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NATIONAL ASSEMBLY HANSARD - 18 March 2010 VOL. 36 NO. 29

 

PARLIAMENT OF ZIMBABWE

Thursday, 18th March, 2010

The House of Assembly met at a Quarter-past Two o'clock p.m.

PRAYERS

(MR. SPEAKER in the chair)

ANNOUNCEMENTS BY MR. SPEAKER

LAUNCH OF THE NATIONAL WOMEN'S ECONOMIC

DEVELOPMENT PLAN 

          MR SPEAKER:I wish to inform the House that the date for the National Launch of the International Women's Day has been changed from the 19th of March to the 25th March 2010.  The venue is Chitungwiza Aquatic Complex and the starting time is 1000 hours.  All Members of Parliament are invited to attend.

MDC-T CHANGES TO PORTFOLIO COMMITTEE MEMBERSHIP

          MR. SPEAKER: I also wish to inform the House that MDC (T) has made the following changes to committee membership: Hon. Makamure has moved form the Committee on Agriculture, Water, Lands and Resettlement to the Committee on State Enterprises and Parastatals; Hon. Varandeni has moved from the Committee on Agriculture, Water, Lands and Resettlement to the Committee on Women, Youths, Gender and Community Development; Hon Nyamudeza will now serve on the Committee on Defence and Home Affairs in addition to the Committee on Small and Medium Enterprises; Hon Musumbu will now serve on the Committee on State Enterprises and Parastatals in addition to the Committee on Media, Information and Communication Technology; Hon. Dzirutwe will now serve on the Committee on Women, Youth, Gender and Community Development in addition to the Committee on Transport and Infrastructure. 

2010 DIARIES

          MR. SPEAKER: All members are advise to collect their 2010 diaries from the Public Relations Department at Pax House, Office 4, 3rd floor South wing.

SWITCHING OFF OF CELL PHONES

          MR SPEAKER: May I remind hon. members to switch off their cellphones or to put them on silence.  This is the last warning. 

MOTION

BUSINESS OF THE HOUSE

          MR GONESE: I move that Order of the Day Number. 1 be stood over until the rest of the Orders of the Day have been disposed of.

          MR MWONZORA:  I second.

          Motion put and agreed to.

MOTION

PRESIDENTIAL SPEECH: DEBATE ON ADDRESS

          Second Order read: Adjourned debate on motion in reply to the Presidential Speech.

          Question again proposed.

          THE DEPUTY MINISTER OF STATE ENTERPRISES AND PARASTATALS: I move that the debate do  now adjourn. 

          Motion put and agreed to. 

          Debate to resume: Tuesday, 30th June 2010.

SECOND READING

PUBLIC ORDER AND SECURITY AMENDMENT BILL [H.B. 11, 2009]

          Third Order read: Second Reading: Public Order and Security Amendment Bill [H.B.11, 2009].   

          MR. GONESE:  Thank you Mr. Speaker.  In moving that the Bill be now read a second time, I would like to first of all commend the Parliamentary Legal Committee for their thorough scrutiny of the Bill and for their useful observation in relation to one of the clauses in the Bill, in particular, Clause 7 Sub-Clause 3.  I would like to inform the House that after careful consideration, I am in agreement with the observations of the Parliamentary Legal Committee that that particular clause could be problematic because as it is currently formulated Mr. Speaker, it would allow a magistrate to review an order when there would be functions which they will have made and I am going to amend that clause when it comes to the Committee Stage.  Secondly, that clause is liable to abuse whereby the Magistrates would have made their decision and maybe given pressure to change.  So I would like to indicate that, that particular clause  will be expunged from the Bill when it comes to the Committee Stage. 

