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SENATE HANSARD 18 DECEMBER 2019 29-15
PARLIAMENT OF ZIMBABWE
Wednesday, 18th December, 2019
The Senate met at Half-past Two o’clock p.m.
PRAYERS
(THE HON. PRESIDENT OF SENATE in the Chair)
SECOND READING
FINANCE (NO. 3) BILL [H. B. 21, 2019]
First Order read: Second Reading: Finance (No. 3) Bill [H. B. 21,
2019].
THE MINISTER OF FINANCE AND ECONOMIC
DEVELOPMENT (HON. PROF. M. NCUBE): Thank you Madam
President. The Finance (No. 3) Bill [H. B. 21, 2019] basically focuses on a budget of $59 billion. The central tenets of this budget are that we want to drive productivity, competitiveness, inclusiveness in terms of quality of infrastructure and we want to drive jobs. Those are the pillars of this budget for 2020. That is why it sounds so big but also the reason why these figures are so big - I will start by revenues and I will come to expenditure itself - it is because of inflation and we also believe that, that is what it will take to fund growth, jobs and competitiveness.
On expenditure, we are expecting expenditure of the order of $63 billion. That means we are targeting a deficit of the order of 1.5% of GDP and we believe that this is achievable. We will not have difficulty at all achieving this. If you look at the things that we have in terms of incentives that will drive growth, jobs and competitiveness – we have focused on the primary sectors of the economy.
In the agricultural sector, we have set aside a budget of $11.3 billion. Here, we are cognisant of the model that we have adopted, of partnering banks so that we share the burden but also crowd in the private sector and make sure that we deal with the issue of 99 year leases which has not been easily accepted by the banks. We have set aside a budget of the order of $500 million for irrigation because we wish to climate proof our agriculture. We have also set aside a budget of the order of $250 million to deal with dam construction but also to acquire meteorological equipment for us to track weather patterns. Everyone knows that the drought has been severe and it has depressed agriculture by as much as 18% of GDP and overall GDP of minus 6.5 %.
Coming to mining, Madam President, again we have set aside what we think is a decent budget for the mining sector. This is an area driven by the private sector in terms of overall investment and we expect that the sector will grow as much as US$12 billion by year 2020.
In industry, again our budget seeks to provide guarantees to those companies that need to be true. We are quickly aware that we need jobs and grow exports; we have set aside a budget for this. On tourism, we are continuing with the incentives that we have had over the years in the tourism sector. There is one that we really want to push in the 2020 Budget, that is to deal with our visa system so that it is easy for tourists to come here spend their dollars and enjoy their stay. It is easy for them to come in and out. If there is one area that we need to push on it is that area that we need to push on and certainly, it is not a big budgetary issue. It should be something that we should be able to do. When it comes to jobs Madam President, we were proposing a youth employment credit incentive (YET). We want to incentivise companies to employ our youth. We need to deal with unemployment. We think that an incentive to companies is one way to go. It may not be the best approach but that is the best we have come up with. We have proposed that companies that employ the youth for at least twelve months in terms of year of assessments without losing other employees deliberately; because we do not want them to fire people and employ the youth and expect a credit, they should be adding on employees rather than replacing those that they have fired. Do not be alarmed when we say youths within the age of 30 years and so forth. We are not trying to define youth but we are staying within the constitutional definition of up to age of 35, so it is a targeting exercise designed to contain our budget and we have set out the criteria very clearly. This has been used in other countries and we want to try it in our country. We think there is mileage that we will gain from this approach.
Let me turn to other issues around job creation and also entrepreneurship support Madam President. We have allocated $500 million towards the National Venture Fund to support start ups from young people, women and everyone but we want to prioritise those two categories; young people and women for their new businesses. We will work on the rules on how these monies can be accessed for start-ups to be supported. Why are we doing this? I recall coming to Parliament to explain a few things before during the course of the year and a bit of last year why banks are not well-suited to supporting start ups and small scale businesses, the reason being that they use depositors’ funds which have a very short duration. They can only lend those resources for a short period of time because there are risks that depositors may want their money back. So what is really proper and more appropriate is a venture fund which can invest for five or seven years. That is what we are trying to do with the National Venture Fund to support these kinds of start-ups.
There is quite a lot in the budget that we are doing Madam President. One issue which is worth highlighting is the export credit facility of US$20 million. We are desirous to grow our exports. Those of you who are old enough; a lot of you are even older than me, you will remember in the old days we used to have these kinds of schemes and they were working. I was working in the industry; I worked as an economist in CZI and I know it works. If you have an export revolving fund and you support your horticulture sector and so forth and the fund revolves, you replenish it through the proceeds and it can go a long way in supporting exports. So we were desirous to capitalise this and make sure that it works well.
As we stimulate the economy and drive employment, productivity and growth, it is important to also stimulate domestic demand. So what we are proposing in this budget is to cut the corporate tax by 1%. We have also cut the Value Added Tax (VAT) by 0.5%. We believe this will go a long way in stimulating domestic demand. I end on this note Madam President, that this budget is really meant to stimulate the economy and I repeat; austerity is over. It has served its purpose. We sitting in Treasury see the technical results. It might not be felt by the populace but the finances of the Government are in order. That is what we wanted to achieve. Now we have enough space to finance the growth, job creation, competitiveness, all towards achievement of Vision 2030 of an upper middle economy. I propose that the Bill be read a second time. I thank you.
Motion put and agreed to.
Bill read a second time.
