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SENATE HANSARD 01 FEBRUARY 2017 26-23
PARLIAMENT OF ZIMBABWE
Wednesday, 1st February, 2017
The Senate met at Half-past Two O’clock p.m.
(THE HON. DEPUTY PRESIDENT OF THE SENATE in the Chair)
BUSINESS OF THE HOUSE
THE DEPUTY MINISTER OF MEDIA, INFORMATION
AND BROADCASTING SERVICES (HON. SEN. MATHUTHU):
Mr. President, I move that Orders of the Day, Numbers 1 to 3 be stood over, until Order of the Day, Number 4 has been disposed of.
Motion put and agreed to.
SUPPORT FOR THE NATIONAL SCHOOL PLEDGE
HON. SEN. CHIMBUDZI: I move the motion standing in my name that this House:
APPLAUDING the noble initiatives by the Government to
inculcate a culture of patriotism, unity of purpose and common desire for equality and justice as mandated by the Constitution;
DETERMINED to overcome any challenges that impede our resolve to cherish and uphold the fruits of our hard won independence;
COMMITTED to building a united and prosperous nation founded on core values of integrity and hard work anchored on the Constitution as the supreme law of the land;
DESIROUS to foster a strong sense of patriotism among school children as is the traditional practice in the global village;
NOW THEREFORE, strongly advocates for unequivocal support for the National School Pledge by all Members of Parliament.
HON. SEN. MAWIRE: I second.
HON. SEN. CHIMBUDZI: Thank you Mr. President. I seek
permission to use my notes.
THE DEPUTY PRESIDENT OF THE SENATE: Why do you
want to read your notes?
HON. SEN. CHIMBUDZI: So that I express myself clearly.
THE DEPUTY PRESIDENT OF THE SENATE: It is okay.
HON. SEN. CHIMBUDZI: Thank you Mr. President for granting me that permission. I want first and foremost to thank the Minister of Primary and Secondary Education for developing a new curriculum for primary and secondary education (2015-2022) on the National School Pledge which was adopted and approved by the Government of Zimbabwe. This National Pledge talks about something important about the brave women and fathers who lost lives during the
Chimurenga/Umvukela. As we are seated here, we all lost relatives during the war.
The National Pledge is urging us as Members to respect those who lost their lives during Chimurenga war to liberate this country. We as a country, should preserve our national resources; we are rich enough. It is our duty as well to give ideas to the Government on how we should use these natural resources.
We should also preserve our traditions and cultures. As of now, I can see that our cultures and traditions are eroded due to not understanding our traditions in Zimbabwe. At times you see a man putting on earrings or covering his head with a scarf. So, we need to understand our traditions as Zimbabweans. This is another role of this national school pledge.
Most of these words are on page 15 of our Constitution on the
Preamble; these words were picked from there. So, we need to read our Constitution particularly on page15, we are rich. In Zimbabwe, we have many natural resources so we should be able to utilise them. We should be proud of our history as a country because without history we cannot be a nation.
Mr. President, it also urges us as a nation to unite, develop and prosper. Without unity, we cannot develop our country. So, I thank the Minister for developing this national pledge.
Whereas the Preamble of the Constitution of Zimbabwe provides
‘We the people of Zimbabwe,
United in our diversity by our common desire for freedom, justice and equality, and our heroic resistance to colonialism, racism and all forms of domination and oppression;
Exalting and extolling the brave men and women who sacrificed
their lives during the Chimurenga/Umvukela and national liberation struggles;
Honouring our forebears and compatriots who toiled for the progress of our country;
Recognising the need to entrench democracy, good, transparent and accountable governance and the rule of law;
Reaffirming our commitment to upholding and defending fundamental human rights and freedoms;
Acknowledging the richness of our natural resources;
Celebrating the vibrancy of our traditions and cultures;
Determined to overcome all challenges and obstacles that impede our progress;
Cherishing freedom, equality, peace, justice, tolerance, prosperity and patriotism in search of new frontiers under a common destiny,
Acknowledging the supremacy of Almighty God, in whose hands
our future lies,
Resolve by the tenets of this Constitution to commit ourselves to build a united, just and prosperous nation, founded on values transparency, equality, freedom, fairness, honesty and dignity of hard work,
And, imploring the guidance and support of Almighty God, hereby make this Constitution and commit ourselves to it as the fundamental law of our beloved land’.
We all know that Zimbabwe is a Christian country; there is freedom of worship in this country. Every person is allowed to choose a church of his or her choice, provided you abide by the laws of this country. Whether you pray in the church, under a tree or on top of the mountain, it is allowed. Whereas Section 1 of the Constitution of Zimbabwe provides that Zimbabwe is a unitary, democratic and a sovereign republic and Section 3(1) of the Constitution of Zimbabwe provides that Zimbabwe is founded on values and principles, recognition of and respect for the liberation struggle.
The Republic of Zimbabwe, through the Ministry of Primary and Secondary Education, developed a new curricula framework for primary and secondary education (2015 – 2020) adopted and approved by the
Government of Zimbabwe after extensive consultations which contends the National School Pledge for infants, junior and secondary schools. Pursuant to the aforesaid provisions of the Constitution of Zimbabwe, the National School Pledge seeks to foster patriotism, honesty and hard work among the school going Zimbabwean population for the greater benefit of our great nation. The general populace was consulted on this and they made their suggestions and views known during the curriculum review process.
I urge all progressive Zimbabweans to note that this common history created by the National Pledge is a wealth platform upon which we may all be united and arise from any of our economic, social, political and spiritual foundations to build a formidable nation. Such a nation will make our millions of citizens rejoice, whether at home or abroad, young or old, male or female regardless of colour or socioeconomic status.
Zimbabwe has been lagging behind on the issue of National Pledge; the Americans, Indians, Jamaicans, Ghanaians and Nigerians, just to mention a few have long implemented the National Pledge. They have built strong traditions and a strong sense of patriotism among their citizens, empowering school going learners with a love of honesty. Dignity of hard work is a great inheritance of our nation. We cannot desire them to be lazy, corrupt or selective with the truth.