          I would also want to express my gratitude to the Portfolio Committee on Defence and Home Affairs.  I understand that they held public hearings in nine provinces in this country.  They held public hearings in Murehwa, Mutare, Masvingo, Bulawayo, Gwanda, Rusape, Gweru, Gokwe, Kadoma, Chinhoyi and Harare.  The only province which public hearings were not conducted was Mashonaland Central, but otherwise this is the first time that we have had such extensive coverage.  I know that in the past, most of the public hearings were being held in Harare and Bulawayo and I would really want to express my gratitude to the Committee for an excellent job which they did in relation to this Bill.  They also invited ministry officials for their comments and views on the Bill on the 1st of February 2010 and they also invited me, a week later, to comment on the observations which were made by the ministry officials which I will give in greater detail later in my presentation.

          Firstly, I would like to deal with general criticism which has been made that the bringing of this Bill is in contravention of the GPA.  The interrogation was made by various quarters and also one of the points which was made to the Portfolio Committee by the ministry officials and I would like to disagree in this House on that notion that by referring to the actual provisions of the GPA, the problem which we have in this country is that many people deliberately mislead others by talking of things which are not there when instead, they will not have read the GPA and in particular Mr. Speaker, I would like to state that this Bill is in conformity with the provisions and I can do no better by actually quoting the relevant provisions of the GPA which support this Bill.  So there is no need to allege that this Bill is against the letter and spirit of the GPA. 

          I will go to Article XII of the GPA which makes it abundantly clear that freedom of assembly and association are recognized in a multi-party democracy and I will actually read the provision itself which provides as follows:  “Recognizing the importance of the freedoms of assembly and association in a multi-party democracy and noting that public meetings have to be conducted in a free, peaceful and democratic manner in accordance with the law, the parties have agreed:

(a)     to work together in a manner which guarantees the full implementation and realization of the right to freedom of association and assembly; and

(b)     that the Government shall undertake training programmes, workshops and meetings for the police and other enforcement agencies directed at the appreciation of the right of freedom of assembly and association and the proper interpretation, understanding and application of the provisions of security legislation” 

          So in other words, what I am proposing in this Bill follows clearly in line with what I said.  Secondly Mr. Speaker Sir, in terms of Article XIII the same principle is reinforced where it is provided as follows: 

(a)     that there be inclusion in the training curriculum of members of the uniformed forces of the subjects on human rights, international humanitarian law and statute law so that there is greater understanding and full appreciation of their roles and duties in a multi-party democratic system;

(b)     ensuring that all state organs and institutions strictly observe the principles of the rule of law and remain non-partisan and impartial;”

          These provisions Mr. Speaker, were put for a purpose because there was a lacuna, there was a gap in the way that the law enforcement agencies have been conducting themselves, that is why the parties, in their sensitive wisdom, agreed to incorporate these provisions in the GPA.  Having said that Mr. Speaker, I will comment on the general attitude of the  people of Zimbabwe to POSA.  If this matter would be put to a referendum, I have no doubt in my mind that there will be an overwhelming vote for the total repeal of this piece of legislation.  The majority of Zimbabwe's opinion is that this piece of legislation is draconian and given a chance, they will tear it to pieces.  They regard it as repugnant.  Given a chance, they would tear it to pieces and throw it in the dustbin.  That is the general attitude of the people of Zimbabwe. 

          I have received numerous telephone calls.  There is widespread interest in this particular Bill.  It is a matter that touches the hearts of most Zimbabweans.  They are very keen to actually have this piece of legislation repealed. 

          However, I have taken a middle of the road approach, bearing in mind that there is need for security legislation,  that there is need to balance the interest of the people of Zimbabwe and also the role of the state to ensure that public order is maintained.  That is why I have proceeded to have certain clauses amended.

          Mr  Speaker, when we look at the general principles regarding our freedom of association and assembly, they are clearly enshrined in our Constitution.  Section 21, Section 22 and Section 20 clearly speak to the issues of freedom of association and freedom of assembly, as well as freedom of movement, which are clearly guaranteed in terms of the Constitution.  It is clear that the provisions of all our laws must be in conformity with the provisions of the Constitution. 

