. Thank you.

          ^(v)HON. DR. KHUPE: Thank you very much Madam Speaker. I would like to add my voice in passing our condolences to the Dhewa-Mavinga family on the untimely death of a renowned human rights activist who fought for the recognition and protection of dignity of all human beings. We will always remember him for the role he played. May his soul in eternal peace. I thank you.

          THE ACTING SPEAKER: Thank you Hon. Khupe. For the purposes of us not taking this as a debate, we will not be debating when it is a point of national interest. One person has already raised it and we would not allow any other person to speak as if we are now debating, but thank you for that. May his soul rest in peace.        

MOTION

LEAVE TO MOVE FOR SUSPENSION OF STANDING ORDER NUMBERS 53, 66 (2), 144 AND 147

          THE DEPUTY MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHIDUWA):  Thank you Madam Speaker Ma’am.  I seek leave of the House to move that the provisions of Standing Order Number 53, 66 (2), 144 and 147 regarding the automatic adjournment of the House at Five Minutes to Seven o’clock p.m. on sitting days other than a Friday and at Twenty-Five Minutes past One o’clock p.m. on a Friday, Private Members Motions taking precedence on Wednesdays after Question Time, procedure in connection with Parliamentary Legal Committee and Stages of Bills respectively, be suspended with effect from today and for the next series of sittings in respect of the following:

• Business relating to the Budget debate;
• Committee of Supply;
• The Finance Bill;
• The Appropriation (2022) Bill; and
• Other Government Business.

HON. MUSHORIWA:  I object. 

THE ACTING SPEAKER:  What is your objection Hon. Mushoriwa?

^(v)HON. MUSHORIWA:  Madam Speaker, the request by the Hon. Minister is vague in two respects.  Whilst we may appreciate and allow the suspension in respect to the Finance Bill, I do not think it will be prudent to give a blanket authority to suspend any other Government business.  The Minister has to be specific.  If it is for the Budget, then we will be agreeing for the Budget, the Finance Bill and the Appropriation.  But for the last item to say ‘any other Government business’, I object to such an addition.  We are agreeable to the Budget but for any other Government business, it should actually follow the normal procedure. 

HON. CHIDUWA:  Thank you Madam Speaker Ma’am.  Thank you for the submission that has been made by Hon. Mushoriwa.  I would want to concur with what he submitted that we deal with issues,numbers 1 to 4 so that we can dispense and remove any other business.  Thank you. 

Motion put and agreed to. 

MOTION

SUSPENSION OF STANDING ORDERS NUMBER 53, 66 (2), 144 AND 147

          THE DEPUTY MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHIDUWA): Madam Speaker, I move that the provisions of Standing Orders Number 53, 66 (2), 144 and 147 regarding the automatic adjournment of the House at Five Minutes to Seven o’clock p.m. on sitting days other than a Friday and Twenty Five Minutes past One o’clock p.m. on a Friday, Private Members motions taking precedence on Wednesdays after Question Time, procedure in connection with Parliamentary Legal Committee and Stages of Bills respectively, be suspended with effect from today and for the next series of sittings in respect of the following:_

1.        Business relating to the budget debate;
2.        Committee of Supply;
3.        Finance Bill; and
4.        The Appropriation of Bill of 2022

Motion put and agreed to.

^(v)HON. S. BANDA: On a point of order! I think this is one of the times when we are doing the budget and a good number are in the House and a good number are also not.  So, I just wanted to check on the issue of quorum because this is very important and we do not want it to be disturbed.  So, I do not know what the ground rules are.  I thank you.

THE ACTING SPEAKER: I am sure if you can check on your chat, you can see we have already exceeded the number which is accepted for quorum.  There are more than 106 members so the quorum is sufficient.

^(v)HON. S. BANDA: Is it possible to lower the number from 70 to about 50 so that we can get this thing done which is very important.

THE ACTING SPEAKR: That cannot be done overnight, it is supposed to be done through the Standing Rules and Orders so that we can then be able to amend our Standing Rules but so far we are going to concur with what the Standing Rules and Orders say which say 70 and it is now allowing the people that are also on virtual to also be considered as part of the quorum.

MOTION

FINANCE BILL: BUDGET DEBATE

     First Order read: Adjourned debate on motion that leave be granted to bring in a Finance Bill.

     Question again proposed.

     HON. DR. NYASHANU: Thank you Madam Speaker Ma’am. The Minister of Finance and Economic Development Hon. Prof. Mthuli Ncube tabled a Z$927.268 billion (approx. US$8.775 billion) 2022 National Budget on the 25^th of November 2021 themed “Reinforcing Sustainable Economic Recovery and Resilience.

To borrow the wise words of our President Dr. ED Mnangagwa,“Nyika inovakwa nevene vayo" Also to borrow the words of the late John Maynard Keynes, a renowned British Economist of the 20^th Century, we need to create economic possibilities for our grandchildren

The 2022 budget is the second step in the implementation of the first National Development Strategy (NDS 1) that runs from 2021 to 2025. The government expects to collect revenues totalling Z$850,7 billion (17% of GDP), thus resulting in a budget deficit of Z$76,5 billion which will be funded through issuance of Treasury Bills (TBs), utilisation of the country’s SDR allocation from the International Monetary Fund (IMF) and external loan disbursements (external debt).The budget is being implemented in the context of the NDS1’s 14 pillars namely:

•          Economic Growth and Stability;
•          Food and Nutrition Security;
•          Governance;
•          Moving the Economy up the Value Chain & Structural Transformation;
•          Human Capital Development;
•          Environmental Protection, Climate Resilience and Natural Resource Management;
•            Housing Delivery;
•           Digital Economy;
•        .  Health and Well-being;
•             Infrastructure & Utilities;
•           Image Building and International Engagement and Re-engagement;
•         Social Protection;
•         Youth, Sport and Culture; and
•          Devolution.

 

NDS1 seeks to create 760,000 new jobs, bring inflation down to between 3-7% by 2025 and expand the economy by 5% year on year.

1. ECONOMIC CONTEXT

The 2022 National Budget came at a time when the country is battling to contain the negative ramifications of the COVID 19 pandemic, which have extended beyond the direct health consequences, but has had negative social and economic impacts, thereby posing a big threat to decades of hard-won development. The Zimbabwean Government has however, emerged as one of the leading countries on the continent in implementing the vaccination programme with a target to reach 60% herd immunity. The country has so far vaccinated 38% and 29% of the targeted population with first and second dosses, respectively as at 16 November 2021.

The economy faces a number of challenges, which include erratic supply of key enablers such as electricity and water, deficiencies in delivery of social and other public services, slow implementation of value addition initiatives, and resurgence of inflation pressures. The premium between the parallel and the official interbank exchange rates has been widening and has now exceeded 50%.  The economy also faces the risk of the fourth wave of the Coronavirus with the recent discovery of a new Variant in South Africa, the Omicron variant which is fuelling a surge in Coronavirus cases in South Africa and rapidly becoming the dominant strain. The variant has been detected in Zimbabwe.

Zimbabwe’s economy is expected to grow by 5.5% in 2022, down from 7.8% projected in 2021. The 2021 growth is well above the 3.4% average growth for Sub-Saharan Africa. Alongside GDP growth, average industry capacity utilisation is gradually picking up, reaching 47% and 54% in the first and second quarter of 2021, respectively.  

In view of the above, Government is expected to enact a pro-poor, inclusive and sustainable National Budget that prioritizes service delivery. Moreover, there is need to ensure budget credibility, which the International Budget Partnership (IBP) defines as the “ability of governments to accurately and consistently meet their expenditure and revenue targets”. When budgets are not implemented as planned, spending priorities can shift, deficits may exceed projections, and critical services may be compromised in addition to eroding public trust if governments consistently deviate from their budgets.

Annual inflation, recorded at 54.5% in October 2021 is projected to decline and close at between 52-58%, up from 25-35 % initially projected. An average inflation target of 32.6% and end period range of 15% to 20% is projected  in 2022.  Adverse macroeconomic conditions characterised by high inflation and severe exchange rate depreciation decimated the 2021 budget, including erosion salaries and wages for Government employees. As such, the 2022 National Budget in real terms is therefore Z$476.7 billion, using 2021 as the base year (discounting the 2022 allocation by the expected inflation) compared to the 2021 budget of Z4421.6 billion.

2. COMPLIANCE TO THE LEGISLATIVE FRAMEWORK

The 2022 budget presentation followed Section 305 of the Constitution of Zimbabwe and Section 28(1) of the Public Finance Management Act (PFMA) [Chapter 22:19] on the timelines for the tabling of the budget in Parliament. The budget also adheres to the PFMA and the Reserve Bank Act [Chapter 22:15] with regard to fiscal targets on level of budget deficit (Not more than 3% of GDP)  and  Central Bank lending to Government (Not more than 20% of the previous year’s revenue).

The 2022 budget deficit is projected at ZWL$76.5 billion (-1.5% of GDP) and is  above legal requirements, total public and publicly guaranteed debt (PPG)  is estimated at more than 80% of GDP by end of 2021 which is above the SADC recommended threshold of 60% of GDP and the Public Debt Act threshold of 70% of GDP. The total public debt as at end September 2021 amounted to US$13.7 billion, comprising of public external debt of US$13.2 billion and domestic debt of US$532 million. The total public debt stock excludes contingent liabilities of US$3.5 billion for the compensation of former farm owners, which will be incorporated on completion of cession agreements with former farm owners.

Moreover, an allocation of Z$ 42 539 billion (5% of projected 2020 revenue of Z$ 850 770.66 billion) to provincial and local tiers of Government is in compliance with Section 301(3) of the Constitution which provides for allocation of “not less than five per cent of the national revenues raised in any financial year to the provinces and local authorities as their share in that year.” However, there is need to revise upwards the allocation in the event of revenue over performance in order to remain compliant to the Constitution.

3. CONSULTATIONS HELD

The Budget, Finance and Economic Development Committee received stakeholder feedback on the 2022 budget from the Zimbabwe National Chamber of Commerce (ZNCC), Chamber of Mines (COM), Zimbabwe Council of Churches (ZCC), Zimbabwe Statistical Agency (ZIMSTAT) and Zimbabwe Revenue Authority (ZIMRA) as well as individuals who wrote directly to Parliament in their personal capacities. The Committee also benefitted from workshops and engagements with  ICOD and the Zimbabwe Coalition on Debt and Development (ZIMCODD). The consultations were done pursuant to budget inputs obtained from conducted countrywide budget consultations from 11-16 October 2021 to gather views of the general public in compliance with Section 141 (a) of the Constitution and 28(5) of the PFMA [Chapter 22:19].

4. EXTENT TO WHICH COMMITTEE RECOMMENDATIONS WERE INCORPORATED INTO THE BUDGET

The Budget, Finance and Economic Development Committee (Hereafter referred to as the Committee) commend the Minister for incorporating and responding to most of Parliament’s recommendations into the 2022 budget. Although total bids submitted to Treasury by various ministries and departments are much higher than the capacity of revenues and borrowings, the Minister did well in counter-balancing the demands with the resource envelope. The Committee however, feels there is room for improvement in the budget in order to best match it with the views of the public.  Given the macro-fiscal stabilization objectives of the budget and the National Development Strategy 1, adhering to an expenditure ceiling is imperative.

5. COMMITTEE OBSERVATIONS
   • Budget credibility – The Committee is concerned with what has become perennial underfunding of some ministries and perennial overspending by certain ministries without Parliamentary approval. The perennial under-spenders and over-spenders are indicated on fig 1 below:

Fig 1: Over expenditure and underspending in different votes, 2020 and 2021

The Committee notes that although deviations from the approved budget sometimes can be unavoidable as they may result from external economic shocks or unforeseen circumstances like drought, floods, cyclone or pandemics, repeated deviations without Parliamentary approval through a supplementary budget points to undermining of Parliament’s “power of the purse. The deviations have happened despite the undertakings in the budget statements of 2021 and 2022 that “disbursements to Government, ministries, departments and agencies will be limited to the Vote Appropriations in order to sustain the macro-fiscal stability so far achieved”.

The Committee is concerned with the erratic releases of funds for some votes, which has become predictable given the trend of overspending and underspending ministries over the years. This renders the budget process and the work of this august House a mere academic process just to fulfil the requirements of the law. No motion allowing for any excess to stand charged to the Consolidated Revenue Fund and to be included in a Financial Adjustments Bill was introduced in Parliament in accordance with Section 19 (3) of the PFMA despite the deviations.

The Committee is concerned with the failure by the Minister to table a supplementary budget for the second-year running despite the glaring need for such given the inflationary environment. The Committee noted that although, on average, budget utilisation has been 41% by 30 June 2021 and 86% by 30 September (with 7 Votes having already spent above the budgeted levels), there is widespread imbalance on the utilisation. There is therefore need for Government to explain and justify such deviations, as well as take corrective measures to minimise the adverse impact on budget outcomes. It is therefore imperative that the Minister observes and abides by provisions of Section 307 in the Constitution which obligates him to introduce a Bill into the National Assembly seeking condonation of the unauthorized expenditure without delay and in any event, no later than sixty days after the extent of the unauthorized expenditure has been established. Further, the Committee recommends that the Minister must include a Fiscal Responsibility Statement which assigns responsibilities and commitment for implementation of the 2022 National Budget.