Let me recite the National Pledge. “Almighty God, in whose hands our future lies, I salute the national flag. United in our diversity by our common desire for freedom, justice and equality. Respecting the brave fathers and mothers who lost lives in the Chimurenga / Umvukela and national liberation struggles. We are proud inheritors of our natural resources. We are proud creators and participants in our vibrant traditions and cultures. We commit to honesty and the dignity of hard work.” This is the pledge. If you take my words, just read page 15 of the Constitution and you will get all these words. We need to work hard for our nation so that we are not lazy. We do not have to be beggars in the country whilst we have educated people. Criticism is allowed but it should be constructive so that we build a prosperous nation. I thank you
BUSINESS OF THE HOUSE
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA): Mr. President Sir, I seek
the indulgence of the House to move that the debate on this motion be adjourned and that all Orders of the Day be stood over until Order of the
Day, Number 1 has been disposed of.
Motion put and agreed to.
RESERVE BANK OF ZIMBABWE AMENDMENT BILL [H.B.
THE MINISTER OF FINANCE AND ECONOMIC
DEVELOPMENT (HON. CHINAMASA): Mr. President, it is my singular honour to move that the Reserve Bank of Zimbabwe
Amendment Bill [H.B. 12, 2016] be read for the second time.
The Republic of Zimbabwe is currently undertaking a number of economic reforms to transform the business environment. In response to the many challenges which are besetting our economy, the Reserve Bank introduced various measures in May last year to deal with the schedule of imports and capital flight and resultant cash shortages within the national economy, whilst at the same time promoting exports of goods and services in order to increase liquidity in the economy.
Mr. President Sir, one of the measures adopted is the introduction of an Export – Incentive Scheme of up to 5% to promote the exports of goods and services. Given that the multi-currency foreign exchange system is set to continue for the foreseeable future and that its sustainability is dependent on the economy’s capacity and ability to generate foreign exchange to meet its domestic and foreign requirements, development and promotion of foreign exchange revenue streams such as exports of goods and services and diaspora remittances is critical to enhance foreign exchange reserves of the country.
Mr. President, the above together with the country’s trade deficit requires a substantial policy shift to promote exports in view of lack of competitiveness of Zimbabwean exports due to global shocks that include the strong US dollar, sharp decline in commodity prices and tighter global financial conditions. Mr. President, it is against the above background that Government, through the Reserve Bank of Zimbabwe introduced the performance related export bonus scheme of up to 5% to be awarded to exporters of goods and services to address the challenges of low productivity and to promote exports with the overall aim of liquefying the multi-currency exchange system.
Mr. President, the funding mechanism of the Export – Incentive Scheme will be through bond notes which are backed by an offshore $200 million counter cyclical facility that has been arranged to support the export bonus scheme from externalization and or capital flight, which has continued to negatively affect the economy since dollarisation in 2009 and that has become more acute since January last year. The issuance of bond notes has a self control mechanism in that when there are no exports, there will be no issuance of new bond notes. The Reserve Bank of Zimbabwe Amendment Bill seeks to augment the legal framework for the implementation of the above policy measure. The amendment is necessary in view of the fact that due to the urgency of the matter, amendments have been made to the Reserve Bank of Zimbabwe Act in terms of Temporary Measures Amendment of Reserve Bank Act and Issue of Bond Notes Regulations 2016. These amendments are only valid for a period of six months.
Key Provisions of the Bill
I will now outline the key provisions of the Reserve Bank of
Zimbabwe Amendment Bill as follows:
Clause 2, defines certain terms, key of which is the definition of a bond note.
Clause 3, will insert in the Reserve Bank of Zimbabwe Act a new section enabling the Minister of Finance and Economic Development to prescribe by notice in a statutory instrument that a tender of payment of bond notes and coins issued by the Reserve Bank are exchangeable at par value with any specified currency other than Zimbabwean currency, prescribed as legal tender for the purposes of Section 44A of the Act. We also prescribed that bond notes shall be legal tender in all transactions in Zimbabwe to the same extent as that prescribed currency. Clause 4, we re-enact the provision of the issuance of bond notes temporarily enacted under the Presidential Powers Temporary Measures – Amendment of Reserve Bank of Zimbabwe Act and Issue of Bond
Notes Regulations, 2016. This clause will also validate the issuance of bond coins in circulation before that time. Mr. President, it is now my pleasure to move that the Bill be read a second time.
HON. SEN. B. SIBANDA: First, I must admit that I am not a
fundi in the area that the Minister has covered, therefore, I will seek a bit of clarification. My first bit of clarification is, in today’s economy, is it possible to fix a rate and say this currency is equal to that and is it sustainable? Secondly, my concern goes to the delays. Early in the past year, we got to know about the need to introduce bond notes but it did not happen until it was legally overtaken by the temporary measures. I do not understand the delay that necessitated the temporary measures instead of proper legislation. Thirdly, you have clarified that the bond notes are going to co-relate to the volume of exports. What is the frequency of the review of the issuance of those bond notes? Lastly, I have heard that the diaspora would be keen to invest in Zimbabwe but they want something in exchange. The one thing that they are requesting is the broad right to vote. How are we tackling that?
*HON. SEN MASHAVAKURE: I have heard what the Minister
said. He wants the country to have foreign currency but we already have foreign currency because we are already using multiple currency basket which includes the Rand, US$, Yen and other currencies. I did not understand what he said. Is there a programme to encourage people to have a culture of saving through the banking system because there is the practice where people have their own home made banks and even keep their money in their socks. Will there be a programme that will encourage people to have savings and are they going to eliminate the dangers that people face in depositing their money where they pay charges to banks for running the account? Are we going to have a situation where people are going to be earning interest on savings that are deposited with the banks? If that were to be done, I believe it would be good for us and we can urge our people to have confidence in banks. Currently, a lot of people are using mobile money so banks should embrace methods that encourage people to save.