          I would like to refer hon members to the celebrated case of Munhumeso and others (1994) Volume 1, Zimbabwe Law Reports.  This is a very important case in our jurisdiction where it deals with the predecessors of POSA, the Law and Order Maintainance Act, LOMA.  In that particular case of Munhumeso and others, they challenged Section 6 of LOMA.  I would like to quote certain portions of the judgement, which I believe were very appropriate.  For those who are not familiar with the case, I think it will educate us on what this actually entails. 

          I would like to refer to page 56 of the judgement by Justice Gubbay and I will quote, “the importance attaching to the exercise of the right to freedom of expression and freedom of assembly must never be underestimated.  They lie at the foundation of  a democratic society and are “one of the basic conditions for its progress and for the development of every man.”  On page 57, it says, “the right to freedom of assembly is often exercised by persons taking part in public processions and freedom of assembly  covers not only static meetings, but public processions as well.  A procession is but an assembly in motion, which is by its very nature, a highly effective means of communication, and one not provided by other media.   It stimulates public attention and discussion of the opinion addressed.  The public is brought into direct contact with those expressing the opinion.” 

          Lastly, I will refer you to page 59 of that judgement, where the learned judge also said, “the second principle  relates to the adoption of a broad approach.  All provisions bearing upon a particular subject are to be considered together and construed as a whole in order to effect the true objective.  Derogations from rights and freedoms which have been conferred to should be given as strict and narrow rather than a wide construction.  Rights and freedoms are not to be diluted or diminished unless necessity or intractability of language dictates otherwise.”

          Having said that, I would like to submit that as the legislators of Zimbabwe, we must ensure that the legislation which we pass in this august House falls squarely in line with the provisions of the Constitution that I have outlined. 

          Mr Speaker, the reason why the people of Zimbabwe have had problems with POSA is that this particular piece of legislation has been abused by the police.  When I introduced the motion on the 5th of November 2009, I clearly outlined all the cases where people had been arrested and were taken to court, charged under POSA, but at the end of the day, almost all of those cases did not have successful prosecution.  In most of the cases, charges are actually withdrawn.  In other words, the matter does not even proceed to trials.

          The way that the police regard POSA is that it is a very serious offence such that someone who is charged is brought to court in leg irons as if he is a very dangerous criminal.  If you look at the number of police officers who accompany that person to court, they will be carrying their guns and you would think that person is an armed robber or a hijacker, when infact, all that person would have done is not to have notified the police that he/she would hold a public meeting.

          The other problem is that people are arrested long after the event when the meeting has already taken place and nothing would have happened to disturb the peace.  A week later, that person is arrested for something that happened 12 months ago.  I want to say that it is no longer necessary to leave this as a crime under our statute.  Hon. Mwonzora is one of the victims who was summoned to appear in court more than 12 months after the event.

          Mr Speaker, I believe that as the legislature of the Republic of Zimbabwe, it is our duty to ensure that we improve this piece of legislation.  I know that the portfolio committee is going to produce their report, but I have no doubt in my mind that the majority of Zimbaabweans would actually want this piece of legislation expanded for our statutes -[MR MAZIKANA: We cannot have a free for all] – Mr Mazikana sometimes it is better to keep your mouth shut and be thought to be a fool than to open your mouth and remove all doubt. 

          MR SPEAKER: Order Hon Gonese, address the Chair. 

          MR GONESE: Mr Speaker, I feel that it is very important for all Zimbabweans to put our hands together.  I want to remind this august House that as I am speaking today, I was given leave by this august House to bring this Bill as a private member.  In other words, there was unanimous support from all the members of this august House.  Without the leave of this august House, this Bill would not have been gazetted.  It was only gazetted because this august House gave me that green light.

          I just want to remind hon members that when we are passing legislation, we must also look at the future generations.  I want to remind those who used to regard themselves as the ruling party before the formation of the inclusive government, that in a democratic society, things can change.  Today it is the ruling party and tomorrow it can be the opposition party and you would not want such pieces of legislation to be used against you. 