• Parliament budget-The Committee noted the Parliament of Zimbabwe budget of Z$14.6 billion, which is a 100% increase from Z$7.3 billion allocated in 2021. Of concern however is the erratic releases of the budget with Parliament having spend only 33% of this budget by 30 September 2021 despite the mounting debts and which have seen the august House being shunned by service providers. The Committee however commends the marked improvement in the release of funds for Committee business which was largely flawless with the exception of a few isolated cases. It is important for the budget to facilitate Parliament to discharge their constitutional mandate without interruptions. In the same vein, the Committee requests the Minister to urgently capacitate Parliament with the requested vehicles and buses, in view of the logistical challenges that are likely to be faced if Parliament relocates to the new building in Mt Hampden.
• CDF Allocation- the Committee welcomes the allocation towards the Constituency Development Fund (CDF) of Z$2.4 billion which translates to Z$11.4m per constituency. The Committee calls upon the Minister to expedite early release of the funds before they are eroded by inflation. The Committee also noted that Constituency Information Centres were allocated ZWL$300 million. This maybe be inadequate given the target to establish 210 CICs in 2023 in the Parliamentary Institutional Strategic Plan and the Blue Book. The 2022 budget must lay the foundation for the establishment of the CICs through procurement of the land, construction of the offices as well as equipping some of the centres.
• SDR Allocation- The Committee is concerned that despite the Ministry of Finance undertaking to consult Parliament before the utilisation of SDRs, the 2022 budget indicates that Treasury has already withdrawn US$311 million from the facility, with most of the funds (US$144 million) going to the rehabilitation of the Harare-Beitbridge Highway and the remainder being allocated to Covid-19 vaccination programmes (US$77 million) and agriculture social protection (US$80 million). Of the remaining amount, US$280 million has been set aside for foreign exchange reserves. The Committee calls upon the Minister of Finance to consult Parliament in the utilisation of the SDRs set aside as contingency reserves. Moreover, the Committee calls upon the Auditor General to thoroughly audit the utilisation of the SDRs.
• Audit Office Budget- the Committee recommends continuous strengthening of the Auditor General, another watchdog institution. A budget of 0.3% of the total budget will not empower the office to effectively perform its mandate given the huge resource requirements for an effective audit. International best practise dictates that the Office of the Auditor General is allocated 1 % of the budget. Moreover, disbursement of funds is critical as the office only got 30% of their Z$1.349 billion 2021 budget by 30 September 2021.
• Vote 1-OPC-As raised in 2020, this Committee is concerned with the consolidation of several issues which Parliament ordinarily should be overseeing and should be kept abreast of under Vote 1. In that regard, there is need to separate votes for monitoring Government programmes and service provision. As such, votes for Radiation Protection, SIRDC and DDF, ZIDA should be under the existing ministries so as to separate from votes for the presidency and administration that are charged with the responsibility of providing strategic policy direction, coordination and monitoring of service delivery in Government departments. This will also facilitate monitoring and evaluation of the performance of the institutions.
• Welfare of Civil Servants-the Committee noted with concern a 97% increase in the provision for employment costs from Z$170.6 billion in 2021 to Z$340 billion in 2022. The increase is not commensurate with the need to cushion the hard-working Government employees who for long have been paid salaries below the poverty datum line, estimated at Z$39 924 as of September 2021. The Committee therefore calls on Government to design appropriate packages for public sector employees and expeditiously address their grievances in order to minimise disruptions to service delivery. On their end, the workers need to negotiate from a moral viewpoint realising that continued industrial action while accepting salaries is unethical.
• Tax Free Threshold- the Committee noted that Government is proposing to adjust the tax-free threshold from Z$10 000 to Z$25 000 and widening of the tax bands to end at Z$500 000 where a marginal tax rate of 40% will apply with effect from January 1, 2022. Equally, the tax-free threshold on US dollar income is proposed to be increased from US$70 to US$100. The Committee calls upon the Ministry to review these tax bands every quarter in line with inflation trends or Total Consumption Poverty Line (TCPL) movements. It is important to note that government revenues increase significantly with advances in inflation, enough to exceed revenue targets. It is therefore prudent that government undertakes frequent adjustments in order to reduce the effects of bracket creep and a higher tax burden on workers. At current levels of prices, the Committee proposes a tax-free threshold of Z$40 000 in order to alleviate poverty of the Zimbabwean workers whose majority are now below the TCPL.
• Review of IMTT- the Committee noted with concern that there was no review of the minimum taxable amount for the Intermediated Money Transfer Tax (IMTT) from Z$500 despite the significant adjustments in prices since the last review. The rationale for extending this tax relief is no longer upheld given that most products which the poor purchase at any given time cost more than $5000. The Committee therefore recommends revision of the IMTT minimum threshold to Z$5000, if the tax relief measure is to make a meaningful impact on the lives of the people. The Committee also calls upon the Reserve Bank to adjust the maximum amount that the transacting public can transfer at any given time on mobile money platforms and in the ZIPIT platform from Z$500 and Z$20000 respectively to Z$20000 and Z$50000 respectively.
• Taxation on mobile phones- The Committee noted that to curb tax evasion on new cellular telephone handsets which attract a 25% customs duty (but can be easily concealed), the Minister proposed to introduce a levy of US$50 which will be collected prior to registration of new cellular handsets by Mobile Network Operators (MNOs). Previously, handsets attracted a 25% customs duty and this had seen the increase in mobile penetration rate and broadband access in the country. The Committee feels that the proposal defeats the whole purpose of encouraging use of ICTs especially in schools in view of COVID 19, in addition to the tax being administratively complex to manage. The new tax will be passed onto consumers, thus pushing the price of cellphones up and creating remittance nightmares for MNOs. The Minister failed to recognise differences in value of cell phones and applied a blanket rate. The Committee recommends that the levy be scrapped to encourage use of ICTs and government can recoup this forgone tax from increased use of cellphones on airtime levy and IMTT.
• National Debt-The Committee comments the Ministry for presenting comprehensive debt information along with the budget. The Committee observed the 28% growth of the public and publicly guaranteed national debt from US$10.7 billion to US$13.2 billion on account of inclusion of blocked funds amounting to US$3.1 billion. The Committee also noted that Government has signed a US$3.5 billion Global Compensation Deed for the compensation of former farm owners in 2020 and this amount will be part of the total debt when the former farm owners sign a cession agreement. The Committee is however concerned that the debt figure excludes the debt to the African Export-Import Bank which is estimated at US$1.4 billion borrowed by the Reserve Bank of Zimbabwe between December 2017 and December 2019 with the government acting as guarantor. Afreximbank is excluded on the list of creditors on Annex 2 of the debt bulletin.

The Committee is also concerned that the US$3.1 billion is a debt arising from negative effects of Government policies and moral hazard behaviour from farmers. It is therefore paramount that Government adopts market-based exchange rate policies (Allowing the auction system to function without interference) as the current misalignment is likely to lead to another debt takeover by Government. The continued use of below the equilibrium exchange rate is creating opportunities for arbitrage on the economy and has brought more costs than benefits to the economy.  Of concern is also the fact that the Ministry of Finance deliberately avoided expressing the national debt as a percentage of GDP. It is clear from the Macro-Economic Framework table that a higher inflation rate from what is indicated was used to convert nominal GDP figures to real GDP figures. As such, the need for consistency in the budget figures cannot be overemphasized.

The Committee is equally concerned with the poor recovery rate from the National Enhanced Agriculture Productivity Scheme (NEAPS) where the following is noted:

• CBZ Agro yield (maize farmers) 0.6% recovery rate-ZWL$76.8 million and 50% guarantee;
• CBZ Agro yield (maize farmers) 22% recovery rate-ZWL$21.7 billion and 80% guarantee;
• CBZ Agro yield (wheat farmers) 77% recovery rate-ZWL$1.57 billion and 100% guarantee; and
• CBZ Agro yield (soyabean farmers) 13.3% recovery rate-ZWL$1.5 billion and 80% guarantee.
  • Withholding tax- the Committee noted the proposal to hike withholding tax from 10% to 30% to push non-compliant businesses to get their tax clearance certificates on time. The increase of the tax in a situation where close to 75% of the economy is informal will lead to a blanket increase in prices of goods and services to cover for the amount withheld for non-compliant suppliers. The Committee is concerned that this increase comes in the background of Zimbabwe Revenue Authority (ZIMRA) consistently failing to issue tax clearance certificates on time to various businesses and running behind schedule in processing tax rebates. The Committee calls upon the Minister to maintain the withholding tax at 10% and prioritise support to ZIMRA  to automate the tax compliance process and reduce human interface to deal with deliberate bottlenecks in the system and corruption.
  • Youth Employment Tax Credit -the Committee noted that Government extended the Youth Employment Tax Credit for youth employees hired without revision of the figure from ZWL$1500 approved in 2021. The Committee recommends upward review of the figure to a minimum of US$500 or equivalent. This will enhance the attractiveness of the scheme to employers who weigh the opportunity cost of employing an inexperienced youths over the abundant experienced potential employees flooding the job market. The Committee wishes to commend the Minister for extending this tax credit to people with disabilities (PWDs). The proposed credit of US$50 is however too low to incentivise employers to employ PWDs given other costs associated with hiring them. These costs may include modifications to the existing infrastructure, or hiring assistants in some cases. The Committee therefore recommends upward review of the tax credit to over US$2000 if it is to be attractive.
  • Motor Vehicle Rebate Scheme for Civil Servants -The Committee comments the Minister for extending the for-Motor Vehicle Rebate Scheme for civil servants to cushion them from excessive transport costs bearing in mind the inadequacy of public transport. The budget however proposed to review the grade thresholds to US$3 500 for Grade B and C, US$5000 for Grade D and E and US$10 000 for Deputy Directors. This is ostensibly to curb abuse of the facility, whereby some beneficiaries cede their privileges to third parties in exchange for monetary gain. The thresholds are however at odd with SI 89 of 2021 which bans importation of motor vehicles above 10 years from the day of Manufacture. Only substandard used vehicles below 10 years can be procured at less than US$5000. The Committee recommends strengthening of the monitoring and verification systems, as is done in other countries like Kenya and Tanzania instead of reducing the thresholds.
  • Devolution-the Committee is concerned with the insufficient transfers to provincial councils and local In 2020, Z$1,045.0b was transferred out of the budgeted Z$2,662.9b despite actual revenue being Z$183.0 billion implying transfers were supposed to be Z$9.15 b, as provided for in Section 301(3) of the Constitution which provides that “Not less than five per cent of the national revenues raised in any financial year must be allocated to the provinces and local authorities as their share in that year”. In 2021, actual transfers as at 30 September were Z$ 6,311, which is 32 % of the budgeted Z$19 540. 2021 revenue is now projected at Z$495 billion implying that transfers to provincial councils and local authorities should be Z$24.75 billion. The Committee is aware that disbursement to local authorities is dependent on readiness to spent, local authorities failed to submit the documentation required. The Committee therefore calls upon local authorities and provincial councils to submit required documentation well in time and Treasury to respect the constitutional provision regarding allocation of not less than 5% of revenues raised in any financial year to devolution.
  • Social safety nets -the Committee noted that the 2022 National Budget proposes to set aside resources amounting to Z$21 billion (2.2% of the budget for social protection programmes that will improve livelihoods, empower persons with disabilities and enhance capacities of parents and guardians of persons with disabilities, including care givers of adults and children with severe disabilities. The Committee however feels that the allocation is insufficient if the budget is to be what the Minister of Finance calls the 2022 budget “the People's Budget”. According to the Social Policy for Africa (2008), 4.8% of the country’s GDP should be allocated towards social protection programmes. The Committee made the same recommendation in 2020 and has been vindicated as there is an expenditure overrun of 121.5% of the budget by 30 September 2021. In addition, the social transfers should be remodelled from a charity model to an empowerment model. The Committee emphasises the need for timely implementation of the various social protection measures and better policy coordination, that is, ensuring that there is policy consistency in the budget execution through alignment of action plans to the realisation of social and economic rights of the citizens especially People with Disabilities (PWDs), the elderly and the vulnerable. The budget should also provide clear job creation strategies beyond just supporting economic value chains, if the pro poor budget is to lift majority of the citizens from poverty and a significant number from dependence in social safety nets. The Committee recommends an upward adjustment of social welfare benefits for the elderly, PWDS, people in difficult circumstances and orphans  from the current levels of approximately $1500 to $20 000.
  • Subsidies-the Committee is concerned with the over expenditure in subsidies whose expenditure up to 30 September was Z$4.676 billion, a 119.6% above the budget of Z$2,129 million. The Committee recalls that Government, on paragraph 234 of NDS1 undertook to “Review subsidy policy for better targeting and fiscal sustainability” As part of the wider reform process, the 2022 budget seeks to streamline subsidies as a way of creating fiscal space for development programmes and projects, as well as social services. In the 2020 National Budget, the Hon Minister of Finance and Economic Development highlighted that subsidies, in particular those on fuel, electricity and agriculture have, in the past, “led to large and often unpredictable expenses”, forcing Government to run a budget deficit that was eventually financed by excessive borrowings and in the process, putting pressure on the local currency and inflation”. As such, the Committee recommends streamlining of subsidies to the bare minimum where necessary.  As such, the Committee calls upon the Minister of Finance to annex to the proposed budget statement a detailed appendix of the proposed subsidies.

Mining-the Committee is concerned with the slow pace in the implementation of the mining cadastre system which has been on the cards and resources have been allocated over the past five years.  Through the computerised mining cadastre system project, the government intends to create a database of information such as applications, licence holders’ rights, restrictions, sizes of mining claims and their geographical location among other issues. The cadastre system will create opportunities for addressing mine ownership disputes, loss of potential revenue from mining claims as awarding, administration, and security of mining titles especially in the ASM sector. This will also give government an opportunity to tax better the ASM sector which has been contributing more than large scale miners in terms of gold deliveries to Fidelity Printers and Refiners. The 2022 National Budget should therefore avail adequate resources towards finalisation of the computerised mining cadastre system. The Committee also calls upon the Minister to commit, with resources, adoption and implementation of the Extractive Industries Transparency Initiatives (EITI). The Committee recalls that the 2019 budget committed to join EITI and the 2021 budget in paragraph 235 reiterated this but the commitment was not backed by resources. The Committee also recommends Government to step up research and advisory services to artisanal miners through universities, SIRDC, ZEPARU and the Zimbabwe School of Mines, in addition to extending financing through the Gold Development Initiative Fund (GDIF) created by the Reserve Bank of Zimbabwe (RBZ) as part of initiatives to enhance economic productivity through promotion and development of the gold mining industry in Zimbabwe. The GDIF should be supported by resources from the fiscus and should be remodelled so that there is clarity on its intentions and outcomes.

• Agriculture-the Committee welcomes Government commitment to finance agriculture especially through the Agriculture Productive Social Protection Scheme for crops and livestock (which targets vulnerable households) while banks will fund commercial farming activities, through the National Enhanced Agriculture Productivity Scheme (NEAPS), with Government only providing guarantees on a risk sharing basis. The Committee calls upon Government to remodel the NEAPS with a view to reduce moral hazard and adverse selection. The Committee calls upon Government to release the Z$18 billion for the Agriculture Productive Social Protection Scheme targeting to support 540 000 vulnerable households well on time and to ensure the right and appropriate inputs mix for the different ecological regions are distributed.  The Committee also calls upon Government to prioritise the effective functionality of the commodities exchange for marketing of agricultural commodities. This will ensure price discovery in the wake of subdued producer prices against inflated costs of inputs which has rendered farming a less viable business.
• Currency issues- the Committee is concerned with the absence of deliberate strategies in the budget to support the Zimdollar in the wake of onslaught on the value of the national currency by the parallel foreign market players. As such, the three-tier pricing system is now tilted in favour of the US Dollar as the Zimdollar prices are indexed to the highest parallel market rate. This is obviously affecting the already burdened members of the society, most of whom earn Zimdollar salaries. The reduced confidence on local currency by the authorities is clearly evident from the statement wherein most fees, fines and prices have been expressed in US dollar terms with a Zimdollar equivalent. The fallacy of a US$ budget against Bond notes medium of exchange is threatening the implementation of this budget and negates the impact of the proposed reforms as the allocated resources are inadequate to meet expenditure forecasts, in real terms. The Committee therefore wonders how the budget is going to account for revenue and expenditure where one part is forex and the other Zimdollar. One cannot discount the potential for illegalities and rent seeking behaviour.
• ZIMSTAT allocation-the Committee noted that ZIMSTATS was allocated Z$3.8 billion in 2022 even though Z$6 billion is required for the 2022 census. The difference is expected to be contributed by Development Partners. The Committee also noted with appreciation the pledges have been received from Cooperating Partners to support 30% of the Census budget. The mapping exercise to divide the country into enumeration areas in preparation for the 2023 National Census is underway. ZIMSTAT envisages to finish the mapping exercise by 21 January 2022. ZIMSTAT is currently seized with the procurement of IT equipment and software for the Census. The Committee therefore calls upon Treasury to prioritise ZIMSTAT in the disbursement of the remaining 2021 and 2022 budget wherein a release of Z$2.9 billion for procurement of tablets, computer equipment, vehicles and other operational expenses is targeted in 2021. The Committee also noted with appreciation that ZIMSTAT is intending to produce new statistics starting 2022. These include quarterly GDP statistics as well as the new agriculture and economic census to be done in 2024 whose preparations have to begin in 2022. The Committee therefore calls upon the Ministry of Finance to prioritise programmes for retention of experienced staff within the agency especially statisticians and IT experts.
• ZIMRA Allocation-the Committee noted with concern the inadequacy of the ZIMRA budget to support infrastructure development as well as ICT systems to enhance revenue collection and reduce exposure to corruption (human interaction). Some of the IT equipment like scanners and drones as well as the software require foreign currency. The Committee also noted with concern the failure by the authority to provide senior managers with condition of service vehicles due to resource constraints. The authority is losing staff due to uneconomic salaries in a unionised environment. ZIMRA also indicated to the Committee that it requires capacitation in terms of vehicles as 347 out of its fleet of 479 vehicles are now aged five years or more. The Committee therefore calls upon the Ministry of Finance to allow ZIMRA to retain 3% of net revenue collected.