We are using US$ and there are lots of countries the world over that keep other people’s money through externalization. It can be externalized to countries like Panama and Bahamas who are in the habit of giving people tax havens. So they keep these monies in secrecy and give them lucrative interests. We want to move away from the issue of Panama papers to our own Zimbabwe papers so that we safeguard other people’s savings. I thank you Mr. President.
HON. SEN CHIEF. CHARUMBIRA: I rise to support this Bill
which was brought by the Minister. It is carrying a subject which has been debated by people from all walks of life because it touches on their livelihoods. I am aware that when the issue of bond notes was first mooted, there were lots of speculations, guess work and gossip around this thing. In all honesty, this being a House of Hon. Members who represent the public, I think the truth should be told that the sentiments out there are that the introduction of the bond notes was very helpful. It would have been different if this Bill had been brought before the introduction of the bond notes because then we would be guessing and speculating as to whether it would work. Now, the public is asking if you can introduce more high denomination bond notes because the volume of the $2 has become too much. Now it is not about whether the bond note should be embraced. It has been well embraced already. The issue is that we are not moving too fast but as you say that you want to anchor it to the export volumes – of course you have a good explanation. However, the denominations probably, you would move from $2 now to much bigger notes so that we do not have to carry US$200 in a big box. I want to commend your Ministry and the Reserve Bank that you have been very creative. The problem of Africa that makes us not to develop is that we want to copy – saying zvakamboitwa kupi, ahh zvimwe totangawo tiriisuwo. Kufungawo kwema Zimbabeans kuti bond note rinoshanda ndokuti tifambire mberi. The doubts that we are trying to assist you in the public is that people still ask about the par value that is this currency and the bond notes the same? So, we always tell them it shall be like that forever. So, do not go back on that one and we want you to continue like that. Others ask whether the bond notes will buy in other countries and we have educated them that there is no local currency that can be used in other countries except the three international currencies. Even the South African rand, if you go to another country like Egypt or Europe, you have to look for foreign currency because it cannot be used. So, if the bond note does not buy
in Botswana, it is normal, that is the economics of the nations – local currency can never buy outside.
Hon. Minister, please keep educating the public about the cashless economy. The long queues in the banks are not necessary if we fully embrace the cashless economy. In Europe where we normally travel on business trips, you want to pay your bills and you have United States dollars from Zimbabwe or the Euros, they will ask you to use a bank card. They do not want cash transactions, so we should also move in that direction. There are no queues there for cash because they do not use cash anywhere, so let us also embrace that route.
Lastly, we are embracing cashless economy in various forms but if the RTGS system can be expedited especially between two different banks, for it to process money. The three days waiting period is just too much. It should work in such a way that at least within 24 hours, money can reflect in the other account. So, if we can improve on the RTGS system, this will cut the queues we are seeing in the banks.
HON. SEN. KHUMALO: Thank you Mr. President for the
opportunity. Unfortunately some of my points have been said.
However, I will dwell on the issue of bank limits. Yes, I know we are supposed to use the plastic money but there are certain things, even if you go to other countries, you find that you have to pay those things using cash because the plastic cannot cover everything. The limit which we are given to withdraw is too little. When I am travelling, I will go to the bank and there are no banks in the rural areas because I would not have been allowed to take reasonable amounts to take with me and that sometimes leads to the queues.
The other thing I think is wasting time on the queues is taking time for economic development when people are in these queues and they are going to be given a limit so that they come back again tomorrow, this will deter economic development because these people need to get their money and go. Even the money from outside which we are given by our children which we are supposed to collect from the banks, there are still queues or you are told there is no cash today come tomorrow. Can this be expedited so that when I am going to collect my money from my children, I know there is going to be that percentage which is extra; but going there three times is not right. Can that money be available when we want it?
These queues also affect the aged. It is very bad for the old people to keep on going back and told you can get so much and come back again tomorrow. So, I am urging the relevant authorities to allow the aged to collect their pensions and monies from Diaspora once rather than being asked to come back over and over again. I thank you.
HON. SEN. CHIMHINI: Thank you Mr. President. Hon.
Minister, an incentive is an incentive, it remains like that. My question is, what guarantees do we have that the export promotion will take place when you are going to issue the 5%.
Secondly, are there any sectors that have already shown signs of willingness to export? If you can please clarify on that?
HON. SEN. MLOTSHWA: Thank you Mr. President, I just want
to get clarity from the Minister. First of all, I would like to say happy New Year Hon. Minister. The bond notes, they are being called the
Patrick and John (PJ) paper. When you withdraw the bond notes in a bank, you write your withdrawal slip as if you are withdrawing US dollars, that is not reality. They must be withdrawn as the bond notes. Where I live, with people that I had conversation with over the bond notes, they still do not understand. Somebody gave an example like this one, which I am so excited to give to you, because I promised that I would do that. Somebody said equating the bond note and the US dollars is like putting a 300 ml bottle full of coca cola and a 300 ml bottle full of water, this one who picks water will say; drink as if you are drinking coke when you know that the properties in the two liquids are not the same. This is reality Hon. Minister. I also want to understand that if I happen to sell a house here in Zimbabwe and I am paid in the bond notes, if I have a visa card and go outside the country, can my bank give that money to me in the strong currency? I would like to be enlightened on that. When we talk about people who were shipping a lot of cash outside the country hence the banks are limiting the withdrawals, who exactly was shipping this money? Is it not the Executive which was shipping all this money outside because the ordinary people do not have money? If you are paid $300.00 a month what do you ship that can
affect the performance of the country, you have nothing to ship. The use of cashless money must not be fast tracked on people Hon. Minister; they have to take it on their stride because if you force them they will choke. So, you should have means and ways and policies that will allow that the people will take it bit by bit because if you want us to choke now, where was Zimbabwe when everybody was doing cashless? I thank you.