          I would like to give an example of LOMA, which was passed by the Smith regime.  It remained on our statutes and could have been used against the very authors – the people who had made that Bill.  So, I want all hon members to look at legislation which is for the betterment of our country, which is in line with the democratisation agenda, which we have all agreed to and which all the principals have subscribed to their signatures in this particular document. 

          One of the objections that have been made is that, this is a negation of the doctrine of separation of powers.  I would like to remind hon members that this august House as the legislature – it includes both backbenchers and frontbenchers.  When I brought this particular Bill, everyone including government ministers, would be given an opportunity to make their input into the debate.  They would also be given an opportunity to make any suggestions or any proposals which would be very welcome.  I understand that some suggestions have been made to the portfolio committee and I am prepared to take them on board and propose amendments that will improve this piece of legislation.  If we can have similar suggestions from our ministers, I am amenable to take suggestions on board.

          Mr Speaker, I will now go to the particular clauses, which I will then summarise because we will have a more detailed discussion when we go to committee stage. 

          On clause 2, it will import new definitions of “public demonstration” and “public meeting”.  Demonstrations hit by POSA will be limited to those which are large enough to make it reasonably possible that they will cause public disorder, serious breaches of the peace or substantial obstruction of streets.  The new definition of “public meetings” of more than 15 persons will make it clear that domestic meetings of political parties and trade unions are not covered by POSA.  The problem we have is that, certain organisations, particularly ZCTU, have been victimized.  Such organizations, if they are holding  their meetings, are not covered by the provisions of POSA.  We do not want a situation like what happened in Masvingo and Victoria Falls.  Such organisations should be exempted and any other Non Governmental Organizations going about their bona fide business.

          Clause 3, which deals with the protection of freedoms of assembly and association.    This requires police and others administering POSA to bear in mind the constitutional right to engage in peaceful assembly and that public meetings, demonstrations and processions may only be prohibited by a magistrate or a judicial officer.   The Commissioner- General must ensure that police administering the Act undergo appropriate awareness training.

          We have had serious problems with the police, some of them believe they have powers of God and others think they are little gods.  We want a situation where power is vested in the judiciary officer who will decide whether such meetings should be prohibited or not.

          Clause 5  requires the number of days for notification to be reduced to 4 days.  I want to point out that when it comes to election period the current Act makes it clear that during elections, the time be reduced to 3 days.  Given this scenario, what can prevent us from reducing it to 4 days when nothing is happening.  This will still give police enough time to make relevant preparations.  Let me make it clear that the purpose is not to seek permission from police but simply to inform or notify them.  The police in their wisdom or lack of it, misinterpret this provision.  That is why you see even when they are informed, their authorization will read “permission granted” or “ permission denied”.  This amendment seeks to strip these powers from them.

           Clause 8, seeks the repeal of ban on gatherings near Parliament, courts and protected areas.   When POSA was enacted in 2008, this provision was not there.  People should be allowed to hold demonstrations at Parliament building because it is them who elected us to be in this House.  They have to be allowed to demonstrate but provisions of POSA should apply so that police will make necessary arrangements and put mechanisms in place for directions and the like.  I also want to say I am surprised by anyone not wanting people of Zimbabwe to have their meetings, they have to be allowed as long as they have notified the police.

          Clause 9, this deals with the civil liability of organizers of gatherings.  What I am proposing is that the convener be given a chance to prove the balance of probabilities that even if I had given the notice, such and such was going to happen.  Let me give an example, we can have a situation where a convener is holding a meeting and have notified the police but there can be some groups of religious sects having disagreements and chaos erupts and this will disrupt that public meeting.  This is a situation which can not be  foreseen by anyone.  The convener should be given time to show that even if he had complied, this could have happened. 

          I would  like to say that this law is not for MDC nor for ZANU PF but it is for the people of Zimbabwe and we are just improving the pieces of legislation.  I would also like to seek support from members of the Cabinet to make their own suggestions which will be much welcome for as long as they are well meaning and make this country move forward.  I therefore commend to this House and move that this Bill be read a second time.