Committee Stage: With leave, forthwith.
COMMITTEE STAGE
FINANCE (NO.3) BILL [H. B. 21, 2019]
House in Committee.
Clauses 1 to 16 put and agreed to.
On Clause 17:
HON. SEN. TIMIRE: I might be lost because I do not have the Bill to follow but I wanted to speak about something to do with water. I only read about dams which are a long term water relief to irrigation, but I did not get the immediate relief of water as you can see that in
Zimbabwe people are really suffering trying to get water. The women
are suffering and are getting water from faraway places, even here in town you can see there are long queues. People are now crying for rain because of lack of water.
THE CHAIRPERSON: Hon. Senator, the procedure is that you
are supposed to raise an issue as it affects the clause as I put it. That is the procedure according to the Standing Rules and Orders of Parliament. However, I will give you the benefit of doubt and ask the Minister if he wants to respond to the issue of water, even though this is not normal procedure.
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. NCUBE): Hon. Chair, I thank and
agree this is not the issue for Committee Stage discussion but I appreciate the question and importance of the issue and I will respond. Thank you for giving me the opportunity. The issue of water is a critical one. What we did in the budget is to allocate Z$233 million to DDF for the purpose of drilling boreholes, mainly in the rural areas. We have another budget for about Z$45 million for ZINWA to do likewise because they have different capacities. ZINWA is capacitated to drill deeper boreholes, especially in the drier areas but we are aware that the Chinese have also given us aid for drilling boreholes where they pay contractors to drill boreholes. We are however, aware that they tend to pay the drilling companies on the back of what we call wet boreholes so if they strike nothing, no water they do not get paid. So they tend to skew their efforts towards those areas that are wetter than the dry areas when the real demand is in the dry areas.
In the urban areas, yes there have been some drying there but the core for water supply in the urban areas is the formal reticulated water. The issue in the main has not been raw water but rather water treatment so it is about clean water rather than raw water. So we have in the budget allocated resources for chemicals for upgrading the infrastructure in the urban areas. We are really focused on that and as we think how perhaps the devolution resources ought to be used in some of these metropolis maybe one area we should be targeting is the issue of water and sanitation. I thank you.
THE CHAIRPERSON: We have gone out of our way and accommodated you Hon. Senator but you should have raised this during the Second Reading stage, during the general debate.
Clause 17 put and agreed to.
Clauses 18 to 30 put and agreed to.
First Schedule put and agreed to.
House resumed.
Bill reported without amendments.
Third Reading: With leave, forthwith.
THIRD READING
FINANCE (NO. 3) BILL [H. B. 21, 2019]
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): Mr. President, I move
that the Bill be now read the third time.
Motion put and agreed to.
Bill read the third time.
SECOND READING
APPROPRIATION (2020) BILL [H. B. 22, 2019]
Second Order read: Second Reading: Appropriation (2020) Bill
[H. B. 22, 2019].
THE MINISTER OF FINANCE AND ECONOMIC
DEVELOPMENT (HON. PROF. M. NCUBE): Mr. President, on the
14th November, 2019, I presented to this House the 2020 National Budget Estimates amounting to ZW$59 046 billion, broken down as consolidated revenue fund, ZW$57 053 billion in and retention funds at ZW$1 994 billion. The purpose of this Bill is to give effect to the 2020 Budget Estimates that were presented to the House. I seek approval for the 2020 National Budget of ZW$59 046 billion, broken down as consolidated revenue fund ZW$57 053 billion and retention funds of ZW$1 994 billion to cater for provisions to ensure achievement and realisation of the overall objectives of the transitional stabilisation programmes 2019-2020 programmes and projects being undertaken by Government.
The 2020 Budget Policy measures put emphasis on reviving key sectors of the economy through promotion of production oriented investment and productivity without losing focus on fiscal responsibility underpinned by the following key priority areas which I have already mentioned before; which is productivity and growth, job creation, competitiveness and quest for strong sustainable and shared growth.
Section 5 (1) of the Bill empowers the Minister of Finance and
Economic Development to transfer funds already approved by Parliament between Votes in respect of a function or responsibility transferred between ministries and departments during the course of the fiscal year. Section 5 (2) of the Bill allows discretion to the Minister of Finance and Economic Development to transfer funds from the unallocated revenue portion which appears on the Minister of Finance and Economic Development Vote to any other Vote as and when the need arises in order to meet inescapable expenditures. In addition, Mr.
President Sir, if necessary, the Minister of Finance and Economic Development can vary the amounts so transferred by taking back any surplus for re-allocation to other ministries to meet demands that may arise. Mr. President Sir, I accordingly move that the Bill be now read a second time. I thank you.
Motion put and agreed to.
Bill read a second time.
Committee Stage: With leave, forthwith.
House in Committee.
COMMITTEE STAGE
APPROPRIATION 2020 BILL [H. B. 22, 2019]
House in Committee.
Clauses 1 to 6 put and agreed to.
Schedule 4 put and agreed to.
House resumed.
Bill reported without amendments.
Third Reading: With leave, forthwith.
THIRD READING
APPROPRIATION 2020 BILL [H. B. 22, 2019]
THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. PROF. M. NCUBE): I now move that the
Bill be read the third time.
Motion put and agreed to.
Bill read the third time.
On the motion of the MINISTER OF FINANCE AND
ECONOMIC DEVELOPMENT, HON. PROF. M. NCUBE the
Senate adjourned at Seventeen Minutes past Three o’clock p.m.