2. RECOMMENDATIONS
3. Treasury should improve on the releases and predictability of resources to MDAs. Erratic releases impede on the ability of ministries to achieve what they set out to achieve in their strategic plans and as reflected in the blue book. The releases should be balanced by programme and economic classification henceforth. All payment runs should be honoured and Treasury should not authorise budget releases not linked to the cash availability.
4. Treasury should adopt a system of quarterly releases of operational budget after a Ministry has satisfied all reporting and acquittal requirements beginning first quarter 2022. Where possible, capital releases should be once off so as to preserve value for money and facilitate realisation of economies of scale.
5. Treasury should take the lead, as custodians of the public purse in addressing Auditor General’s recommendations and consistently reporting to Parliament on such efforts. In that regard, Treasury should quarterly update Parliament on progress made in addressing AG recommendations through comprehensive Treasury Minutes.
6. There is need for the Minister of Finance and Economic Development to condone any unauthorized expenditure timeously in line with Section 307 in the Constitution which obligates Minister of Finance to introduce a Bill into the National Assembly seeking condonation of the unauthorized expenditure without delay and in any event no later than sixty days after the extent of the unauthorized expenditure has been established. This should be done annually.
7. Treasury should, beginning 2022, put in place mechanisms which will ensure observance of hard-budgetary constraints as contained in the NDS1 and the 2021 and 2022 Budget Statements. There should be no room for additional resources outside the already approved resource envelope by Parliament in order to instil fiscal discipline and effective budgeting across MDAs.
8. ZIMRA must be allowed to retain 3% of the net revenue collected for its operations beginning 2022 fiscal year. This will ensure that the authority is adequately capacitated to pursue revenue enhancement measures and plug revenue leakages.
9. There is need to speed up enactment of a legal instrument to ensure accountability for the devolved funds as such the Provincial Councils and Administrative Amendment Bill which is expected to clearly define roles, responsibilities and parameters for the three tiers of government to avoid duplication of functions should be fast tracked and brought to Parliament by March 2022.
10. The overdue Mines and Minerals Amendment Bill should be promulgated into law. This will in turn usher in the necessary processes for the amendment of the Precious Stones, and Gold Trade Acts to facilitate growth of the mining industry and the nation as a whole. There is also need to effect the cadastre system and employing digital technology in the mining sector so that there is constant surveillance of mining operations through the country.
11. CONCLUSION

Regardless of the difficult macro-economic environment exacerbated by exogenous shocks related to recurring droughts, Cyclone Idai and the COVID-19 pandemic as well as limited external support, the economy is exhibiting some positive sentiments and is on its way to recovery.  Efforts to stabilize the local currency and lower inflation through the Foreign Currency Auction system are commendable. The Committee recommends that Parliament approves the 2022 budget subject to the proposed amendments by the Committee. I thank you.

          HON. CHIKUKWA: I am going to present the report on the Ministry of Local Government and the Ministry of National Housing and Social Amenities.

1.0           Introduction

The mandate of the Ministry is to ensure that functional human settlements are promoted and sustained in all local authorities back-stopped by sound local governance and provision of quality, well-maintained Government infrastructure.  The Ministry was allocated a revised estimate of ZWL$19.54 billion in the 2021 financial year, with only ZWL$6.31 billion (32%) having been disbursed by September 2021. For the 2022 financial year, the Ministry submitted a total bid of ZWL$114 billion but was allocated only ZWL$24.3 billion (21%). The enormous negative variance shall severely undermine Ministry activities in the coming budget year.

2.0            Budget Analysis Meeting Observations

On 2 December 2021, the Committee held a virtual meeting with Ministry officials, and observed the following:

•      The glaring variance between budget allocations and disbursement is paralysing Ministry operations.
•      The Committee remains seized with continued violation of the Constitution regarding the allocation of 5% of the budget towards devolution. In the previous budget, while the allocation was 4.5%, only 1.47% was allocated. In the 2022 budget, there was an even lower allocation of 2.2% which may imply an even lower disbursement. These funds are critical for infrastructure development and water and sanitation hygiene, especially in rural growth points which are experiencing increasing population pressure.
•      Another area of concern is the delay in the aligning of laws with the new Constitution to allow the operationalisation of the Council of Chiefs. This step will enable the establishment of the Council of Chiefs secretariat, thus giving them freedom to manage their own funds. The current arrangement where the Traditional Leadership Support Services Department acts as the secretariat does not promote transparency and accountability. The Committee requested the Ministry to submit a written report explaining the delays but it is yet to do so. Therefore, the Committee has decided to summon the Ministry, through the Office of Clerk, to a physical meeting to discuss the matter.

HON. T. MLISWA:  On a point of Order Madam Speaker or maybe it is more in terms of education and enlightenment.  In terms of tradition, the Opposition usually comments first on the Budget before all these Committee reports are tabled.  When we first brought this issue up last time, we were told that we will be allowed to speak when we next assemble in Parliament.  It is tradition, I do not know how we have lost the tradition but the Opposition is here to comment on the budget.  I am just saying this so that we have clarity on the matter and would not want us to be recorded as having deviated from tradition. 

I know Dr. Mashakada is ready and waiting to make his traditional contribution to the Budget Statement.  I just need to be educated Madam Speaker.  I thank you.

THE ACTING SPEAKER:  I think it is common knowledge that we all reside in certain Committees and the practice is that Chairpersons are supposed to start with the presentations.  What has been happening for some time and has now been regarded as tradition is because the reports were taking a long time to be produced and Dr. Mashakada would be allowed to stand and give his comments/sentiments whilst awaiting the production of the various Committee Chairpersons’ reports. 

Now that the reports are ready for tabling and also taking into consideration the fact that we all reside in certain Committees, it would be prudent for Committee Chairpersons to table their reports and Hon. Dr. Mashakada and the rest of the Hon. Members will be given opportunity to debate later.

^(v)HON. NDEBELE:   I think Hon. Mliswa is right in saying that Hon. Dr. Mashakada comments on the Budget Statement before everyone else and that has always been tradition.  I am in total agreement with Hon. Mliswa.  It is not a matter of accident that the Opposition responds to the Minister’s Budget Statement before the Committee Chairpersons because it is something that has been entrenched within parliamentary tradition and I see no reason why we are deviating from the norm.

Madam Speaker, I wish to appeal to you to request our esteemed Chairpersons to present summarised reports and submit the full reports to Hansard for publishing in order to maximize on time and more so in the case of Hon. Chikukwa since she presides over two ministries.

THE ACTING SPEAKER:  Thank you very much Hon. Ndebele.  We will look into the matter and see how we can resolve it and also see how we can safeguard the interest that you had in the matter.  It is also worth knowing that Chairpersons are supposed to be given precedence first.  Please proceed Hon. Chikukwa. It is also worth knowing that all Hon. Chairpersons will be allotted 20 minutes to table their reports.

HON. CHIKUKWA:  Thank you Madam Speaker.  I will be done with my presentation within the allotted time.

•       Furthermore, the Council of Chiefs is not being allowed to install new headmen in line with population growth, with the shortage of funds being cited. In the 2021 financial year, the council was allocated a revised estimate of ZWL$317 million, but received a 41% disbursement. For the 2022 budget, the Ministry was allocated ZWL$671 million, representing 42% of the bid, implying that the installation and replacement of new headmen among other activities shall remain a challenge.
•        Relatedly, the alignment of Acts and production of principles received only 10% of the bid. A far more rational amount of 50% of the requirement would be the bare minimum. The slow pace in the alignment of laws is hampering progress in areas such as devolution and operationalisation of the Council of Chiefs, among many other areas.
•       The spatial planning programme remains underfunded, as it was in the previous budget, implying that the regional master plans for Masvingo South, Victoria Falls-Zambezi, Harare Metropolitan, the new city and Tugwi-Mukorsi, shall remain unfinished. Such a scenario compromises the long-term development of the nation, given the importance of planning. Due to underfunding, we are still working with planning maps from the 1960s and there are no future plans for roads, water, and sewerage. Informal settlements remain in a mess 20 years later.
•       The gross underfunding of disaster risk management is extremely worrisome. More funding is needed for Civil Protection to finance tent-age, evacuation centres and warehouses in case of extreme weather events whose intensity and frequency is increasing. There also is a need to train local authorities and traditional leadership on disaster risk management.
•      Furthermore, it was noted that the ZUPCO subsidy is placed under spatial planning which then gives the impression that spatial planning is well funded. As it stands, the ZUPCO budget is 68% of the spatial planning budget.
•      Also as raised in the previous budget, the underfunding for the Construction, Maintenance and Management of Public Buildings Programme continues. While the Ministry had decided not to initiate any new projects, the allocated funds are not enough to complete the ongoing projects. Some of the priority projects include completion of the Lupane and Mutoko Government Offices, and the revamping of Mukwati and Kaguvi Buildings which are now an eyesore. Under programmed strategic projects, eight of them have received no funding including some classified as stalled.
•      Underfunding of staff training will continue to hamper lines of reporting in local government. As we stand, the Ministry has failed to produce Q3 accounts and to also account for devolution and ZINARA funds disbursed to local authorities.
•     The Ministry also pointed out that the allocation for the ZUPCO mass transport subsidies is only sufficient for six months. This is a challenge since this is a contractual obligation towards bus operators.

• Recommendations

The Committee recommends that:

•      Treasury should allocate 5% of the budget to devolution in line with the Constitution. The continued violation of the Constitution is unacceptable.
•      Furthermore, the Devolution Bill must be brought before Parliament as a matter of urgency.
•      Alignment of laws for the operationalisation of the Council of Chiefs and establishment of its secretariat must be expedited, to allow the council to manage its own funds. Also, adequate funding should be availed to the council to allow it to properly discharge its mandate.
•      Disaster risk management should be fully funded to ensure the establishment of warehouses, evacuation centres and acquisition of adequate tent-age in preparation for possible extreme weather events this summer.
•      The allocation towards spatial planning be increased given the critical role it plays in long term development.
•       Mass transport budget must be removed from the spatial planning budget and be a stand-alone sub-vote. Alternatively, it can be transferred to the Ministry of Finance budget since it is the creation of a Cabinet decision and we then avoid the overstating of the Ministry of Local Government budget.
•      All devolution and ZINARA funding received by local authorities must be listed for reconciliation in the budget. In this regard, funding should be availed to strengthen monitoring and evaluation of fund disbursement to local authorities by the Ministry. The Committee further proposes that it be notified of devolution and ZINARA funds disbursements to local authorities through mandatory quarterly reports.
• The allocation to ZUPCO subsidies should be increased to sufficiency for a year.

• Conclusion

The Committee is concerned with the gross underfunding of the Ministry which compromises service delivery. It is the Committee’s hope that Treasury shall review the allocated amounts to the above-mentioned critical areas in line with the Ministry’s bids. 

2022 Ministry of National Housing and Social Amenities

1. Introduction
   •       The Ministry of National Housing and Social Amenities is responsible for the promotion and facilitation of urban and rural development through the provision of modern and affordable housing and social amenities, and the regularisation/sanitisation of informal settlements in consultation with relevant ministries.
   •        With a housing backlog of 1.25 million units, the Ministry is targeting to deliver 220,000 housing units over five years under the National Housing Delivery Programme (2020-2025). The Ministry shall adopt a multi-pronged approach involving the public and private sectors, and broad-based citizenry participation to achieve this goal.
2. Budget Allocations for 2021 and 2022
   • In the previous and current budget, the Ministry remains grossly underfunded, thus compromising its operations as a fairly new Ministry. In the 2021 financial year, from a revised estimate of ZWL$2.8 billion, only ZWL$486 million (17%) was disbursed, while out of a bid of ZWL$48 billion, only ZWL$10 billion was allocated for the 2022 budget. Such underfunding for a new Ministry is unacceptable and leaves little hope for the clearance of the housing backlog.
3. Post Budget Analysis Meeting Output

The Committee held a post-budget analysis meeting with Ministry officials and departmental heads led by the Permanent Secretary on Thursday 2^nd December 2021. The following was observed:

•        The Committee noted with concern that up to now, the Ministry still remains under-resourced such that it only has 34% of the approved staff establishment (275/790), there is inadequate office equipment, furniture and fittings, and vehicles at the Head Office, and both provincial and district levels. The provincial offices do not even have computers for report writing. No new Ministry can stand on its feet with such gross underfunding and meagre resources. The Ministry has a bid of 22 vehicles and one mini-bus for the Head Office, 10 vehicles for provinces and 20 single-cab for districts and aims to move from the current 275 in post to at least 558 by end of 2022. Unfortunately, the allocations made towards these expenditure lines are glaringly way below the bids.
•        Due to lack of funds, the Ministry had decided not to embark on any new projects but finish the stalled projects first. However, with the low allocation standing at 18% of the bid, not even the stalled projects can be completed. Its ‘major’ achievements are completion of a few old housing projects.
•          Also, the regularisation and sanitisation of various informal settlements remains outstanding due to lack of resources.
•        Furthermore, the erratic Treasury disbursements have also seen contractors downing tools awaiting payment for work done, thus further delaying the completion of on-going projects.

4. Recommendations

The Committee recommends that:

•        Treasury increases its allocation to the Ministry towards the acquisition of office equipment and vehicles to enable the setting up of administrative structures at all levels for effective discharge of its mandate. An increase of the overall allocation to at least 75% of the bid is recommended.
•         The allocation towards stalled projects be increased to match the bid.
•         Adequate allocation is needed for the completion of Cyclone Idai victims’ housing.

5.0    Conclusion

Given the gross underfunding of the Ministry, the goal of decent shelter, a critical human need and an essential feature of an upper-middle-income society will remain elusive. In this light, the Committee appeals to Treasury to reconsider increasing the allocations to the Ministry to allow it to be fully constituted in terms of human and material resources so that it fully discharges its mandate.  I thank you.

HON. DR. MASHAKADA:  Thank you Madam Speaker for affording me this opportunity to join the debate.  I am most grateful to the Minister of Finance and Economic Development for tabling measures relating to the revenues and expenditures of the country and I am also grateful to the Chairperson of the Budget Committee, Dr. Nyashanu, for presenting the position of the Budget Committee which I also belong to.

I rise to give my own assessment as the shadow Minister of Finance from the opposition.  It is a tough balancing act, I am a Member of the Budget Committee but at the same time, I also have a constituency which is the opposition, to articulate our position and views.

Madam Speaker, in looking at the budget, there is a structure which the Minister has followed and I think in assessing the budget, I will also want to follow the structure which was used to present that budget.  The structure which I am going to use or the framework I am going to use to analyse this Budget is as follows:

First, I will look at the budget as a tool for macro-economic management, budget as a tool to advance NDS 1 and also to direct the economy towards meeting of the Vision 2030 goals.

Secondly, the other leg, I will use to analyse the budget is to what extent does the budget transform the lives of the people. Does it have an impact on society, does it meet the basic needs of the people, have the people’s expectations been met by the 2022 Budget? That is very important because in everything that we do, we must put people first.

Thirdly, the framework I am going to use is to look at whether the budget allocates resources efficiently to line ministries.

Fourthly, I will look at whether the budget is set to develop the country as a whole and finally, I will also look at what are the downside risks of underlying the budget. I will use those five pedestals to assess the budget.

Madam Speaker, looking at the macro-economic framework that the budget has set, I am encouraged first by the growth trajectory – [HON. T. MLISWA: Sorry Madam Speaker, my sekuru is busy snoring.] –

THE ACTING SPEAKER: May you please proceed.

HON. DR. MASHAKADA: Thank you. I look at the macro-economic framework/macro-economic dashboard that is set out in the budget and note that the growth target of 5.5% is very encouraging.  If we are going to stimulate the economy, even under the challenges of COVID, stimulate the mining sector, stimulate the agricultural sector, manufacturing and tourism and all other growth enablers so that we can meet the 5.5% target.  I think this is going to benefit the country. I hope that the 5.5% growth that we are talking of is not only growth per se. It must be inclusive to growth. It must be shared growth. It must be growth that will bring jobs. It must be growth that would reduce poverty among our people. It must be growth that will increase the happiness of our people. If it is going to be growth per se which does not trickle down to touch the lives of the people, then we will not need that growth. At this stage, let us hope that the 5.5% is going to impact the lives of the people. I am encouraged that the 5.5% growth is way above the global growth target of 3.6%.  Zimbabwe must continue to chat this positive growth trajectory. The other thing to look at the macro-economic dashboard is the budget deficit. I see a continued and spirited effort by the Minister to contain the budget deficit and this is to be encouraged. In the past, Government borrowing had been too high and almost unsustainable but I see that the deficit is being contained progressively going forward.  I think it is a positive mark on the macro-economic dashboard.

I also note that our exports in the current account balance are set to increase to over US$4 billion. In fact, we will continue to register a positive trade balance and that should be maintained. I also note that a diaspora remittance to the tune of $1.5 billion is on the high note. These are macro-economic variables or targets which conform to the theme of reinforcing sustainable recovery and resilience. I think in the era of COVID, we are fairly doing well as a Southern African country to keep the economy on track.