          MR MWONZORA: On behalf of the Portfolio Committee on Justice, Constitutional and Parliamentary Affairs, I wish to present a report on the Bill. The report on the public hearings that we conducted as a committee on the Bill. Before I present the report, allow me to make one remark regarding this law generally.

          MR SPEAKER: If you are presenting a report of a Portfolio Committee, you confine yourself to the views of the committee and not your own views.

          MR MWONZORA:  I am most obliged Sir. Following the gazetting of the Public Order and Security Amendment Bill  [H.B. 11, 2009] - your committee  conducted consultations with members of the public, civil society and other stakeholders. In terms of Standing Order 105 which provides that (a) every Bill shall stand referred to the appropriate Portfolio Committee after publication in the Gazette and that (b) Portfolio Committee shall consider the Bill and shall have power to call and receive  the evidence from the members of the public on that Bill.

          The process that the committee engaged in was to consult members of the public on the Bill and solicit their views and to ascertain what their position was on that Bill and thereafter, to report to this Parliament. In pursuit of the aforesaid, your committee received oral presentation from Hon Gonese, the mover of the amendment, the Secretary for Home Affairs, Mr Melusi Matshiya who was accompanied by the Zimbabwe Republic Police representatives, Commissioner of Police, Mubatapasango, Senior Assistant Commissioner Mhiripiri Director for Legal Services and Assistant Commissioner Manyonga, for the Law and Order Section of the ZRP.

          Your committee also gathered views from the public and input and received written submission from members of civic society, public and stakeholders at large. I now want to go to the evidence received by us as a committee. The first evidence was from Hon Gonese, the mover of the motion. Clause by clause, Hon Gonese provided to us the justification of the Bill and what he presented to us is not substantially dissimilar to what he has done today. For that reason, I will incorporate what he has said in our report.

          I now want to go to the evidence from the Ministry of Home Affairs. In evidence before your committee, the Secretary for Home Affairs, Mr Matshiya, indicated that the ministry is responsible for the administration of the Act. As a ministry Mr Matshiya said they could neither comprehend the motive that had necessitated the amendment nor could they identify any ills or mischief that they sought to remedy or reverse. In other words the police had no clue on why these amendments are being brought.  The secretary further stated that the current Act as constituted was intended to protect the consumer and the participants of public gatherings and also sought to balance competing interests.

          In his opinion, the Bill was ill timed considering that it came when the GPA was being consummated. He further elaborated that POSA was as a result of consultations for the regional and international instruments and cited legislation from Britain, South Africa, and Zambia as examples. The secretary intimated that the ZRP was busy enough without being laboured by having to approach the courts at every turn. He said “there are so many areas of public gatherings and there are so many areas of contention that might arise but do we always have to go to court  to seek determination”. The submissions from the Secretary for Home Affairs can be summarised as follows:

1)   The Bill is contrary according to the Ministry of Home of Affairs. The Bill is contrary to the letter and spirit of the GPA as all laws are supposed to be enacted after consultations with both parties.

2)   The amendments according to the police, are a negation of the doctrine of Separation of Powers

3)   The proposed amendments are aimed at transferring  the power of the police from the police to the courts.

4)   That the  proposed Bill as it stands goes against the intention of Section 93 of the Constitution.

5)   That there is no need for Section 3 of the Bill as it already exists in the Constitution. Section 3 of the Bill says that the Constitution shall be the supreme law of the land and any law that is inconsistent with the Constitution shall, to the extent of the inconsistency, be null and void.

6)   That the proposed amendments in Section 14 do make sense in that breaches in law can never be categorised as serious breaches and non serious breaches.

7)That the police need no further training and they are trained in law enforcement and the training is enough. As you will know Mr Speaker, the Bill calls for retraining of the police force.  The police force are of the opinion that they are adequately trained. However, the challenges that they are facing are basically financial. So there is no need for retraining.

8)The proposed amendments to Section 25 reducing the notice period from 7 days to 4 days, make the work of decriminalizing the failure to notice problematic to the police.