*HON. SEN. MACHINGAIFA: Thank you Mr. President. I rise to thank the Minister of Finance and Economic Development for a good Bill he has brought. In addition to what Hon. Sen. Chief Charumbira has said that the currencies that are used worldwide are three, the United States Dollar, the Euro and the Pound. As Zimbabweans very few of us have problems because if you deny your totem and you want to take another person’s totem you do have a serious problem. If we do not encourage our own currency then we have a problem. As I grew up I met such problems in Zambia and the Zambian kwacha it had become worthless because it had lost its value and the citizens did not change it.
The Senesene from Senegal would tear off the kwacha and flash them in a toilet as they leave that country so that the country could not have its own currency. The same happened to the Malawian kwacha when it lost its value, the Malawians did not ditch their currency or change its own currency. The rand has a turbulent movement in terms of its strengths, at times it firms and weakens but they have not done away with the rand because they are a few who are into cross boarder trading. We want to move around with huge sums of money. The ordinary people in
Zimbabwe want more bond notes. Thank you Mr. President.
*HON. SEN. MURWIRA: Thank Mr. President. I second the
Minister’s Bill. I want to talk about shops. I am saying that shop owners should be urged to bank their daily takings. They have a problem that they bank the bond notes and remain with US$, what is Government policy on that issue. There is a problem that we observed that if you try to buy flower using the bond notes you will pay a higher price, if you use a US$ it is less. May that normally be corrected and we want to find out what the policy says. Thank you.
HON. SEN. MUTSVANGWA: Thank you Mr. President. I rise to commend the Minister of Finance and Economic Development for bringing up this RBZ Amendment Bill. I think it was long overdue that Zimbabwe comes up with its own currency which circulates in this country. What was happening is that Zimbabwe was becoming a haven of criminals because nowhere in the world and I am very well travelled it does not matter in Asia, Europe or anywhere where it is so easy to access the US$ as it was in this country. This is the only country also where you could easily get US$100.00 notes. I lived in America when you go to an ATM in America you can hardly get those big bills but you just get $20, $10, $5. This will certainly help the economy and it will certainly somehow bring down the capital flight which is a serious problem in this country. Every business man was coming from wherever they come from coming to Zimbabwe, take the US$ and take it out. So, no matter how much US$ you were going to inject into the market, as long as they were US$ they were going to be mopped out and sent out the country which was not going to help the economy. We thank you Minister.
*HON. SEN. MAWIRE: Thank you Mr. President. First and
foremost, I would like to congratulate the Minister of Finance and Economic Development, Hon. Chinamasa. You are very important to us in this country. The issue of funding should not be your problem because you are one of those few hard working Ministers in the SADC region.
The problem of money that you have talked about, you saw it fit that the Zimbabwean people are now facing a cash shortage and you did not sit on your laurels. In collaboration with the RBZ Governor you came up with a solution and brought the bond notes. I would want to appear to be repeating as has been said by Hon. Sen. Chief Charumbira, that there has been a lot of things that the Zimbabwean citizenry has had to contend with. Others were for the issue of the bond notes while others were extremely against it. We failed to understand whether these were the brains of the Zimbabweans and were they made for developing this country. Upon the release of the bond notes all of us were happy and you have delayed in producing the $5 and $10 notes that you aid you were going to produce and people are quite happy. People are anticipating the arrival of the bond notes. Do not think that you are only person to have come across this scenario.
In Mozambique, our next door neighbor, as Hon. Sen. Machingaifa has said I was in Mozambique during that time. The meticals become useless but in Zimbabwe we have problems with the pen and paper because those that are degreed appear to know a lot but their intelligence is misdirected. Our education is useless we are not properly applying that. Mozambique said get out once their currency had lost value. They remained steadfast and used the meticals alongside other currencies. The good thing about the bond is that it cannot be externalized. We would hear from the media that people were burning the bond note or flashing it down the toilets but they are not going to achieve any victory. We are using bundles to go and buy using those bond notes. This has happened in other countries and eventually they emerged victorious and rich the promised land.
We stand behind you and we urge you to remain steadfast and produce the bond notes. I thank you.
HON. SEN. MARAVA: I want to thank Hon. Chinamasa because
you are hard working but at times you are asked to move mountains. A single man cannot move mountains. The issue Hon. Minister is that, have you observed that our bond note is now trading on the black market at a lower exchange rate. The use of money or the money market cannot be understood simply to mean that money is being taken out of the country but what is important is the rate of exchange of our currency compared to other currencies when we use it in our own country.
The question that begs an answer is that if it has been declared as a legal tender or currency for Zimbabwe, we need clarity. Is this Zimbabwe’s currency, so that we can then say Zimbabwean two dollar note (Z$2). Is it not possible to remove the word ‘bond’ because we want now to compare our Z$2 note with the Ghana $2 and two pula from Botswana so that we see its worthiness as compared to the meticals, kwacha, rand and other such currencies, so that we do not continuously refer to it as a bond note. What are we bonded for? That is that begs an answer from the Hon. Minister.
THE MINISTER OF FINANCE AND ECONOMIC
DEVELOPMENT (HON. CHINAMASA): Thank you Mr. President.
I would like to first of all thank all Hon. Senators who have contributed to this debate. Let me say that from the outset, I am very pleased that the Zimbabweans embraced the use of bond notes – [HON SENATORS:
Hear, hear.] –
This was contrary to the propaganda that in fact was being launched against the issuance of bond notes. All those who were in the forefront of that propaganda were alleging to be speaking on behalf of the people. I am happy that as we discuss this Bill, the people have spoken. They have spoken by embracing the bond notes.
Senator Sibanda, let me say that when we were confronted with the problem, because it hit us so suddenly. The capital flight that happened was quite sudden and we realised that there had been a lot of mopping out of US dollars out of the country. The problem was exacerbated by the fact that the dominant currency then was the US dollar, almost occupying 95% of our transactions. As the US dollar was siphoned out of the Zimbabwean market, we therefore found ourselves suddenly that we had no medium of exchange because the US dollars was being used as and we still use it as legal tender.