On the downside risks which are very visible in this budget, the first one Madam Speaker is the question of the fiscal space which is very problematic. You will recall that ministries had a total bid of ZWL$2.7 trillion but the Minister was only able to allocate a budget of ZWL$927 billion which was close to a trillion. That shows you that there is lack of fiscal space. If you look at the revenues that the Minister has projected to collect, those revenues at over $800 billion are only 17% of GDP. If we are collecting only 17% to 18% of DGP and our GDP is about US$25 billion, it means we are not doing well in terms of revenue collection. That will impact the release and allocation of the monies to Government departments. That is the question of fiscal space that I am happy on, that Government has to come up with more innovative ways to raise revenues just outside the taxation framework. We have to look at other ways to raise our revenues. That is where our natural resources sector come in. Let us leverage on our huge natural resources. We have got huge deposits of platinum, huge deposits of gold and other sub-soil resources. Let us do forward contracts and sell some of these things in advance so that we can fund our budget, strengthen our budget and complement the fiscal taxes that we used to raise the revenues. So I see fiscal space as one obvious downside.

Madam Speaker, the second downside to note is the question which Dr. Nyashanu ably enunciated – the issue of budget credibility. If the uptake of allocations by ministries is going to be under 40%, surely it is a low uptake. It will affect service delivery by ministries because there are no resources to release to these ministries yet when ZIMRA reports their income statement, they say that they have registered surpluses but this money, because it is a cash flow problem, the money is not released in time to benefit Government ministries. We might be persuaded as the Chairperson of the Budget Committee has noted, maybe to do quarterly releases which are timed to coincide with the ZIMRA revenue targets. Maybe that can improve the allocation to ministries. Otherwise it will not work if the ministries continue to get less than 40% of what is allocated to them. That is a true downside.

The other downside is the threat of inflation. You may recall Madam Speaker, that the Ministry had projected an inflation target of 25% by December this year. Contrary to that, inflation is now poised to reach 58%. That creates new inflationary pressures in the economy. With new inflationary pressures, the monies that had been allocated would be wiped out. I agree that without resorting to a supplementary budget, these monies will not be enough because of inflation which is creeping in again, like I said, at 58%.  We have to watch on inflation. This will mean that money supply, growth will increase, borrowing also will increase and that will create a huge crisis for us. The other measure downside risk is that whereas we are budgeting in Zim Dollars, which is our official currency and we must promote the usage of our local currency; there is no doubt about that, we need to strengthen our mono currency.  The fact of the matter is that on the ground, it is the US dollars which is being paid or charged by the market.  Just go out, very few retail shops or agencies charge you in the mono currency.  The fuel sector, everyone has to find US dollars to buy fuel in Zimbabwe.

There are very few garages which sell fuel in bond notes or RTGS, that is a reality. Most bills are paid in foreign currency and that is the reality.  It is the market which is driving this US pricing system and we have to be more innovative to make sure that our people do not suffer as a result of this re-dollarisation that is taking place. In fact, I want to commend the Government for paying bonuses in US dollars, they realised that it is hard currency that is working. It is an admission that this economy is based on hard currency – [HON. MEMBERS: Hear, hear.] -  So we want to thank Government for that. We urge Government to go beyond - they must start collecting taxes in foreign currency so that they can even pay half the wage bill in hard currency to cushion civil servants.  The other issue Madam Speaker is the question of non-taxable income which has now been raised to RTGS39 000.  This falls short of the poverty datum line.  Economists estimate the poverty datum line at RTGS50 000 not RTGS39 000, so this figure will fall short of the poverty datum line and it will not cushion the civil servants or the workers as it is intended to do.  These are some of the down-side risks I thought I should raise.

Most importantly Madam Speaker, attached on the macro-economic dashboard is the macro economic framework and had the positive outturn there.  What is now important is to make sure that the budget benefits the people. The poor person in the streets feels that there is a 2022 National Budget by way of the income that they get, jobs that are created, food security and by way of strengthening their pockets.  That is what people need, we do not want a budget that is divorced from the practical day to day lives of the people. If people see a road being constructed for example, they must be able to relate that to a good economy. If they see a dam being constructed, they must be able to relate it to a good economy and see that they are benefiting from the construction of that dam. So, we need to make sure that there is a trickle-down effect of whatever we do or achieve through the budget to benefit the people. 

Madam Speaker, I noted that the SDRs have not been disbursed even without the involvement of Parliament. 

THE ACTING SPEAKER: Hon. Dr. Mashakada, you are only left with 5 minutes.

HON. DR. MASHAKADA: I thank you. The SDRs have not been disbursed even without the involvement of Parliament. I noticed that a huge chunk of the money has gone to the Harare-Chirundu-Beitbridge highway which is commendable. The other chunk has gone to agriculture and social protection which is again commendable.  The other chunk has gone to fight COVID-19 and the other has been reserved to boost our reserves at the Reserve Bank of Zimbabwe.   Well, these sound to be very good areas to spend the SDRs but we need public expenditure tracking system and a strong system to make sure that this money is truly going to where it is intended to benefit.  Is the money going to agriculture?  Is the money going to social protection as stated?  Is the money going to COVID-19 as stated?  Has some money been set aside for reserves?  We need some verification or some audit of some sort, that is why I still feel that it is necessary for the Ministry of Finance and Economic Development to come to Parliament and address it on the disbursement of SDRs rather than smuggle it in the budget statement as it were.  We need a Ministerial Statement on the planned usage of the SDRs but I hope that we can take good care of our SDRs because when rainy days come, we must be cushioned or not misapply or misappropriate the SDRs.

Madam Speaker, having said this, I still feel that Zimbabwe needs to pull together and all stakeholders have to be involved in the execution of this budget.  We need quarterly reports from the Minister on the execution of this budget so that we can monitor and evaluate the implementation of this budget.  It is one thing having the budget presented but it is another to monitor it and to track the expenditures and even the revenue side so that we always stay alert and always stay on track. I thank you very much.

^(v)HON. NDUNA: On a point of order Madam Speaker.

THE ACTING SPEAKER: What is your point of order?

^(v)HON. NDUNA: If it pleases you Madam Speaker, if you may increase his time by another 5 minutes, I think he was beginning to submit something very critical. 

THE ACTING SPEAKER: I am sure he had finished – [HON. MUSHORIWA: Inaudible interjections on virtual platform.] – Hon. Mushoriwa, let us not want to just put each other at a corner, I think I indulged Hon. Dr. Mashakada so that at least we can then be able to balance the House.  So now we need to do the procedure that we always do because we all reside in Committees like I had ruled before. For now, can I allow the Hon. Chairpersons to debate? We know we have extended our time.  We have got enough time for us to be able to have this conversation.  So I am going to indulge soon after the Hon. Chairpersons have finished speaking.  I thank you.

HON. SACCO: Thank you Madam Speaker – [AN HON. MEMBER: Madam Speaker, I am representing the Portfolio Committee on Public Accounts] –

THE ACTING SPEAKER: I have a list that I have been given by the Chief Whips here so I will also indulge you.

HON. SACCO: Thank you Madam Speaker.  I stand to present a report by the Portfolio Committee on Industry and Commerce.

 1.     Introduction

• On the 25^th of November 2021, the Minister of Finance and

Economic Development, Hon. Professor Mthuli Ncube presented the 2022 National Budget. The 2022 National Budget was presented in the COVID-19 context and was informed by the country’s Vision 2030, which is benchmarked by the continued implementation of the National Development Strategy 1 (NDS1), 2021-2025, which is an economic blueprint outlining the policies, institutional reforms and national priorities as the country aims to attain the middle-income status by 2030. Hence, the 2022 National Budget is aligned to the provisions of the NDS1 as it is centered-on building resilience and sustainable economic recovery.

• The 2022 National Budget comes also after the country has

received the International Monetary Fund’s (IMF) Special Drawing Rights (SDRs) to the tune of US$958 million aimed at addressing the liquidity crisis, build confidence, and foster the resilience and stability to the economy which has been affected due to Covid-19 pandemic and this will necessitate social and economic growth during and post COVID-19 era. The Ministry will directly benefit through allocation for industry support worth US$30 million under the proposed SDR utilisation. The US$30 million is intended for retooling/revolving fund for new equipment and replacement for the value chains specifically targeting cotton, leather, pharmaceuticals, and other agro-processing industries.

HON. T. MLISWA: On a point of order. My point of order is on the Ministry of Finance. When we debated the budget, the Minister was very clear that he will never allocate SDR to anyone before coming to Parliament. It is there in the statement and we now hear he already did it before coming to Parliament. So how can people trust the Ministry of Finance? That is dishonest and criminal. May I know which Parliament he went to? Maybe he went to another Parliament. I can even come up with the Hansard and to quote his words, he said he would not allocate anything before coming to Parliament but now the allocations have been made and Parliament is supreme in terms of oversight. So how then can we trust him and it is not sitting well with me because we are dealing with dishonest people. He is the Minister of Finance and that statement is there but now he has allocated, and we must sit here and listen to a statement full of lies and dishonesty. So the Minister of Finance must tell us which Parliament he went to. We were here. He said it. He must respond which Parliament did he went to - how then can we trust him moving forward? This is where the corruption starts where you are allocating these funds, to who? This Parliament has got the power through Section 119 of the Constitution. We have the power and with that power, may he answer before we move forward because we will not pass the budget until he comes here. We will not pass the budget with this dishonesty. He must come here first and then we will move forward.

THE ACTING SPEAKER: Hon. Mliswa, that is noted. I am sure that is very much in order. We hear everything you are saying. The Hon. Minister will be given an opportunity to respond and I am sure he is going to respond accordingly.

HON. T. MLISWA: The response was for now because it is a waste of time sitting here when the Minister is doing things. It is like you are stupid. He is here and he can respond which Parliament they went to.

THE ACTING SPEAKER: I am sure he can respond but for the purposes of this meeting, I am the one chairing and we are going to get a response when the time comes.

HON. SACCO:

1.3 While the economy has been exposed to varying shocks, coupled with macro-economic risks, there is still need and space to firmly set focus on strategic priorities for economic recovery and growth anchored on building resilience against such shocks. Hence, the need to accelerate the industrialisation drives, if we are to turn around the economy and steer it towards the achievement of Vision 2030. 

          2.      The Ministry’s 2021 Budget Performance Review 

2.1 The mission of the Ministry is aligned to the Second Republic’s vision of transforming the economy to the middle-income status by 2030. Thus, the Ministry of Industry and Commerce’s vision is to attain a highly industrialized, technologically advanced and diversified Zimbabwean economy by 2030. This will be attained through its main service delivery areas of policy and administration, industrialization and consumer protection and quality assurance. 

          The Ministry was allocated a total budget of ZWL$2,345,000,000 during the year 2021, which represented an increase in nominal value from the 2020 National Budget allocation of ZWL$60,760,000.  However, the worrying trend over the period 2020 and 2021, is the Ministry’s poor absorption rate which has been stagnant at 32 percent. This has not been spared by challenges imposed by Covid-19 pandemic, shortages of electricity and water, inadequate foreign currency and backlog at the foreign currency auction system, high cost of utilities, shortage of raw and intermediate materials, depressed aggregate demand, and inadequate ICT infrastructure.    

          The Ministry’s major achievements under the three key result areas

during the 2021 budget year includes:

1. Implementation of the Zimbabwe National Industrial Development Policy (2019-2023)
2. Launch of the Pharmaceuticals and Leather sectors strategies

iii.     Successfully held the Zimbabwe International Trade Fair and coordinated participation of the industrial sector in the recently opened Expo Dubai.

1. Implementation of the E-Licensing for Import and Export licences.
2. The establishment of the Consumer Protection Commission
3. The development of the second draft Consumer Protection Policy

• Facilitated resuscitation of closed/distressed and creation of new companies
• Coordinated implementation of selected value chains

1. Improved the World Bank ease of doing business ranking from 156 to 140
2. Successfully funded the IDCZ to the tune of ZWL$450 million
3. Overview of the 2022 National Budget

3.1 The Ministry was allocated ZWL$3, 879, 548, 000, which

represents a 65 percent increase from the 2021 National Budget allocation. The allocated figure exceeds the initial expenditure ceiling of $3, 631, 495, 000, according to the Treasury Budget Call Circular Number 3 of 2021 by 7 percent. This does not suffice the Ministry’s requirements to fulfill its mandate of providing a conducive environment for sustainable industrial and commercial growth and development. However, the budget allocation fell below the proposed bid by the Ministry of $40,843,795,736 and is most likely to be eroded away by the inflationary environment.

The variance between the Ministry’s bid and the 2022 National Budget allocation to the Ministry have huge implication on the nation’s route to the fourth industrial revolution and the successful attainment of Vision 2030.

3.2 While the Ministry appreciates the overall allocations to its three main operating areas; Policy and Administration, Industrialization and Consumer Protection and Quality Assurance, the Committee is concerned with the variance between the proposed Ministry bids and the ceilings. 

3.3 The Ministry noted that the industrial sector is continuously facing challenges pertaining to access to affordable and long-term financing for retooling and working capital. The Industrial Development Corporation of Zimbabwe (IDCZ) is being capacitated financially to provide funding to the industrial sector. However, concerns were that the National Budget allocation of ZWL$2, 250, 000, 000 to the IDCZ is just 10.34 percent of the Ministry’s request. 

4. 4. Post Budget Presentation Analysis Meeting Output

Your Committee duly held a post budget presentation analysis meeting with Ministry officials led by the Permanent Secretary, Dr. Mavis Sibanda and the industry representatives, CZI on Thursday the 2^nd of December 2021. The following issues were observed:

4.1 In its meeting with Ministry officials on the 2^nd December 2021,

the Ministry appreciated the 2022 National Budget allocation to the Ministry. However, there were concerns on the variance (92 percent) between the Ministry bid of $40, 843, 795, 736 and the budget allocation of $3, 879, 548, 000 which is likely to have a negative impact on the efforts of the Ministry to revamp the industry which is significantly affected by Covid-19. Your Committee was in consensus with the Ministry officials in regards to the need to capacitate the industry towards aiding the 2030 vision. 

4.2 Your Committee raised concerns on the low resource absorption rate, 32 percent in 2020 and 2021 and further asked a question on whether the Ministry provides cash budget to the Treasury to aid disbursement process. The Ministry officials also highlighted their concerns on delayed disbursement of budget allocations and indicated that they will make available paper-trail showing their efforts on engaging the Treasury for quick disbursement of resources to the Ministry.

4.3 Your Committee took note of the US$30 million from the

proposed SDR utilization that will be made available in 2022 for retooling, new equipment and replacement for the value chains. However, your Committee highlighted the need for clarity on the method of disbursement of the SDR allocations. 

4.4 Your Committee noted that the attainment of the Vision 2030

and national economic development is centered on successful industrialization process and value chain mapping and beneficiation. However, your Committee raised questions on the competitiveness of the industry compared to regional and international standards with regards cost of doing business and technological advancement.  

4.5 The Ministry, in their submissions, emphasized the significant

 role of IDCZ on offering affordable long-term finance for retooling of the industry. The Ministry further raised concerns on the under-funding of IDCZ and your Committee also agreed that the budget allocations, 10 percent of the Ministry bid towards the IDCZ is too little for IDCZ to contribute meaningfully towards industrialization and the attainment of Vision 2030.

4.6 The submission from CZI as one of the key industry

stakeholders was pinned on the hopes that the 2022 National Budget should have been intended on stimulating industrialization, boosting exports, growing the tax base and boosting aggregate demand. CZI reiterated the need for more effort towards policies which encourage more productive industry, as a way to reduce taxes and increase companies’ performance. They also called for policies which promote import substitution, local procurement and value chain support. Overall, CZI continues to believe that the focus of the budget should be to ensure macro-economic stability, which will in turn enhance attaining of the projected 5.5 percent GDP growth in 2022. 

4.7 Your Committee asked a question on the status of ZISCO Steel

resuscitation as it has been appearing in the national budgets since 2019 but without notable progress on the ground. The Ministry officials highlighted that there is progress on the ZISCO Steel resuscitation process as there is work in progress with regards to potential investors’ engagement and there are short-term roadmap targets for recapitalization and resuscitation of the firm’s subsidiaries in the steel industry, particularly Lancashire Steel.  

4.8 Your Committee, the Ministry and CZI noted with concern the

faltering foreign exchange auction system as a complication to competitiveness and production capacity of the industry. Your Committee suggested fiscal and monetary policy alignment or complementarity to avoid a situation where either of the policies will become a risk for the other.  

4.9 Your Committee also asked the Ministry officials about their

key priority areas going into year 2022 if the history of low/delayed resource disbursement repeats itself. Your Committee further asked for the Ministry’s steps towards prioritized value chains. The Ministry responded by reiterating that low disbursement rate implies prioritization of the Ministry’s work plans. The Ministry officials further highlighted that they have developed sector specific strategies intended for full value chain. CZI buttressed the Ministry’s response by highlighting how the private sector have established a memorandum of understanding with external business partners intended at moving up value chains and enhancing industrialization. 