Now, a medium of exchange must circulate if the economy is to remain functional. Where people decide to put that currency under the pillow or to take it out of the country, it means there is no longer any money to transact business; to sell tomatoes or do ordinary business. If you want to sell your car or cattle, you no longer have that currency. That in fact is the situation that confronted us. We then decided and zeroed in on the bond note, because the problem we are facing in Zimbabwe is one of confidence. Confidence because people are still in the mindset of what happened in 2008. That is the problem, otherwise if we were able to renew, in Government that confidence which existed before, we should have no problem in this economy. So, we had to accept the reality confronting us, that there was no confidence in the market; first to introduce our own currency, there is still no confidence but we are working very hard towards that goal.
Generally, once the correct fundamentals are in place, we will be able to do it. Some of the fundamentals are basically to do with increasing exports so that we can build reserves. Countries normally have three months or so for import cover in terms of reserves for themselves. We need to address the issue of trade deficit and productivity. Unless there is production you cannot have currency chasing too few goods. So, we need to work on a lot of those and we are already working on those.
These were the issues Mr. President were confronting us. When we announced, we deliberately allowed debate. I think, as Sen. Chief Charumbira has said, there has never been an issue as debated thoroughly as we did on the bond notes. It started from the word go when the Reserve Bank Governor announced it, around May 2016. It has been full throttle on the debate both in print, social and electronic media. As we listened to the views of the people coming out, we were also able to change our own initial concept. We were helped to evolve our own ideas so that we become firmer and clearer.
So, personally I am very grateful for the debate that has happened since May, 2016 because we have answers for everything. We anticipated every problem because of the debate that ensued. The issue you raised is to why the temporary measures. To be honest, for me it does not worry me what happened because temporary measures are still within the framework of the Constitution and the law. We can resort to that.
Another problem which I can say to you now, the moment we started putting orders to print the bond notes, we had our own people tracking me and the Governor. Wherever we went we were being followed and people were discouraged to cooperate with us. I know two or three companies which we had engaged to print the bond notes who declined because they were threatened through e-mails. They were threatened with strikes and so forth and they had to think about their own reputation, given the way the whole message was put together. So, all these things we had to basically take into account. Overally, I have no problem with the way things have progressed because we are now here. I am confident that this august House as has been expressed, will support this Bill so that we can have a permanent legislation to undertake it.
Also, let me say that right from the beginning, we think and I still strongly feel as a lawyer that the legal framework was in place for the issuance of bond notes, but because of the controversy surrounding the issue, I felt I should put myself on guard and bend over backwards to make sure that I reinforce the existing legal framework. So, this Bill is doing nothing more than reinforcing what is already there, so that we put it beyond any doubt that bond notes are a legal tender in Zimbabwe. So, Hon. Sen. Sibanda, I want you to understand that the path has not been straight, it has been a very complicated process. You ask, ‘Is it possible to fix the rate and is it sustainable?’ As you can see, everything is managed; we are not printing bond notes willy-nilly. No exports, no bond notes.
Basically, this is why we are matching the bond notes with the United States dollars because we know the value of our exports. Exports bring US$ or foreign currency into the market and therefore once we know the value, we then say 5%. We are not even matching to the full extent of the exports, we are saying 5%. So, that control mechanism makes it possible to maintain that 1:1 exchangeable rate with the US$. So, for as long as we are talking about bond notes, yes, I can say it is sustainable.
I need also to advise, Mr. President Sir, that we are moving away slowly but clearly from an over liberilised foreign exchange market to a managed one. What this means is, all exporters as they have always done, must export and do their documentation through the Central Bank. When they are paid, they acquit and from now onwards, we are going to allow those who are exporting a portion. Already, I think currently I may be mistaken there; currently I think it has been fixed at 50% which we allow the exporter to keep for use in purchasing raw materials and buying spares so that the activities of export are maintained, increased and intensified. The other 50% is used by the Reserve Bank for importation of fuel and other essential commodities to the market and which also cover those companies that are into import substitution but are not exporters - you know soap manufacturers and a host of other companies.
Essentially, I want this august House to understand that is the direction we are going to travel. Today it is bond notes, when the macro-economic fundamentals are right and I do not anticipate it to be soon, we will move to the next stage basically to our own currency - again depending with the confidence that is restored in the authorities. Another point I want to highlight Mr. President is that, the value of any currency is not supported by anything worldwide. It used to be backed by gold; people used to keep gold vaults to support the value of the currency but that was abandoned, I think 60 or so years ago. The value of a currency is confidence by the people in their own money. You withdraw that confidence and you do so at your peril then you will not have any medium of exchange.
I was challenged in the Lower House but it is no longer here sorry, if you look at the One United States dollar note (US$1), you will never find anywhere in the world dirty currency as the One United States dollar note that you find in Zimbabwe. For your information that US$1, dirty as it is, is not accepted anywhere; it is only accepted by
Zimbabweans. – [HON. SENATORS: Inaudible interjections.] – Only by Zimbabweans as it has no value outside Zimbabwe. If you were to take it to the United States of America, they would take it, burn and destroy if they accept it. I am sure they will accept because it is theirs but outside there, it has no value. So, why is it that it has value here? Dirty and torn as it is? It is because you are putting unnecessary blind confidence in it and you refuse to put that confidence on something that we create ourselves. Alright, I can understand the history but we need not remain entrenched in the past and forget to work for the future. It is very important that we need to look into the future.
All that is necessary to give value to a currency is confidence which arises from discipline among those who run the Exchequer. Disciple not to print willy-nilly, wholesale without following; those who are into accounting know that certain formulas are used to say, when your economy is growing at this rate, you must have your money supply according to this formula. If that is followed, sometimes it can be exceeded but even the parameters for exceeding are also known because there is a danger zone and so on. If you do not exceed the danger zone, you will be fine. So for me, I believe that we are a disciplined lot and should be supported in the direction that we are taking. So the corerelationship with exports is very important as it is a control mechanism so that we do not over supply. This is why even now we are dripfeeding into the economy so that we do not have any situation, perception of inflation.
With respect to the frequency, I think you need to understand that the initial support to exporters did not take into account incremental production. We just accepted that you are into gold production, you exported gold; you are into tobacco production, you exported tobacco and we just said, how much did you export or how much did you produce? We based the incentive on that basis. Of course, as we grow another crop, other gold exports, we pay up to 5% because in some instances, it is two and a half percent. We are also proposing, Mr. President, we are still under active discussion, to pay the 5% incentive to cotton farmers starting with this crop that is in the ground.
On diaspora remittances, we have given those who receive diaspora remittances a 5% incentive so that we encourage your relatives in the diaspora to send this money through structured channels. If they do, we will pay the recipient here 5% and so on and we hope that it will go quite some way to enhance diaspora remittances.
With respect to whether we can give the vote to diasporans, those of you who were involved in the Constitution making process will remember that this was debated extensively and the conclusion was that as of to now, we do not give. Whether that will remain so is a matter for the future but currently, the Constitution and Electoral Law does not give them the right to vote.
Hon. Sen. Mashavakure, thank you very much. We will do what we can to encourage a culture of savings. Our biggest problem in the economy is that we have been using too much cash and what that means is that it is not in the banks. When there are no deposits in the banks, the banks have no money to lend to the productive sectors. So it is an issue that I believe needs to be taken up and we have already taken up. We already have strategies of financial inclusion. We encourage all those tobacco farmers to open up accounts and were paid through their banks in the last season – that encourages a culture of savings. We have also found that those who are side marketing and I hope that it serves as a warning, those who are side-marketing cannot be paid the incentive. The incentive will be paid through the account of that person who carried them and we are not to blame for that. I hope that those who have this habit of side marketing will stop it and will be encouraged basically to open their own accounts and to market their produce directly in their own names.
The issue that you raised, the Reserve Bank is actively pursuing this matter with the commercial banks; the issue about bank charges and not paying interest for savings. When we engaged them with respect to interest on savings and deposits, they said there are two types of deposits. There are what we call demand deposits where the depositor can withdraw at any moment. That money generally is of no use to the bank because they do not know when you are going to demand it. What they encourage are savings accounts. It could be a fixed deposit, you put it for six months or one year and they pay you interest. They also encourage basically that we make more and more of our deposits under that route. That is the money they can use for lending because they know they can lend it on a short term. For example, if it is a 12 month fixed deposit, they can lend it for nine months. After nine months, they have been repaid and can redeem your fixed deposits if you should want it after the 12 months.
You are urging us to be a Panama as a country so that we have the fame of having something like Panama Zimbabwe papers. I do not want to say anything negative about another country but I think we should all know; Switzerland used to be like that, maybe still is. They would encourage deposits from everywhere and no questions asked as a safe haven security. What this meant was that anyone who steals money anywhere in the world could take this money where they were encouraged to take it. By the way, that money does not earn interest. It could be $20 million or $30 million. You just deposit it there as a safe haven. No, we are not in that class and we should never follow that route.
Hon. Sen. Chief Charumbira, thank you very much for supporting this Bill. You are quite right that the sentiments that we are getting from the public on the introduction of bond notes have been very positive. For that, we are perpetually grateful to the Zimbabwean Republic. You urge us to introduce more bond notes. It is only according to the control mechanism – no exports, no bond notes. We will not make the mistake of printing bond notes to meet Government expenditure. We will go the same way like we did in 2008 and I will not allow that to happen. Bond notes are only introduced and issued to encourage production, particularly to encourage exports.
Our major sources of foreign currency are exports, diaspora remittances, lines of credit, foreign direct investment that is equity and loans. Currently, we do not have much in the way of foreign direct investment worth talking about. Whatever financing of capital projects we are doing is through loan financing. Much of it is through EPC, meaning we are given a loan, for example through China Exim Bank and the conditions are, it does not come in as cash. They insist that we buy the equipment from China and that the contractor is from China. So, there is very little that comes mostly to source domestic materials like sand, concrete and so forth. As we speak, the issue is to do with exports; that is the major source of our foreign currency.
With respect to denominations, yes we will not print any $100 bond notes. I think the maximum that we will go, subject to further consultations maybe $20. Basically, when we had the $100 here, it made it easier for people to mop out our money and they will take millions of dollars in just a suitcase through the airport, which will not have been the case if there were US$1 or US$20. We have learnt that lesson and I am happy to say that in other countries, they are also going the same route that they will not encourage $100 notes. So, the $5 bond notes, I think are coming in March – [HON. MEMBERS: Hear, hear.] –
I thank you for commending us for being innovative. I feel so proud that we have been able to overcome this. When we interact with foreign financial institutions, to be honest we had endless arguments with the IMF, World Bank, et cetera to say “hazviite” and so on. They were also acting under pressure from our own people. We said
Zimbabwe is in a unique situation, it is a country under sanctions and we do not have our own currency. We are using other people’s currency which has now been mopped out. We cannot afford to stay in a situation where we have no medium of exchange. Over time, they have now come to understand that and the bank which has helped us basically says, do you know we have used Zimbabwe to create new products which they are now applying to other countries. In fact, they mentioned some three or four things that we have done together which had never been done anywhere else which worked and they are now applying to other countries. Of course, we cannot claim any patent on that.
Hon. Sen. Charumbira answered well the question that bond notes will not buy outside Zimbabwe. You rightly pointed out that there are very few currencies which are able to buy outside their countries. It is the United States which is global to a greater extent, the British pound and Euro to a limited extent. We tried it here before. If someone produced British pound here, no one would accept it. That of course is not the same thing with the US dollar, so the bond notes will not buy outside Zimbabwe. This is why it is our mechanism to stop capital flight and to have a medium of exchange circulating.