4.10 Your Committee also raised concerns on the tax burden posed

by the 2022 National Budget, especially the impact of the increase from 10 percent to 30 percent of the withholding tax, the US$50 levy on the new cell phone handsets as these will affect industry performance and tax compliance rate.  

4.11 Your Committee also highlighted the need for a retreat

between the Ministry, the Committee and the private sector partners aimed at discussing challenges faced by the industry and proffer mitigation strategies.  

5. Recommendations

Your Committee recommends:

5.1 The improved Vote to the Ministry from the current less than 1

percent to at least 5 percent of the total National Budget, particularly IDCZ allocation in order to enhance retooling/revolving fund for the industry, value addition and implementation of stimulus funding for industries. 

5.2 There be complementarity between the Fiscal and Monetary

Policy to avoid jeopardisation of sustainability amongst the policies and embrace the demands posed by the Vision 2030 policies and strategies.

5.3 Improved and expedient disbursement of funds by the Treasury,

from the 32 percent in 2020 and 2021, to allow the Ministry to carry out its core mandate towards Vision 2030. 

5.4 The need for continuous oversight on budgetary allocation and

disbursement to the Ministry on a monthly basis to ensure funds are released with the oversight of the Committee.  

5.5 Establishment of concrete steps towards the resuscitation and

capacitation of ZISCO steel citing clear stages to be followed with timelines. 

5.6 Review upwards of the US30 million SDR allocation for

retooling, new equipment and replacement of value chains since industrialization requires significant transformation in order to improve production capacity and competitiveness.  Hence, an allocation of at least US$100 million will have positive and significant effect on industrialization and digitalization processes.  

5.7 The need to improve the ease of doing business and

competitiveness of the country so as to attract both domestic and foreign investment, hence the need to ensure macro-economic stability as a benchmark for economic growth and attaining of Vision 2030.

5.8 An improved foreign exchange auction system based on market

fundamentals, with expedited allocation and disbursements of foreign currency.  

5.9 Prioritization of IDCZ funding from the auction/foreign

exchange system. 

5.10 Revisit of the proposed taxes especially increase (10% to 30%)

in withholding tax, IMTT ZWL$500 threshold, and the new cellphone levy of USD$50 with an intention to boost the industry through induced aggregate demand.  

5.11 The meeting between the Ministry, Portfolio Committee on

Industry and Commerce, and the private sector partners meant to discuss the industry challenges and develop unified solutions to industry problems.    

6. Conclusion

The Zimbabwean economy has been exposed to varying shocks and macro-economic risks which have disturbed the industrial growth and development process. Hence, industrialization lies at the heart of our vision of becoming an upper middle-income economy by 2030. It is through industrialization and digitalization that we can effectively exploit the backward and forward linkages that primarily exist among the agricultural, mining and manufacturing sectors, thus bringing to reality the structural transformation that this economy desperately needs. There is a call for unified voice and action amongst all stakeholders in the Zimbabwean economy in order to create a matrix which points or aids the national policies, priorities and strategies. Thus, when there is complementarity and coordination amongst all stakeholders, the middle-income status is for us to attain.  

          HON. DR. LABODE:  Thank you Mr. Speaker.

INTRODUCTION

         Background 

         The Ministry of Health and Child Care’s mandate is to provide the highest standards of health care services to all Zimbabweans in line with the Primary Health Care approach as set out in the National Health Strategy. 

 Methodology

         Following the presentation of the 2022 National Budget by the Minister of Finance, the Portfolio Committee on Health and Child Care engaged the Ministry of Health and Child Care and stakeholders to gather their views.  The Committee consolidated the views and came up with its own analysis of the budget.

HEALTH AND CHILD CARE BUDGET ANALYSIS

         Overview of the 2022 budget 

         The Ministry of Health and Child Care received an allocation of ZWL$117.7 billion in the 2022 National Budget up from ZWL$54.7 billion allocated in 2021. This allocation represents a 115.17% nominal increase to what was allocated in the previous budget. It further represents a 12.16% share of the National Budget indicating a marginal decline from 12.87% achieved in 2021 and not 14.9% as presented by the Minister of Finance in his 2022 National Budget Statement. 

To contextualise the budget allocation to the health sector, an analysis of the top ten Vote allocations was made (see Figure 1). Allocation to the Ministry of Health was ranked third after Ministry of Primary and Secondary Education and the Ministry of Lands and Agriculture (see Figure 1).  

 

 Figure 1: Top ten vote allocations for 2022

 

 

Figure 2 shows the trends in the Ministry of Health and Child Care budget allocations and its share to National Budgets from 2010 to 2022. It illustrates a general decline in the share of the health sector to total national budget from a high of 8.6% in 2012 to 5.84% in 2018 before a steady increase to 12.16% in 2022.

 

Figure 2: Trends in Health and Child Care Budget Allocations (US$): 2010-2022

 

 

The share of the health budget to total expenditure for 2022 slightly exceeds the Southern African Development Community (SADC) average of 11.3% but remains slightly below the 15% stipulated under the Abuja Declaration for the delivery of quality health services.

 Trends in per capita health spending 

 

The 2022 Health Budget allocation of ZWL$117.7 billion translates to US$71.66 in per capita terms, up from US$42.34 in 2021 (see Figure 3). Whilst this allocation is progressing towards the World Health Organisation recommended threshold of US$86, it is only 48.22% of the SADC average per capita health spending of US$146.29. 

 

Figure 3: Trends in per capita spending on health in Zimbabwe (2010-2022)

 

 

Low levels of per capita spending in health care indicate that health financing in the country is insufficient to guarantee adequate access and quality health care. This implies that the health sector will continue to significantly rely on out-of -pocket expenditures and donor assistance, which is not sustainable given the low disposable income amongst the public and the unpredictability of donor support. 

 

The 2021 Health Budget performance

 

Only 46.74% of the 2021 budget allocation to Health had been released as at 30 September 2021.   Table 1: Summary of the 2021 Expenditure performance

	Allocation	Releases	Actual Expenditure	Burn Rate %
Compensation of employees	22,958,000,000	12,518,604,093	12,455,790,523	99%
Capital	9,455,000,000	2,916,633,585	1,937,755,850	66%
Recurrent	22,292,000,000	10,136,109,664	9,284,829,629	92%
TOTAL	54,705,000,000	25,571,347,342	23,678,376,002	93%

 

As shown in Table 1, the Ministry of Health had used up 93% of what was released. As much as 99% of the salaries budget, 66% of capital budget and 92% of the recurrent expenditure had been exhausted as at 30 September 2021. The burn rate for central hospitals was 99% while that of provincial hospitals was 89%. District hospitals had a burn rate of 90%. 

Some of the capital projects accomplished in 2021 include construction of 30 clinics; rehabilitation and upgrading of health facilities; installation of solar system to 522 health facilities; drilling of boreholes to 441 health facilities; and procurement of 30 ambulances with delivery of 70 more being expected before the end of the year. Major challenges faced in 2021 include delayed release of funds by Treasury to execute projects; requests for prepayment by most suppliers before project implementation; difficulties in getting borehole water in most health facilities resulting in dry holes; and fluctuating exchange rates that resulted in price instability.

 Economic Classification of 2022 Health and Child Care Budget

About 15.5% of the Health Ministry’s Budget was allocated towards capital expenditure which includes buildings and structures, machinery and equipment as well as capital grants (Table 2). The Minister of Finance maintained the share of the budget was allocated to capital expenditure in 2021(see Table 2). 

 Table 2: Economic Classification of MOHCC 2022 Budget (%)

	2022	2021
Capital expenditure	15.5	17
Employment Costs	21.5	62
Use of Goods and Services	63	21

 

As much as 63% of the Ministry’s Budget will be spent on recurrent expenditure compared to 21% allocated in 2021. Recurrent expenditure includes purchase of goods and services and current grants. Employment costs will take 21.5% of the Ministry’s total budget compared to 62 % allocated in 2021. This allocation represents a significant slash in employment costs. 

         Programmes Budget Allocations vs Bids for 2021

         In developing the 2021 budget requirements for the Ministry of Health, the following evidence was used to inform key issues to be stressed in budgeting.

•     The NDS 1 which focus areas to concentrate on as well as contributions from various stakeholders
•     The National Health Strategy.
•     The 2022 Annual Work Plan
•     Inputs from the various programme managers and sub-programme managers
•      2021Budget performance
•     The Expenditure target that it received from Ministry of Finance.

         The Ministry submitted a bid of ZWL$232.2 billion to Treasury for its programmes but received an allocation of ZWL$117.7 billion leaving a funding gap of ZWL$114.5 billion (or 49% of its funding needs) (see Table 3). 

 

Table 3: 2021 MOHCC BID vs Allocation by Programme (ZWL$)

PROGRAMMES	Bid	Allocation	GAP	%ge less
Programme 1. Policy and Administration	33,693,140,033	18,684,184,000	15,008,956,033	45%
Programme 2: Public Health	31,178,597,509	17,736,227,000	13,442,370,509	43%
Programme 3 : Curative Services	163,350,103,220	78,123,155,000	85,226,948,220	52%
Programme 4 : Bio-Medical Engineering, Bio-Medical Science, Pharmaceuticals and Bio-Pharmaceutical Production	4,009,027,326	3,170,649,000	838,378,326	21%
TOTAL	232,230,868,089	117,714,215,000	114,516,653,089	49%

All the Ministry’s four programmes have financial gaps ranging between 21% and 52% as illustrated in Table 3.

         Of the ZWL$117.7 billion allocated to the health sector, the Curative Programme received the largest share where it was allocated ZWL$78.1 billion (66.4%) followed by Policy and Administration that received ZWL$10.14 billion (15.9%). Public Health was allocated ZWL$5.27 billion (15.1%) whilst Biomedical Engineering, Bio-Medical Science, Pharmaceuticals and Biopharmaceutical Production received the least share of the budget which amounted to ZWL$1.24 billion (2.7%). 

 

Table 4: Programme 1. Policy and Administration (ZWL$)

 

PROGRAMME 1: POLICY AND ADMINISTRATION	Allocation	Share of Programme allocation(%) in 2022	Share of Programme allocation(%) in 2021
Sub-Programme 1: Ministers' and Permanent Secretary's Office	764,114,000	4	4
Sub-Programme 2: Policy Planning and Coordination	2,668,733,000	14	11
Sub-Programme 3: Human Resources	2,534,830,000	14	12
Sub-Programme 4: Finance and Administration	2,959,580,000	16	11
Sub-Programme 5: Monitoring and Evaluation	770,639,000	4	3
Sub-Programme 6: Internal Audit	489,043,000	3	2
Sub-Programme 7: Logistics and Asset Management	8,147,351,000	44	56
Sub-Programme 8: Legal Services	349,894,000	2	1
Total	18,684,184,000.00	100	100

 

Policy and Administration Programme received ZWL$18.7 billion and 45% of its financial needs were not met by under the 2022 Budget. The most affected sub-programme is the Policy Planning and Coordination whose requirements are ZWL$18.68 billion but only received ZWL$2.67 billion. The level of priority to sub-programme allocations did not change much from 2021 except for logistics and asset management whose allocation declined from 56% in 2021 to 44% in 2022 (see Table 4).

 

 

 

Table 5: Programme 2: Public Health (ZWL$)

PROGRAMME 2: PUBLIC HEALTH	Allocation	Share of Programme allocation(%) in 2022	Share of Programme allocation(%) in 2021
Sub-Programme 1: Communicable Diseases	12,549,308,000	71	34
Sub-programme 2: Family Health	2,482,058,000	14	35
Sub-Programme 3: Non-Communicable Diseases	861,064,000	5	3
Sub-programme 4: Environmental Health	1,843,797,000	10	28
Total	17,736,227,000	100	100

 

Communicable diseases received the largest share (71%) of the budget allocated to Public Health compared to the 34% it received in 2021 (See Table 5). Significant reductions in allocation of shares were noted in Family Health and Environmental health (see Table 5). 

Whilst the rest of the sub-programmes under Public Health received close to what was requested, the worst affected is sub-programme on communicable diseases that received ZWL$12.55 billion from the ZWL$18.46 billion originally requested. The most affected areas under this sub-programme are HIV/ AIDS and COVID-19. Through resource mapping however, the Ministry noted that it would fund HIV/AIDS programme through partner and Aids levy funds to the tune of ZWL$3.3billion. The ZWL$300 million allocated in the budget would go towards advocacy activities. COVID-19 programme received funding of ZWL7 billion from the ZWL$15 billion originally requested for 2022. The Ministry of Finance assured the Ministry of Health of additional resources should the need arise. The Committee is of the view that the ZWL$7 billion allocation needs to be reviewed upwards in view of the fourth wave that has already hit the country. The health sector needs to be adequately funded to respond to the fourth and other future waves of COVID-19.

         The Minister of Finance tried to meet the funding request on drugs and medicines towards cancer and dialysis diseases. The Ministry of Health requested for ZWL$ 2.28 billion for cancer drugs and received ZWL$2.13 billion. It further requested for ZWL$1.4 billion for dialysis drugs and received ZWL$1.37 billion. 

The Committee is concerned that communicable diseases sub-programme was not adequately funded. One of the country’s goals is to eliminate cholera by 2028, hence the country needs to work towards this goal now. More-so, Treasury allocated ZWL$141.2 million towards mental health sub-programme. It is the Committee’s view that this is hugely underfunded to adequately deal with mental health issues that have been brought by COVID-19 and drug abuse by the youths. 

Table 6: Programme 3: Curative Services

PROGRAMME 3:  Curative Services	Allocation	Share of Programme allocation(%) in 2022	Share of Programme allocation(%) in 2021
Sub-Programme 1: Quinary (Research Hospital)	357,409,000	0.5	0.4
Sub-Programme 2:  Quaternary Care(Central Hospitals)	23,073,926,000	29.5	32.5
Sub-Programme 3: Tertiary Care (Provincial Hospitals)	10,512,657,000	13.5	11.9
Sub-programme 4: District/ General Hospitals Services	20,336,222,000	26.0	31.4
Sub-programme 5: Rural Health Centre and Community Care	23,629,354,000	30.2	23.5
Sub-Programme 6: Traditional Medicines	213,587,000	0.27	0.3
Total	78,123,155,000	100	100

 

The level of priority in sub-programme allocation did not change from 2021 (Table 6). Allocation of ZWL$23 billion to the central hospital exceeded the Ministry of Health’s bid of ZWL$15.5 billion whist provincial hospitals got an underfunding of ZWL$10.5 billion down from the request of ZWL$18billion. 

Table 7: Programme 4: Bio-Medical Engineering, Bio-Medical Science, Pharmaceuticals and Bio-Pharmaceutical Production

	Allocation	Share of Programme allocation(%) in 2022	Share of Programme allocation(%) in 2021
Sub-Programme 1: Bio- Medical Engineering	487,615,000	15	19
Sub-Programme 2: Bio- Pharmaceutical Engineering and Production	526,125,000	17	16
Sub-Programme 3: Bio-Medical Science Research	725,254,000	23	24
Sub-Programme 4: Bio-Analytics	543,688,000	17	14
Sub-Programme 5: Health Research	887,967,000	28	28
Total	3,170,649,000	100	100

 

The level of priority on allocation to the sub programmes did not change from the 2021 allocation (see Table 7).

Zimbabwe Health Financing (2014-2021): Domestic vs Partner funding Trend 

         The 2022 health financing mix shows that Government of Zimbabwe increased its contribution from US$ 739 million (or 61.5%) in 2021 to US$1.094 billion (or 68.4% of the total budget on health). 

 Figure 4: Zimbabwe Health Financing Trend: (2014-2022) (US$)

Source: Ministry of Health and Child Care 

 

The Ministry of Health and Child Care continues to receive partner funding in various programmes such as HIV/AIDS, malaria, maternal health among others. It hopes to receive similar support in 2022 but with increased Government of Zimbabwe funding (see Figure 4). Between 2016 and 2022, two partners namely the Global Fund and the US Presidential Emergency Plan for AIDS relief contributed between 75% and 81% of total external funding. This increases the country’s vulnerability health shock should these funds dry up.  