I am delighted that bond notes have started to be deposited back into the banking system, suggesting that the bond notes are now circulating. Anything that is taken away from circulation, it means you are going to kill the economy and suggest a serious problem. So, bond notes have started to be deposited and I am very happy that they are now a clear case that they are circulating. Thank you Hon. Sen. Chief Charumbira for that and we will continue to educate people on using plastic money and to be honest, the upsurge in the usage of plastic money has even baffled us. It has been so successful to a point where I marveled at someone selling mangoes and mazhanje along the Domboshava road, he had a swiping machine so that no one would be prejudiced in buying. I clearly marveled at the innovativeness. It showed me that there is now greater acceptance of the usage of plastic money. That is the way to go because in any country, the rule of thumb is that if you have got deposits; in this country our bank deposits are $6.5 billion. So the rule of thumb is you cannot print $6.5 billion in cash but you print between 5% and 10% relative to the bank deposits. So we are going to print the bond notes up to $200 million. Ideally, like in the
United States, they work on a percentage of 10% that will move as cash. This is to do petty transactions but as you all know, the USA is a bigger country with a larger population. I take your comment and I will refer this matter Senator Chief Charumbira of expediting the RTGS system so that we cut the waiting period.
Senator Khumalo raised the issue of queues which we are working on but I want you to understand first that the queues are rising from a resistance to use plastic money, because if you have a bank account, you have easy access to plastic money. This will make your life a lot easier instead of spending a day outside an ATM machine. Generally, people use cash when they want to do things which are not above board. Clearly plastic money helps to kill any abuse or corruption because it leaves a trail. So, those who are resorting to cash want to take a bag to pay someone in cash. Therefore, we need to understand and discourage cash transactions. Plastic money is one way to fight corruption and we should use that. I agree that the more time people stand in queues retards economic development and it means you are not economically active. However, we are doing a study to understand who the people are that are always in the queues. It will just be a study to find out where they are coming from, what exactly is happening and so on. It may throw up very interesting results which we may use either to improve our systems or otherwise.
Diaspora remittances – I want you to understand Senator Khumalo and the august House that when someone wires a payment to you which could be $200, there is no physical cash to that. If $10 million is wired to Barclays Bank in Zimbabwe there is no physical cash. The Reserve
Bank must go to the Federal Reserve to buy the cash using money in the NOSTRO accounts to buy the US$, which again is a cost that we can ill afford.
Senator Chimhini, I think I have already answered your question. When we started, there was just the base and we want to encourage people to continue producing for exports using the bonds notes 5% as an incentive. That is what we are doing and I must say that those who have benefited under the scheme have been encouraged to go and produce more. That is what I discovered in the Tobacco and Gold sectors. We have been able to enhance our gold production though we fell short of the target by one tone. We are still considering and discussing how best to incentivize more gold production. The idea is that we hope to build from the gold some reserves which we hope in future we can use to anchor the value of our own currency. The bond note is not the
Zimbabwean currency. These bonds notes are backed by a facility from Afrexim Bank. When we do have our own currency, we will not have anything like a facility. So by that time, I wish we will have some gold and diamond reserves.
Senator Mlotshwa, the fact that when you deposit your bond notes and your US$, they are deposited on the same slip because they are interchangeable. When you withdraw, sometimes you are given bond notes and at times US$. The system is working very well, so what is the problem. So far we do not see any problem. The problem will only arise where you insist – like I thought your mind was going – that we separate the bond and the US$ suggesting the bond is our currency. Bond notes are in the basket of foreign currencies and at par in terms of value with the US$. We have decided to do so because the dominant foreign currency here, apart from the bond notes is the US$. In fact, the South African Rand is not seen anywhere here, not because we said we do not want it but the people rejected it completely. We even tried through the Governor to give directives that where any Government services charge fees and are tendered for payment in rand, pound or euro they should accept but there has been no evidence of much that has taken place. This means that the people are not holding Rands anymore. So, the currencies that we are seriously talking about are the US$ and the bond note which are interchangeable. You raised an issue Senator Mlotshwa which we are looking into because part of the capital flight that happened in this country was through sale of houses. The seller would insist on being paid in cash – can you imagine $300,000 in cash. The person then took the money to go and buy a house in South Africa yet that was our money. That house is a Zimbabwean house, why is that money now going outside and not benefiting Zimbabwe. So, those are issues we are now pursuing. We want basically receipts from house sells, our Zimbabwean money to pay taxes here. Now, what you are talking about is capital flight and that is how some of the money was going abroad, people then say pay me outside. Even if the money is coming from outside, you sell someone to a Zimbabwean who is abroad in the United States, then say do not worry to send the money here, deposit it in my account in South Africa or in UK. That is wrong, that money should come here, it is our money.
No, I do not agree with you Senator Mlotshwa that plastic money programme should not be fast tracked. As I mentioned, I do not understand when you say people will be choked. It will make my life easier. If there is a mental resistance in the Hon. Senator, please unblock that resistance, you will be surprised with how much time you will have on your hands without going to the bank. Some of the transactions, you can actually do them on your cell phone. You can transfer from one bank to another and it is already happening, it will make your life a lot easier. Just accept the change. I know it is difficult to accept change but this type of change, please accept it, it will be easy for you.
Senator Machingaifa, thank you very much for the comment you made especially the issue about people refusing their totem and taking other people’s totem, I liked it. That is exactly what I think
Zimbabweans have been doing. They do not appreciate the good that is in their own country. They look at the very negative side of life. If you look at the social media; you do not get as negative a social media as we have in Zimbabwe, you do not get that in any other country which have worse problems than ourselves. It was suggested that maybe it is education, so if it so, then it is wrong education that we have imparted on our people clearly. What people forget is that when you are negative about your country and yourself, it means you have no confidence in yourself. You cannot build a country with people who lack self confidence. They do not believe they can do anything in the world. So, you end up basically destroying your own self esteem which is very important. So I liked that bit about people refusing their totem. The examples you gave about Zambian kwacha, Malawian kwacha, Mozambique, they went through hell worse than we did but they were able to hang on to their own currency. The mistake we made is basically it happened in the budget that I presented in January 2009. I had anticipated our Zimbabwean dollar to run parallel with the US dollar. In fact the kombis continued to use the Zimbabwean notes until they ran out of those notes, we should have continued with that route.