 

         COMMITTEE OBSERVATIONS, ISSUES AND CONCERNS 

Funding gap too wide, health outcomes may not be met

2.7 With a funding gap of ZWL$114.5 billion (or 49%) for its programmes, the Ministry of Health is faced with huge challenges of achieving its policy targets and ensuring a healthy human capital that will take the country into an upper middle-income class by 2030.

2.8 The Committee is concerned that blood and blood products sub-programme is grossly underfunded. It only received a funding of ZWL$583.6 million (or 39% of its requirements) against a bid of ZWL$1.5 billion. This is a critical area in the treatment of patients and needs adequate funding to guarantee stable blood supply to hospitals. More-so, the cost of screening blood is very high in Zimbabwe, making it unaffordable to patients. It is the Committee’s concern that the supply of blood in Zimbabwe has been left in the hands of a non-governmental organization, the National Blood Service Zimbabwe and not under a government agency.

 

2.9 The allocation towards procurement of gas is commendable as it was fully

funded as per the Ministry of Health’s’ request. 

The budget is far from achieving the Abuja Declaration target of 15%.

2.10 Whilst the steady increase in the share of the health budget from 5.84% in 2018 to 12.16% in 2022 is a positive step towards the Abuja Declaration target, the Committee’s concern however, is on the partial and late disbursements of allocated funds. Only 46.74% of the 2021 Health budget had been released as at 30 September 2021. In fact, this constitutes 5.89% of the 2021 budget. The biggest question is how much the Ministry of Health will receive before the end of this year for it to achieve the 12.87% it had originally been allocated. Late disbursements delay the implementation of programmes and compromise health service delivery. This is in sharp contrast to some Vote appropriations that had overspent their allocations by 30 September 2021. These include the Ministry of Lands, Agriculture, Fisheries, Water, Climate and Rural Development (171%); Ministry of Finance and Economic Development (135%); Ministry of Power and Energy Development (131%) and Office of the President and Cabinet (112%). Such huge disparities in budget allocation seem to be pointing to the low level of priority the Government attaches to the health sector.

2.11 The Committee is concerned that the 2022 budget allocation to the health sector is only 11.3% if the ZWL$7 billion allocated to COVID-19 is factored out. Thus, the country’s commitment to meet the Abuja Declaration and its endeavour to achieve desirable health outcomes in line with NDS1 remain elusive. Given the high and urgent demand on COVID19 mitigation expenditure, there is a risk of diverting funds from the already underfunded conventional health care. 

2.12 Quality of the budget is equally important. Increase in domestic spending does not always translate to increased access to health care given the inflationary and exchange rate pressures bedeviling the country, inefficiencies and unequitable distribution of health services among other challenges that undermine the best intentions. As poverty levels in the country continue to rise, more and more people cannot afford health care services, hence government health financing becomes important. 

2.13 Budget proportions between central and district/provincial hospitals are not speaking to the current problems on the ground. Primary health care is largely being offered at central hospitals where there are specialized doctors and nurses who must instead focus on complex health care issues. This results in the country running a very expensive healthcare system.

2.14 Planning in and unstable currency (RTGs) for programmes that are implemented in USD is not being realistic.   

Health Financing mix needs further balancing

2.15 Although external health financing significantly dropped from 47.5% in 2021 to 27.3% in 2022, it is still substantial and is largely funded by two partners, notably the Global Fund and the US Presidential Emergency Plan for AIDS Relief. Reduced global health financing is anticipated in the medium to long term. This significant level of dependency on external sources compromises sustainability of health cares should external funding be withdrawn. 

2.16 The Ministry of Finance allocated ZWL$697.4 million towards contraceptives pills against a bid of ZLW$985.7 million. One of the programme’s major funders, DFID cut their contraceptives budget for 2022 by 75% implying that Government of Zimbabwe must take full financial responsibility of this programme to reduce teenage pregnancies and avert population boom.    

Additional funds to the health sector commendable

2.17 The SDR 122 million allocated to the heath sector is commendable. The Committee notes that SDR 87 million has already been disbursed towards COVID 19 (SDR 77 million); health infrastructure and health consumables and equipment. The balance of SDR 35 million is projected to be disbursed in 2022. 

2.18 The Committee commends Treasury for approving that the Health Service Fund be retained at the public hospitals. This fund is critical as it is meant to cushion the unpredictable flow of funds from Treasury in cases of drug shortages as well as repairs and maintenance. 

Confirmation letter on this position to be sent to the Ministry of Health as soon as possible. 

2.19 The proposal to introduce the Non-Communicable Disease Fund resource through excise duty on cigarettes and energy drinks is a welcome development. It is however, not clear how the fund will be managed and framework for disbursement to be adopted.

 Skills gaps in the health sector remain a challenge 

2.20 The health sector is still understaffed and inadequately remunerated. Out of an approved staff establishment of 51,929, only 83.4% of the post are filled leaving out 8, 616 posts vacant. There is a rising trend in emigration of trained doctors and nurses. The country is spending an average of US$72,000 per year in training a doctor and cannot continue to invest in training for other countries such as South Africa, Botswana, Mozambique, United Kingdom and United States of America.

2.21 Not only is the issue of staff numbers important but the availability of specialized skills. With the reality of COVID-19, some of the disciplines have emerged as areas that require more capacity. These include epidemiology; and virology in the context of COVID-19 vaccines production.  

Drug costs is phenomenal and institutional framework to facilitate local production of drugs is grossly underfunded

2.22  Drug costs is phenomenal in Zimbabwe and the country ends up importing drugs that can be produced locally thereby losing the much-needed foreign currency. Pharmaceutical producers use obsolete machinery and suffer from other cost drivers in the economy such as erratic supply of electricity and water among others. 

Health budget allocation of 2.69% to the Bio-Medical Engineering, Bio-Medical Science, Pharmaceuticals and Bio-Pharmaceutical Production means that Zimbabwe will continue to be a net importer of drugs, thereby exporting jobs and the much needed foreign currency. 

RECOMMENDATIONS

 3.1 Treasury to increase the health budget and ensure that it is at least 15% of the National Budget in line with the country’s regional commitments. In addition, more resources still need to be channeled towards the central hospital given that they are national referral institutions; contraceptives, mental health, blood and blood products; remunerations; research and development; and specialized skills building among other areas 

3.2 Treasury to ensure timely disbursements of the allocated resources in full to facilitate provision of the health care services; implementation of planned projects and preservation of real value of money given the inflationary and exchange rate pressures in the economy. In fact, the Committee recommends quarterly disbursements of funds to ensure health care service delivery.  Further, Treasury to ensure that conventional health care receives its allocated budget in full and not to be diverted to other budget lines.

3.3 In view of the inflationary pressures and disbursement delays, Minister of Finance to prepare another budget in USD which then is tracked for resource use. 

3.4 Allocate more resources to district and provincial hospitals so that these institutions are adequately capacitated to delivery primary health care and reduce resource pressure on central hospitals.

3.5 Government to focus more on building resilience and sustainability in domestic health financing and reducing partner dependency through:  

3.5.1 Incorporating the private sector to ensure adequate health care financing in Zimbabwe. The Aids levy that private sector contributes can be transformed to finance, not only AIDS related expenditure but also other health financing issues which are affecting the country.

3.5.2 Introducing a National Health Insurance in the long term as a solution to guaranteeing sustainable health care services. The Government can pick lessons from Rwanda National Health Insurance that has every citizen logged onto its database. Any change to their incomes is automatically captured in the National Health Insurance system thereby guaranteeing its funding.

3.5.3 Tapping into the Motor Vehicle Insurance Pool. Due to low claims ratio, surplus funds are distributed to participating short term insurance companies. The Minister of Finance to redirect 20% of the surplus funds into the Consolidated Revenue Fund in order to assist victims of road traffic accidents, thereby reducing the health financing burden on Medical Aid Societies.

3.6   Minister of Finance to set up a transparent framework for the disbursement of levies collected from cigarettes and energy drinks excise duties to ensure the Non-Communicable Diseases Fund is consistently funded.  

3.7    Government to eliminate inefficiencies in blood screening. Further, it reviews the legal status of the National Blood Services and attach it to a local university. The Committee recommends a study tour to University of Zambia that has a similar structure that is functioning very well and supplying blood at half the cost of what is prevailing in Zimbabwe. 

3.8 Zimbabwe to prioritise building capacity in specialized skills in order to adequately respond to epidemics. Government of Zimbabwe therefore need to assess how many experts they have and to what extent they need to develop skills in these specialized areas such as epidemiology and virology.

3.9 The Minister of Finance to develop long term human resource retention schemes to health personnel to attract and retain motivated staff and stem brain drain. The country is spending an average of US$72,000 per year in training a doctor and cannot continue to invest in training for other countries such as South Africa, Botswana, Mozambique, United Kingdom and United States of America. 

3.10 Government to capacitate local pharmaceutical companies to procure latest equipment for drug manufacturing. Further, it needs to ease the doing business environment by addressing the cost drivers such as electricity and water.

3.11 The Minister of Finance to prioritise Bio-Medical Engineering, Bio-Medical Science, Pharmaceuticals and Bio-Pharmaceutical Production and increase funding towards building and strengthening of specialized skills, deeper research and development as well as local production of drugs. I thank you.

          HON. GABUZZA:

1. Introduction

The Portfolio Committee of Energy and Power Development has an oversight responsibility over the Ministry of Energy and Power Development. The Ministry of Energy and Power Development is mandated to provide adequate and sustainable energy supply through formulating and implementing effective policies and regulatory frameworks. Post budget consultations conducted with the Ministry and its stakeholders showed that there was an increase in 2022 budget allocations to the Ministry of Energy and Power Development from the 2021 budget allocation.

• Key Policy Priorities for the Ministry of Energy and Power Development in 2022

The Ministry of Energy and Power Development has managed to identify some key developmental areas to pursue. Some of the Ministry’s priorities for the period 2022-2024 include:

• Building up national strategic stocks of fuel reserves
• Rehabilitation and maintenance of existing infrastructure
• Completion of storage facilities for Liquid Petroleum Gas (LPG) and ethanol
• Maintaining a sustainable fuel pricing policy
• Increasing pipeline capacity utilisation
• Promoting independent power producers
  • Ministry’s key achievements in 2020

Despite the economic challenges experienced in 2021 and economic disruptions caused by COVID 19, the Ministry of Energy and Power Development managed to post some achievements in 2021.  Some of these achievements include:

• Significant progress in the expansion works at Hwange 7 and 8 units which are now 72% complete
• Kariba dam rehabilitation which is now 57% complete
• Initiated the Hwange units 1-6 expansion works
• Significant progress in Mabvuku Ethanol Project which is now 88% complete

2. Ministry of Energy and Power Development 2021 Budget Performance

Despite being allocated a revised total budget of ZWL$1.641 billion in the 2021 budget, Ministry of Energy and Power Development’s expenditure in 2021 amounted to ZWL$2.154 billion which represent a 131% budget outturn. The budget overshoot was mainly a result of capital grants to ZESA for the Hwange 7 and 8 expansion works, ZRA Legacy and loans and Rural Electrification Fund for the promotion of renewable energy. However, it disappointing to note that although the Ministry’s overall disbursements surpassed the Ministry’s allocation, Treasury disbursed very little towards funding Ministry’s operations. Policy and Administration Programme expenditure as at 30 September was only 27.2%. The non-disbursement affected the acquisition of motor vehicles and machinery and equipment which had a budget outturn of 0%.  As a result of the failure by Treasury to release funding to the Ministry, the following budget performance impacts were noted:

• Failed to carry out monitoring and supervision of projects under the Ministry’s purview as the Ministry’s vehicle fleet is very old and have become very expensive to maintain;
• Failed to achieve some of the 2021 targets as the non-disbursement of funds resulted in the stagnation of most projects.

3. Overview and Analysis of the Ministry's 2022 Budget Allocation
   • Ministry of Energy and Power Development 2022 Budget Allocations

The Ministry of Energy and Power Development was allocated a total of ZWL$3.553 billion (equivalent to US$33,634,913.87) in the 2022 budget. The amount allocated represent a 116.6% increase from the 2020 budget allocation of ZWL$1.641 billion (equivalent to US$20.04 million). While in nominal terms the amount allocated increased, the share of the Ministry’s budget the total budget decreased from a share of 0.38% in 2021 to 0.36% in 2022. Figure shows the Ministry of Energy and Power Development’s budget shares in the total national budget.

 

Figure 1: Ministry of Energy and Power Development’s budget share in the total national budget (2019-2022)

Source Budget Estimates (2019, 2020, 2021 & 2022)

 

• Economic classification of the budget

Of the Ministry’s total allocation of ZWL$3.553 billion, 20% was allocated towards the Ministry’s current expenditure, 3% for employment costs, 67% for capital grants to the Ministry’s Parastatals and 10% for capital expenditure. Although the total allocation to the Ministry falls short of the Ministry’s requirement, Treasury is applauded for greatly improving the budgetary allocation for use of goods and services in the 2022 budget which received 96% of the bid submitted.

Figure 2: Economic Classification of the Ministry’s 2022 Budget.

Source Budget Estimates (2022)

 

• Ministry’s 2022 Budget Allocations vs Bids

In the 2022 budget, most of the Ministry’s programmes received budget allocations which meet the programme requirements for 2022. The budget lines that received allocations that meet the funding requirements include goods and services which got 96% of the funding requirements, capital grants (86%), building and structures (74%) and other expenses (90%). There are, however, some budget lines which were grossly underfunded. These include transport and equipment (32%) and machinery and equipment (46%). Overally, the Ministry was allocated 33% of its 2022 budget funding requirements. The Ministry had submitted bids amounting to ZWL$10.335 billion but was allocated ZWL$3.553 billion giving a funding gap of 67%. The variance is mainly a result of strategic fuel reserves which were not funded in the budget despite the Ministry submitting a bid of ZWL$5.85 billion. The failure by the Ministry to provide funding for strategic fuel reserves   underfunding for this programme will negatively affect implementation of Ministry’s projects in 2022.

Figure 3: Ministry of Energy’s Allocation vs its funding requirements

Source Budget Estimates (2022)

4. COMMITTEE OBSERVATIONS, ISSUES AND CONCERNS

The Committee noted that the Ministry got an overall budget which is 67% lower than what it had requested. The major shortfall is on strategic fuel reserves which was not allocated anything in the 2022 budget. The following are some of the Committee’s observations and concerns with respect to the Ministry of Energy and Power Development’s budget and the possible implications of the 2022 budget allocation to the Ministry’s operations and the energy sector.

• Goods and Services- the Ministry was allocated ZWL$655 million against a funding requirement of ZWL$684 million. For a number of years, the Committee has raised concern that Treasury was not making adequate provision for Ministry operations. Goods and Services is one of the major sub heads in the Ministry’s operations and was allocated 96% of the requested funding from Treasury. The Committee appreciates this improvement in funding for goods and services which is a key sub head item in the Ministry operations.
• Capital Transfers: Treasury allocated ZWL$2.405 billion for capital grants to the parastatals under the Ministry of Energy and Power Development. Of the Ministry’s capital grant allocation, ZWL$1.7 billion will be for Hwange 7 and 8 expansion works. The construction of an additional two units at Hwange 7 and 8, which will come on board in July and September 2022 respectively, will add 600MW onto the national grid.  The Committee is hopeful that Treasury will be able to release the ZWL$1.7 billion during the first quarter of 2022 to ensure that there are no delays in the construction works and avoid the situation that happened in 2021 when the project was affected by Interim Payment Certificate (IPC) outstanding payments as well as the effects of Covid-19. The capital grant will also cater for the promotion of the Ministry’s renewable projects under the Rural Electrification Agency. REA will get ZWL$354 for 32 solar institutions and 7 community solar grids. Whilst the Committee applauds Treasury for allocating $354 million for supporting installation of solar systems at various institutions around the country, it is disappointing to note that in the 2021 budget, the Rural Electrification Fund was allocated ZWL$137 million to support the same projects but Treasury did not disburse anything. This negatively affected the Agency’s projects.
• Revenue from Retention Funds: In previous years, the Ministry of Energy and Power Development used to collect revenues from various levies and would use the collected revenue to fund the procurement of strategic fuel stocks. However, in terms of the Public Finance Management Act, revenue from levies will now be remitted to the Consolidated Revenue Fund (CRF). In light of this development, the Ministry will not be able to procure strategic fuel reserves in 2022 as Treasury did not allocate any funding for the procurement of strategic fuel reserves. Ministry of Energy and Power Development had submitted a funding requirement of ZWL$5.85 billion for strategic fuel stocks that would provide nine days’ fuel cover as outlined in the Ministry’s Strategic Plan. Strategic Stocks are an important component of any government policy package aimed at coping with severe fuel supply disruptions. Disruptions to the availability of fuel often results in economic losses besides social inconveniences.

Motor Vehicles: The Committee noted with concern that the budget allocation for transport and equipment only met 32% of the Ministry’s requirements. The Ministry is running an old fleet whose maintenance cost is very high. The poor funding will have negative implications on the Ministry’s operations as the mobility of Officers to monitor the Ministry’s projects will be limited by the non-availability of vehicles. The situation is made worse by Treasury’s failure to even release the little amount allocated. In 2021, Treasury allocated ZWL$29.7 million for motor vehicles but by 30 September 2021, no disbursement had been made towards this sub head. It is disheartening to note that since 2019, Treasury has not disbursed any funding to the Ministry of Energy for the procurement of motor vehicles.  This is despite the fact that in each budget, provision would have been made for the purchase of motor vehicles but Treasury would then fail to meet its part of the bargain.

5. Recommendations

In light of the analysis of the Ministry of Energy and Power Development’s budget analysis and issue raised, the Committee recommends the following measures that it feels will raise revenue in the sector and contribute to economic growth.

• It is of concern to note that Treasury has for the past yearsfailed to disburse the total budgets allocated to the Ministry. This trend implies that Ministry’s activities also suffer from the failure by Treasury to timeously release funds allocated in the budgets. For example, in the 2021 budget, REA was allocated ZWL$137 million but as at 30 September, Treasury had not released anything to support the parastatal’s projects. It is therefore recommended that in 2022, Treasury should meet its side of the bargain by timeously releasing allocated funds to the Ministry. 
• The Committee reiterates the importance of providing funding for strategic fuel stocks and having considered Zimbabwe’s own situation in terms of risk exposure and the associated effects resulting from any disruptions in the fuel supply, the Committee recommends that Government revises upwards the level of stockholding from the current 3 days cover to 60 days’ cover whilst working on reaching 90 days cover which is in line with the International Energy Program (IEP). The government should come up with a strategic stocks policy that endeavors to ensure uninterrupted supply of petroleum products in the country through the provision of adequate strategic stocks and infrastructure such as storage facilities.
• The Committee notes with concern Treasury’s intention to achieve cost recovery electricity tariffs which are guided by the cost-of-service study by the World Bank which is also in line with cabinet decision to streamline subsidies. Although this is a good idea that has the possibility of ensuring sustainable and efficient energy supply in the country, there is need for government to come up with a tariff structure that is aimed at achieving the four objectives of tariff structure design. These include cost recovery, affordability, equity and efficiency. The tariff structure should take into account the depressed income levels of most people in the country and should also be aimed at promoting domestic production through provision of low cost electricity that will make our products competitive in regional and international markets. The Committee recommends that in 2022, we need a stop gap measure which can be a once off grant to ZESA to avoid the increase in tariffs and in 2023 the cost recovery tariff structure can then be implemented when the economy has recovered from economic challenges resulting from the COVID-19 induced shutdowns.
• The Committee noted with concern the deteriorating electricity distribution infrastructure around the country. In some areas the power lines have fallen, transformers have not been replaced. The Committee recommends that Treasury through the budget makes provision for a grant that will assist ZESA to repair and acquire transformers to improve the electricity distribution in the country. This is necessitated by the fact that the existing mechanisms that are in place and those being proposed are not enough to cover the damage that is already there.
• The Committee notes with concern the inadequate funding for the Ministry’s transport equipment. The Ministry has the mandate to promote the use of renewable energy sources around the country and therefore there is need for the budget to support the mobility of Officers so that they are able to access all the country’s provinces and promote the use of renewable energy. In the long term, Treasury should provide funding for the establishment of provincial offices in all the country’s provinces. Currently the Ministry has only 2 provincial offices (Bulawayo and Masvingo) whilst Mashonaland Central Provincial Offices are being operated from Harare. It is recommended that Treasury increases the ministry’s budget allocation for motor vehicles and then ensure that whatever allocation that has been promised is then funded through making the disbursements.

6. Conclusion

The Portfolio Committee on Energy and Power Development is of the view that the energy sector is a key enabler for the success of the NDS1. Failure to implement the infrastructure and development projects such as the rural electrification projects, Hwange Units 7 and 8 expansion projects will inevitably impact on the success of the NDS1.  Thank you Mr. Speaker Sir.

^(v)HON. MUSHORIWA: Thank you Mr. Speaker Sir for giving me the opportunity to present the Report on the Public Accounts in respect of the Vote that was allocated to the Auditor General and the Audit Office.  Mr. Speaker Sir, for the sake of time, I will not go into nitty- gritties of the report because the secretariat will actually forward the report to Hansard.  What I am going to do is to summarise this Report.

Mr. Speaker Sir, every one of us is aware that the Minister of Finance made his largest proposal on the 30^th of November.  The Public Accounts Committee, just like all the other committees had the chance to meet the Auditor General in respect of the budget so that we hear the views of the Auditor General in respect to the allocation to the Audit Office.

            INTRODUCTION

On 25 November 2021, the Minister of Finance presented the proposed National Budget for the 2022 Financial Year. As is the tradition, the Public Accounts Committee embarked on the process of interrogating the proposed allocation for the Audit Office as the other Committees analysed allocations for Ministries and Commissions that fall under their purview. 

METHODOLOGY

On 30 November 2021, the Committee had a virtual meeting with the Auditor General wherein she presented her views on the proposed budget allocation for her Office.  Thereafter, the Committee deliberated on the submissions leading to the compilation of this Report which summarises the Committee’s observations and recommendations on the Budget. The Committee’s process of analysing the Budget was adversely affected by the delays encountered whilst waiting for a correct copy of the Estimates of Expenditure to replace the initially tabled one. It is important to note that this is the second successive year where the copy of the Estimates of Expenditure has had to be replaced. 

 

COMMITTEE’S OBSERVATIONS

Audit Office’s Overall Allocation 

Of the total $968.3 billion National Budget, the Audit Office was allocated $3,014 billion. This constitutes 0,31% of the national cake, the same percentage the Office was allocated in 2021. In the 2022 National Budget, the Audit Office had requested for $7. 1 billion for its operations, which would translate to 0. 75% of the National Budget. The total shortfall therefore amounts to $4. 29 billion, whose breakdown is shown in the analysis that follows. Besides 0.75% being the Audit Office’s requirements from the 2022 National Budget, the percentage compares well with the benchmark for National Audit Offices in Africa. The Committee however, observes that other Audit Offices are well established compared to ours. This difference warrants the local Office to be allocated much more than the 0. 75% so that the Auditor General is able to work effectively under a conducive environment with adequate human resources and tools of trade. 

 

Refurbishment of Burroughs House

The Committee commends the Minister of Finance and Economic Development for allocating adequate resources to the Audit Office for the refurbishment of  Burroughs House, its office premises. This is a once off cost which is dispensed with once taken care of. The line item was allocated $500 million, a realistic amount the Audit Office had requested. The Committee observes that the allocation should be adequate to ensure that costs associated with requirements for electrical works, carpeting, partitioning and air conditioning are met. This should transform the premises into a safe and pleasant environment to work from.  

          Transport and Mobile Equipment

The Committee also appreciates the Minister of Finance and Economic Development’s good gesture of allocating the requested amount for the purchase of 10 vehicles. The Audit Office’s bid was $20 million and this amount was granted. It is the Committee’s hope that the Office will be able to secure the vehicles for use by auditors who conduct visits to auditees located in various outstations. The Committee has confidence that the Audit Office is aware of some unscrupulous suppliers of vehicles who have failed to deliver when they were engaged by some Government departments and local authorities. These must not be entertained because of their tainted business records. The Committee also appeals to the users of the vehicles to safeguard the valuable assets from abuse once they are in their custody. 

The allocation of $90 million for the purchase of four 75-seater buses is noted by the Committee. The Committee however, submits that the shortfall of $18 million for another bus required by the office is something the Minister of Finance and Economic Development should reconsider in his final allocations before Parliament approves the budget. As alluded to earlier on, expenditure of a capital nature once catered for is dispensed with for a reasonable period of time unlike recurrent expenditure and therefore, it would be advisable to include the extra bus in this 2022 National Budget. 

Employment Costs

The Minister of Finance and Economic Development allocated $364. 1 for employment costs. The Auditor General’s bid for the item stood at $1.258. The difference between the bid and allocated resources leaves a huge negative variance of $893,9. The Auditor General’s explanation of the variance points to the calculation of the salaries based on the old scales that obtained before the review that was affected in June 2021. An analysis of the allocated amount means the salaries will cover only five months, something that is not  tenable. This line item needs a plausible explanation from the Minister of Finance and  Economic Development as it is the lifeline of any employee, the basic benefit that accrues in exchange of his or her labour.  

The Auditor General submitted to the Committee that due to some previous high turnover, her office was in dire need of 124 more auditors in order to have its full establishment of 381 staff. This is justified considering additional work for her office arising from devolution of funds to provinces, where the office would need to make follow-ups on disbursements to various outstations. Audits as an integral part of public finance management should be supported adequately to expose weaknesses in the system and delinquent behaviour by some public officials.  

Digitalisation/Communication

Over the past few years, the Auditor General has been requesting for the digitalisation of their systems so that the officers move away from the awful manual system they are still using. Besides moving on with trends, digitilisation has been made a necessity by COVID-19 containment measures that sometimes prohibit physical interaction. An allocation of $131. 8 million against a bid of $268. 5 falls short of the office’s requirements. The Committee wishes to point out that in the last four years (2005 -2008), the Audit Office was up to date as it met its statutory deadline for producing the annual audit reports. The current delays that have characterised the production of the 2019 and 2020 Reports should be addressed and digitalisation of the systems. As such, the Committee implores the Minister of Finance and Economic Development to consider revising the allocation upwards.  An element of communication is embedded in the above allocation.

Communication with the outside world is critical to the office, thereby deserving adequate resource allocation.  

For hardware and software ICT digitilation infrastructure, the office requires $856. 6 million. Against this requirement, the Minister of Finance and Economic Development allocated the office only $300 million. The paltry allocation unfortunately negates the efforts to digitalise the operations. The Committee urges the Minister to reconsider the amount allocated as this falls short of the requirements. 

Training and Development

The Committee is aware of training of staff by the Audit Office in global auditing guidelines and paying tuition and examination fees for graduates put through the articles of clerkship programme and other study programmes at various institutions in Zimbabwe. This enables them to acquire the necessary audit qualifications, which helps them to be efficient in their specialised field of work. In addition, the Auditor General referred to in-house courses on SAP, Management Development Programmes and Continuous Professional Development through training workshops they undertake. 

The Minister of Finance and Economic Development allocated $123,6 million against  $648 million bided for by the Audit Office for training and development. Given a shortfall of $524,7 million, not much will be achieved against the office’s intentions and this is likely to compromise on quality of output from the untrained staff.  It would be in the interest of the nation at large for the Minister of Finance and Economic Development to improve the allocation to this line item even if it does not allocate the full amount requested by the office. 

          Furniture and Fittings

The Auditor General informed the Committee that the current state of chairs and desks coupled with the absence of some leaves a lot to be desired for an auditor working at a supreme audit institution. From a budget request of $50, 3 million, the office was allocated $39,3 million leaving a shortfall of $11 million. Given this allocation, the purchase of suitable furniture to replace the obsolete items will go a long way in matching the expected renovations to the premises. The shortfall can hopefully be taken care of should there be surplus funds resulting from some savings or increased revenue streams than projected during the course of the year. If the above assumptions do not materialise, the Committee implores the Minister of Finance and Economic Development to treat the allocation of additional funds for the acquisition of furniture to the Audit Office as a priority in the 2023 National Budget.

Staff Revolving Fund

The staff revolving facility which got approval and was resourced with $100 million in the 2021 National Budget received a boost of another $100 million in 2022. The increase to $200 million was significant though it falls short of the $500 million that had been requested by the office based on the demand for the facility. It is the Committee’s view that given the revolving nature of the facility, the actual amount available by end of the year exceeds $200 million as some beneficiaries of the facility will be expected to service their loans through their monthly payments. Funds available, the Minister of Finance and Economic Development can always consider increasing the capital injection into the facility.  

Audit Visits

The Audit Office is centralised as it has one office premises in Harare with no office in the provinces.  It is necessary that the auditors visit provinces in order to carry out audits, thus guaranteeing the nation of comprehensive audits. The office was allocated $292. 8 million against its requirement of $684 million, leaving a gap of $391. 2 million. The net effect of this shortfall is failure to achieve reasonable coverage and therefore, not so accurate an assessment of the utilisation of public resources. The Committee respectfully requests the Minister of Finance Economic Development to revise the allocation upwards. The request is also made against the background of a relatively small audit coverage recorded during the 2019 Audit Reports.  

2021 Budget Releases 

The Committee noted from the presentation made by Auditor General, that of the $ 1 199 000 000 allocated in the 2021 Budget, only 32% had been released by 30 November 2021, this being $ 383 680 000 in real value. This percentage is too low for the Audit Office to have undertaken the planned programmes in 2021. A budget allocation becomes real when actual releases are made. 

          Recommendations

The Minister of Finance and Economic Development should allocate to the Audit Office at least 1% of the National Budget. 

That the Minister of Finance and Economic Development should ensure that the amounts for capital expenditure are released immediately after budget releases commence with periodic releases for operational expenses being made timeously and consistently.  

The Minister of Finance and Economic Development should consider an amendment to the Audit Office Act to provide for the levying of audit fees by the Auditor Generals on Ministries’ financial statements.

Conclusion

The Committee implores the Hon. Minister of Finance and Economic Development to consider the Committee’s requests for an upward revision of the Audit Office. Failure to do so has a direct implication on the work of the Public Accounts Committee.  Thank you Mr. Speaker Sir.

^(v)HON. MUSHORIWA: Thank you Mr. Speaker Sir for giving me the opportunity to present the Report on the Public Accounts in respect of the Vote that was allocated to the Auditor General and the Audit Office.  Mr. Speaker Sir, for the sake of time, I will not go into nitty- gritties of the report because the secretariat will actually forward the report to Hansard.  What I am going to do is to summarise this Report.

Mr. Speaker Sir, every one of us is aware that the Minister of Finance made his largest proposal on the 30^th of November.  The Public Accounts Committee, just like all the other committees had the chance to meet the Auditor General in respect of the budget so that we hear the views of the Auditor General in respect to the allocation to the Audit Office.

            INTRODUCTION

On 25 November 2021, the Minister of Finance presented the proposed National Budget for the 2022 Financial Year. As is the tradition, the Public Accounts Committee embarked on the process of interrogating the proposed allocation for the Audit Office as the other Committees analysed allocations for Ministries and Commissions that fall under their purview. 

METHODOLOGY

On 30 November 2021, the Committee had a virtual meeting with the Auditor General wherein she presented her views on the proposed budget allocation for her Office.  Thereafter, the Committee deliberated on the submissions leading to the compilation of this Report which summarises the Committee’s observations and recommendations on the Budget. The Committee’s process of analysing the Budget was adversely affected by the delays encountered whilst waiting for a correct copy of the Estimates of Expenditure to replace the initially tabled one. It is important to note that this is the second successive year where the copy of the Estimates of Expenditure has had to be replaced. 

 COMMITTEE’S OBSERVATIONS

Audit Office’s Overall Allocation 

Of the total $968.3 billion National Budget, the Audit Office was allocated $3,014 billion. This constitutes 0,31% of the national cake, the same percentage the Office was allocated in 2021. In the 2022 National Budget, the Audit Office had requested for $7. 1 billion for its operations, which would translate to 0. 75% of the National Budget. The total shortfall therefore amounts to $4. 29 billion, whose breakdown is shown in the analysis that follows. Besides 0.75% being the Audit Office’s requirements from the 2022 National Budget, the percentage compares well with the benchmark for National Audit Offices in Africa. The Committee however, observes that other Audit Offices are well established compared to ours. This difference warrants the local Office to be allocated much more than the 0. 75% so that the Auditor General is able to work effectively under a conducive environment with adequate human resources and tools of trade. 