Anyway because of the changes that took place, it was not possible to maintain, there was a change of guard at the Treasury and we are in a completely different situation now. Let me say to Senator Machingaifa that we will only print more bond notes in sync with exports, no exports no bond notes. We will not print bond notes to support expenditure.
Senator Murwira, thank you very much with respect to the encouragement that we should give to shops to bank their sells. We will certainly continue to do that. Thank you very much for the support. Senator Mutsvangwa, I also thank you very much for the support, particularly when you are warning us against printing any $100 bond notes. We will certainly heed that advice and we will not do it. Even as we now import, we import US dollars, like I said, when people wire, whether through Diaspora remittances or they sent money here, they do not send physical cash, we have to import. So, we obviously have to import up to denominations of US$20.00. The only problem of course is that the smaller the denominations, the more expensive it is to transport the currency to Zimbabwe.
Senator Mawire, thank you very much and I acknowledge that the negative publicity does not do our country any good. Senator Marava, I have said this, you are worrying about bond note trading at inferior rate on black market. I have said this; anyone who is doing that wants to externalize funds, clearly. So, they are being very criminal. However, as of now because of the drip feeding of the bond notes, there is not much trading, we have been monitoring. Obviously, you are not able to cover every eventuality, people who want to be mischievous will do so. Senator Marava, we will not remove the word bond from the bond notes because they are a unique currency. They are backed by Afro Exim Bank export incentive facility. They are not a Zimbabwean currency. When we introduce a Zimbabwean currency we will tell you and in fact we will get to a point where you will demand the introduction of your own currency because production would have gone up. Already, if you look at this season and God has so for been smiling on us. If the crop situation remains as is, we are looking for a very good agricultural season. More production of maize, cotton, in other words we are looking for increased growth, better growth than I perhaps anticipated in my budget in the agricultural sector.
We are now working on gold, we have been working on it and we are discussing further incentives to see how we can basically push up gold production. We are also looking at diamonds. When I presented my first Budget in 2014 as substantive Minister, I had anticipated 13 million karats, throughout. Since then, and I hardly have got more than three million. So, Hon. Minister Chidhakwa is working very hard, in fact he is devoting and focusing his attention on how to restart production of diamonds. What has been hindering has been the litigation by two of the companies and we have now engaged them with a view to try to reach an amicable understanding so that we can fulfill the promise and the plan of Government that Government only should be involved in diamond mining. So, when that production goes up, when real jobs are being created, that will increase revenues and that will correct a lot of the macroeconomic fundamentals. Already, when we look at what Statutory Instrument 64 of 2016 has done, it has sparred local production but there are challenges which are shortages of foreign currency to source raw materials and we think that it is a teething problem during this transition and that we should be able to sort out that problem sooner rather than later.
Mr. President, I once again thank the Hon. Senators for their contributions and always for their support. I therefore, move that the
Reserve Bank of Zimbabwe Amendment Bill [H.B. 12, 2016] be now read a second time.
Motion put and agreed to.
Bill read a second time.
Committee Stage: With leave, forthwith.
RESERVE BANK OF ZIMBABWE AMENDMENT BILL [H.B. 12,
House in Committee.
Clauses 1 to 4 put and agreed to.
Bill reported without amendments.
Third Reading: With leave, forthwith.
RESERVE BANK OF ZIMBABWE AMENDMENT BILL [H.B. 12,
THE MINISTER OF FINANCE AND ECONOMIC
DEVELOPMENT (HON. CHINAMASA): Mr. President, I thank
Hon. Senators for their support and I now move that the Bill be read the third time.
Motion put and agreed to.
Bill read the third time.
MEASURES TO CURB VIOLENCE PERPETRATED BY POLITICAL
Fifth order read: Adjourned debate on motion on violence that had become a socio-political way of life among the people of Zimbabwe.
Question again proposed.
HON. SEN. B. SIBANDA: Thank you Mr. President. I move that the debate do now adjourn.
HON. SEN. MARAVA: I second.
Motion put and agreed to.
Debate to resume: Thursday, 2nd February, 2017.
STATE OF THE NATION ADDRESS BY HIS EXCELLENCY THE
Sixth Order read: Adjourned debate on motion in reply to the State
of the Nation Address.
Question again proposed.
HON. SEN. CHIEF CHARUMBIRA: Mr. President, I move that
the debate do now adjourn.
HON. SEN. MARAVA: I second.
Motion put and agreed to.
Debate to resume: Thursday, 2nd February, 2017.
PRESIDENTIAL SPEECH: DEBATE ON ADDRESS
Seventh Order read: Adjourned debate on motion in reply to the
Question again proposed.
HON. SEN. CHIEF CHARUMBIRA: I move that the debate do
HON. SEN. MASUKU: I second.
Motion put and agreed to.
Debate to resume: Thursday, 2nd February, 2017.
REPORT OF THE DELEGATION TO THE 68TH SESSION OF
EXECUTIVE COMMITTEE OF THE AFRICAN PARLIAMENTARY
Eighth Order read: Adjourned debate on the Report of the Delegation to the 68th Session of the Executive Committee of the
African Parliamentary Union.
Question again proposed.
HON. SEN. GOTO: I move that the debate do now adjourn.
HON. SEN. B. SIBANDA: I second.
Motion put and agreed to.
Debate to resume: Thursday, 2nd February, 2017.
On the motion of HON. SEN. CHIEF CHARUMBIRA seconded by HON. SEN. MARAVA, the Senate adjourned at Twenty Four
Minutes past Four o’clock p.m.