      Refurbishment of Burroughs House

    The Committee commends the Minister of Finance and Economic Development for allocating adequate resources to the Audit Office for the refurbishment of  Burroughs House, its office premises. This is a once off cost which is dispensed with once taken care of. The line item was allocated $500 million, a realistic amount the Audit Office had requested. The Committee observes that the allocation should be adequate to ensure that costs associated with requirements for electrical works, carpeting, partitioning and air conditioning are met. This should transform the premises into a safe and pleasant environment to work from.  

          Transport and Mobile Equipment

The Committee also appreciates the Minister of Finance and Economic Development’s good gesture of allocating the requested amount for the purchase of 10 vehicles. The Audit Office’s bid was $20 million and this amount was granted. It is the Committee’s hope that the Office will be able to secure the vehicles for use by auditors who conduct visits to auditees located in various outstations. The Committee has confidence that the Audit Office is aware of some unscrupulous suppliers of vehicles who have failed to deliver when they were engaged by some Government departments and local authorities. These must not be entertained because of their tainted business records. The Committee also appeals to the users of the vehicles to safeguard the valuable assets from abuse once they are in their custody. 

The allocation of $90 million for the purchase of four 75-seater buses is noted by the Committee. The Committee however, submits that the shortfall of $18 million for another bus required by the office is something the Minister of Finance and Economic Development should reconsider in his final allocations before Parliament approves the budget. As alluded to earlier on, expenditure of a capital nature once catered for is dispensed with for a reasonable period of time unlike recurrent expenditure and therefore, it would be advisable to include the extra bus in this 2022 National Budget. 

Employment Costs

The Minister of Finance and Economic Development allocated $364. 1 for employment costs. The Auditor General’s bid for the item stood at $1.258. The difference between the bid and allocated resources leaves a huge negative variance of $893,9. The Auditor General’s explanation of the variance points to the calculation of the salaries based on the old scales that obtained before the review that was affected in June 2021. An analysis of the allocated amount means the salaries will cover only five months, something that is not  tenable. This line item needs a plausible explanation from the Minister of Finance and  Economic Development as it is the lifeline of any employee, the basic benefit that accrues in exchange of his or her labour.  

The Auditor General submitted to the Committee that due to some previous high turnover, her office was in dire need of 124 more auditors in order to have its full establishment of 381 staff. This is justified considering additional work for her office arising from devolution of funds to provinces, where the office would need to make follow-ups on disbursements to various outstations. Audits as an integral part of public finance management should be supported adequately to expose weaknesses in the system and delinquent behaviour by some public officials.  

Digitalisation/Communication

Over the past few years, the Auditor General has been requesting for the digitalisation of their systems so that the officers move away from the awful manual system they are still using. Besides moving on with trends, digitilisation has been made a necessity by COVID-19 containment measures that sometimes prohibit physical interaction. An allocation of $131. 8 million against a bid of $268. 5 falls short of the office’s requirements. The Committee wishes to point out that in the last four years (2005 -2008), the Audit Office was up to date as it met its statutory deadline for producing the annual audit reports. The current delays that have characterised the production of the 2019 and 2020 Reports should be addressed and digitalisation of the systems. As such, the Committee implores the Minister of Finance and Economic Development to consider revising the allocation upwards.  An element of communication is embedded in the above allocation.

Communication with the outside world is critical to the office, thereby deserving adequate resource allocation.  

For hardware and software ICT digitilation infrastructure, the office requires $856. 6 million. Against this requirement, the Minister of Finance and Economic Development allocated the office only $300 million. The paltry allocation unfortunately negates the efforts to digitalise the operations. The Committee urges the Minister to reconsider the amount allocated as this falls short of the requirements. 

Training and Development

The Committee is aware of training of staff by the Audit Office in global auditing guidelines and paying tuition and examination fees for graduates put through the articles of clerkship programme and other study programmes at various institutions in Zimbabwe. This enables them to acquire the necessary audit qualifications, which helps them to be efficient in their specialised field of work. In addition, the Auditor General referred to in-house courses on SAP, Management Development Programmes and Continuous Professional Development through training workshops they undertake. 

The Minister of Finance and Economic Development allocated $123,6 million against  $648 million bided for by the Audit Office for training and development. Given a shortfall of $524,7 million, not much will be achieved against the office’s intentions and this is likely to compromise on quality of output from the untrained staff.  It would be in the interest of the nation at large for the Minister of Finance and Economic Development to improve the allocation to this line item even if it does not allocate the full amount requested by the office. 

          Furniture and Fittings

The Auditor General informed the Committee that the current state of chairs and desks coupled with the absence of some leaves a lot to be desired for an auditor working at a supreme audit institution. From a budget request of $50, 3 million, the office was allocated $39,3 million leaving a shortfall of $11 million. Given this allocation, the purchase of suitable furniture to replace the obsolete items will go a long way in matching the expected renovations to the premises. The shortfall can hopefully be taken care of should there be surplus funds resulting from some savings or increased revenue streams than projected during the course of the year. If the above assumptions do not materialise, the Committee implores the Minister of Finance and Economic Development to treat the allocation of additional funds for the acquisition of furniture to the Audit Office as a priority in the 2023 National Budget.

Staff Revolving Fund

The staff revolving facility which got approval and was resourced with $100 million in the 2021 National Budget received a boost of another $100 million in 2022. The increase to $200 million was significant though it falls short of the $500 million that had been requested by the office based on the demand for the facility. It is the Committee’s view that given the revolving nature of the facility, the actual amount available by end of the year exceeds $200 million as some beneficiaries of the facility will be expected to service their loans through their monthly payments. Funds available, the Minister of Finance and Economic Development can always consider increasing the capital injection into the facility.  

Audit Visits

The Audit Office is centralised as it has one office premises in Harare with no office in the provinces.  It is necessary that the auditors visit provinces in order to carry out audits, thus guaranteeing the nation of comprehensive audits. The office was allocated $292. 8 million against its requirement of $684 million, leaving a gap of $391. 2 million. The net effect of this shortfall is failure to achieve reasonable coverage and therefore, not so accurate an assessment of the utilisation of public resources. The Committee respectfully requests the Minister of Finance Economic Development to revise the allocation upwards. The request is also made against the background of a relatively small audit coverage recorded during the 2019 Audit Reports.  

2021 Budget Releases 

The Committee noted from the presentation made by Auditor General, that of the $ 1 199 000 000 allocated in the 2021 Budget, only 32% had been released by 30 November 2021, this being $ 383 680 000 in real value. This percentage is too low for the Audit Office to have undertaken the planned programmes in 2021. A budget allocation becomes real when actual releases are made. 

          Recommendations

The Minister of Finance and Economic Development should allocate to the Audit Office at least 1% of the National Budget. 

That the Minister of Finance and Economic Development should ensure that the amounts for capital expenditure are released immediately after budget releases commence with periodic releases for operational expenses being made timeously and consistently. 

The Minister of Finance and Economic Development should consider an amendment to the Audit Office Act to provide for the levying of audit fees by the Auditor Generals on Ministries’ financial statements.

Conclusion

The Committee implores the Hon. Minister of Finance and Economic Development to consider the Committee’s requests for an upward revision of the Audit Office. Failure to do so has a direct implication on the work of the Public Accounts Committee. 

          HON. SHAMU: Thank you Mr. Speaker Sir. I stand to present the report of the Portfolio Committee on Foreign Affairs and International Trade.

1. a) The Ministry of Foreign Affairs and International Trade’s mandate is to safeguard national interests of the Republic of Zimbabwe, promote trade and build the country’s image in the regional, continental and international arena. It plays a critical role in the attainment of Vision 2030 through its engagement and reengagement exercises. Cognisant of the above, our embassies are at the epicentre of the Ministry’s mandate. Hence, the Ministry of Finance and Economic Development must allocate adequate financial resources to support our foreign missions.

          The following were noted as challenges which are impeding the Ministry in achieving its mandate:

•     Some embassies abroad are uninhabitable, for example, mission’s residence in New York, Namibia, South Africa, Zambia and Mozambique. These require urgent face-lift.
•     Rental arrears - non-payment of rentals is still a major threat; with the worst case scenario of staff being evicted or locked out.
•     Salary arrears – this is a perennial challenge with the greater part of each new budgeted figure being consumed by the salary arrears only. Salary arrears is viewed negatively as a breach of international labour laws by not paying workers accordingly.
•     Abrupt and delayed payment of salaries as - this has affected staff payment of rentals, school fees and medical bills for the staff and their families. Such delays negatively affect staff morale in the missions.
•     Inability to host administrative meetings at Missions residence aimed at promoting trade, investment and re-engagements.
•     Inadequate embassy vehicles – in some missions there are no representational vehicles and in others limited vehicles to carry out all mission duties. In a bid to minimise the challenges, the need to reposition the country and the need to achieve its mandate, the Ministry submitted a budget totalling ZWL$32,726,289,000 (US$130, 437, 440). However, the Ministry received ZWL$14,877,305,000 (US$69,276,800) which reflects a shortfall of 47%. The following table showcases budget submissions from the Ministry and budget ceilings and ultimate variances.

Table 1: Budget Submission and Allocated Funds

Descriptions	Submitted Budget (ZWL$)	Budget ceiling (ZWL$)	Variance (ZWL$)	Variance (%)
Compensation of employees	3,500,000,000	2,727,305,000	-772,695,000	-22%
Goods                  & Services	13,776,289,000	7,223,296,000	-6,552,993,000	-48%
Subscriptions	1,850,000,000	1,203,186,000	-646,814,000	-35%
Acquisitions of Physical Assets	13,600,000,000	3,650,000,000	-9,950,000,000	-73%
ZimTrade***	150,000,000	73,518,000	-76,482,000	-51%
Total	32,876,289,000	14,877,305,000	17,998,984,000	-55%
Total (USD)	US$130,437,440	US$69,276,800	US$61,160,640	47%

 

*** ZimTrade figures were excluded in the final figure when adding because they are included in subscriptions.

2. RISKS AND IMPLICATIONS OF SHORTFALLS IN BUDGETS

The budget shortfalls are expected to result in the following risks:

• Compensation of Employees

The approved budget shows a variance of -22%. Given the fact that underfunding compensation of employees which is already in arrears will worsen the situation in Zimbabwe Missions abroad. The risks which are most likely to rise are non-payment of rentals and school fees for children by mission staff and evictions or locked out scenarios.

• Use of Goods and Services

This budget heading has a shortfall of -48% (Table 1). A significant share of this budget line item are rentals and hire expenses which amounts to ZWL$101,171,000 (i.e., US$418,492). The fact that there is an overall shortfall of -48% of the total budget requested, the risks which emerge from here are as follows:

•     Continuous evictions of officials in diplomatic missions;
•     Legal suits since the diplomatic missions have contractual agreements with the landlords;
•     Bad country image;
•     Restrictions to foreign travels thereby slowing international re-engagement;

• Subscriptions

This budget item has a negative budget variance of 35% (Table 1). This variance is worsened if there are any arrears to be paid. The Ministry must allocate resources in full to this item as arrears or non-payment to these international bodies is unavoidable and will affect Zimbabwe’s participation in international groupings. More importantly, arrears to these international organisations have a negative effect on the country’s image. 

• Acquisition of Non- Financial Assets

This budget heading has a huge shortfall of negative 73% (Table 1). With the urgent need to improve Embassy properties given the deplorable state of properties at various Missions abroad. The following are the risks expected:

•     The diplomatic missions will remain in a deplorable state which reflects badly on the country;
•     Negative image of the country and loss of confidence by investors in countries where Zimbabwean Embassy are in a bad state.
•     In ability to scale up Missions across the world.
•     The Ministry will risk losing its land in some countries if there is non-development of infrastructure especially in Abuja (Nigeria), Lusaka (Zambia), Pretoria (South Africa), Abu Dabhi, Ankara, New York and Kigali.

• Limited Funding on ZimTrade Portfolio

The role of ZimTrade is to grow exports by at least 10% per year. This was enunciated by His Excellency, the President, Dr E.D. Mnangagwa when he was launching National Export Strategy and the National Development Strategy 1 which, combined, places emphasis of ZimTrade role in promoting exports and nation branding.

In this regard, the country is expected to grow exports from the current US$4.5 billion to US$7.3 billion by 2023. In addition, ZimTrade is expected to do clustering of exports in all the ten provinces to contribute to national exports. This development requires funding. 

In addition, in recent months, ZimTrade has won prizes in international exhibitions and presentations which is also assisting the country in rebranding and in a number of cases. Therefore, this calls for continuous funding for ZimTrade.

Given the fact that the Government is not matching dollar to dollar from private sector contribution as stated in the ZimTrade Constitution, ZimTrade will be constrained in delivering its mandate and carrying out its operations. This will negatively impact ZimTrade and will undermine the achievement of the goals set in the NDS1 and National Export Strategy.

• Exchange Rate Volatility

The Committee noted that the budget is in ZWL$ which poses further risks from the budgeted amount due to the risk of exchange rate losses when the local currency depreciates. In view of the above, the Committee recommends that in future, the budget be in foreign currency (US$ which is more stable) as all payments are made in foreign currency.

CONCLUSION & RECOMMENDATIONS

In view of the shortfalls of the overall budget by -47% and the fact that the Ministry of Foreign Affairs and International Trade utilises foreign currency in most of its activities as it drives the re-engagement agenda enunciated by the President, there is evidence that the Ministry will not achieve its targets.

In addition, the Committee unanimously agreed that there is need to reaffirm on the following recommendations which were previously submitted during the pre-budget consultations:

•      The Government must provide the budget for the Ministry in foreign currency as payments are in foreign currency such that the Ministry does not suffer from exchange rate movements;
•      The Government must review the budget upwards to enable the Ministry to meet its financial needs (subscriptions, goods and services, compensation of employees etc);
•     The Minister of Finance and Economic Development should reconsider to fully allocate the requested funds for Subscriptions as this will ensure that Zimbabwe will subscribe fully to all international bodies without any discrimination.
•      The Government must match the dollar to dollar the funds provided by the private sector for ZimTrade to deliver its mandate of promoting exports and nation branding;
•     Additional resources are required with a view to equip the Ministry as it takes a leading role in engaging the diaspora with a view to promote their participation in the economy which is key in mobilising resources for the NDS1.
•     There is need for provision of sufficient budgetary support towards diplomatic missions with a view to clear salary arrears;
•     Additional resources must be provided, targeted at the procurement of land for the construction of new embassies and refurbishment of the existing dilapidated ones;
•     There is need for additional resources for refurbishment of Mission infrastructure, procurement of motor vehicles and office equipment as well as furniture for the diplomatic missions;
•     There is need to be transparent by the Ministry in terms of revenues generated by Missions outside in order to have a proper understanding of the financial position of each Embassy;
•     In order to improve accountability and efficiency in the operations of embassies in foreign missions, the Committee highly recommends that the Ministry of Foreign Affairs should be given a relative autonomy on the refurbishment and maintenance of Zimbabwean embassies;
• In order to raise resources for the Ministry, the Committee highly recommends for the promulgation of a Statutory Instrument which gives authority to the Ministry of Foreign Affairs and International Trade to make use of funds collected by Embassies for services rendered for example visa fees, emergency travel documents et cetera; and
•     The Committee highly recommends that Treasury must expeditiously release allocated resources with a view to help the Ministry of Foreign Affairs and International Trade ease operational challenges.

Based on the foregoing recommendations and the fact that the Ministry of Foreign Affairs and International Trade does not have parastatals under its purview which gives it additional funds, the Committee is humbly requesting the Minister of Finance and Economic Development award the Ministry its budget request of ZWL$32,726,289,000 instead of the budget ceiling of ZWL$14,877,305,000.

This request if fulfilled, will help the Ministry of Foreign Affairs and International Trade to effectively discharge its mandate.  I thank you.

          THE TEMPORARY SPEAKER (HON KHUMALO): I am informed that other Committee Chairpersons are going to submit their reports tomorrow. May I ask those Hon. Members who wish to debate now to do so on those Committee reports that have been submitted to the House?

          HON. TOGAREPI: I move that the debate do now adjourn.

          HON. TEKESHE: I second.

          Motion put and agreed to.

          Debate to resume: Wednesday, 8^th December, 2021.

          On the motion of HON. TOGAREPI  seconded by HON. TEKESHE, the House adjourned at Twenty-Five Minutes past Five o’clock p.m.