9)Section 26 (b) allows the democratic consultation by stakeholders such as the city council, church and public utilities. 

10.    The proposed amendment ignores the need for consultation.  

11.    The appeal for procedure to the majestic court up to the high court is basically too cumbersome and can not be completed within 4 days as contemplated by the amendment.  The status quo was recommended.

12.    The proposed amendment of section 27 is tantamount to appointing magistrates as regulating authorities, and this breaches separation of powers. 

13.    Under section 27 (4) (a), (b) (c ), the use of “and “ is improper as it implies that the three means of publication must be satisfied.  Instead, it is supposed to be “or “ which means any of the mentioned alternatives will suffice.

14.    The proposal to repeal Section 27 A is dangerous in a democratic society, as it allows demonstrators to disrupt the business of the courts, Parliament and protected places and areas.

15.    The amendment to Section 28 is a clear contradiction since, if notice is given in the first instance, the Police will be away and take action to prevent damages or loss of property, injuries or even death of people. 

15.    The repeal of Section 32 is ridiculous since it encourages people not to carry identity documents.  This would complicate the work of the Police as they try to identify dangerous criminals from law abiding citizens during the course of their duties. 

          Your Committee conducted wide consultations on the amendments to the Bill through public hearings in the following areas so as to obtain views, recommendations from the public and interested stakeholders on POSA:-

          Place                             Province

          Murehwa                      Mashonaland East

          Mutare                          Manicaland

          Masvingo                     Masvingo

          Bulawayo                     Bulawayo

          Gwanda                        Matabeleland South

          Lupane                          Matabeleland North

          Gweru                           Midlands

          Gokwe                          Midlands

          Kadoma                        Mashonaland West

          Chinhoyi                      Mashonaland West

          Harare                           Harare

          In summary, there were some representatives from stakeholders who were in support of the Principal Act as opposed to the Bill.  These were not many, but their submissions could be summarized as follow:-

7)   The Principal Act ensures that public gatherings and demonstrations do not degenerate into violence.

8)   The Principal Act is part of Zimbabwe Law and must continue as part of the Legal framework.

9)   The provisions banning the carrying of weapons are proper as it prevents the use of these weapons to cause damage and injuries to death to members of the public.

10)                      That there is need for members of the public to produce their identity documents whenever requested by the Police for easy identification of dangerous criminals.

11)                      There were some members of civil society who were in support of the Bill and opposed to the Principal Act.  Their submissions could be summarised as follows:

12)                      the Principal Act contains some vague provisions that have been abused by the regulating authorities.

13)                      The police sometimes interpret the requirement of notification as a requirement for an application for authority from them to conduct a public meeting or demonstration.

14)                      Too much power has been concentrated into one arm of government, the Executive, through the police.  There is need to allocate some of that power into one of the other arm or the State, the courts.

15)                      The police require serious training, not only on human rights issues, but on the correct interpretation and administration of the Act.,

16)                      In line with the Principal of separation of powers, it is only proper that the courts determine issues pertaining to the right to hold public meetings and demonstrations; and for the police to implement those determinations.

17)                      The role of the police should be to maintain law and order.  Should the police be against the holding of a public gathering or public demonstration, it should be incumbent upon them to make the necessary court application for its banning. 

18)                      POSA has been sometimes wrongly applied and at others, selectively applied.  It is susceptible to abuse by the authorities, the police have been partisan in its implementation. 

19)                      The Act has its foundations in the Law and Order (Maintenance Act) of 1965, and has the effect of negating rights conferred by the Constitution.  It suppresses fundamental freedoms of assembly, association and expression.  The Act is a piece of bad law, one that does not serve the interest of the general populace.  It has been used to arrest human rights defenders in large numbers, who have usually been freed by the courts – thereby confirming that it is irregularly used.  Human rights defenders have complained of being hand picked at times by untrained members of the constabulary who have been used to implement provisions that they are not familiar with.

20)                      The power to stop and search people for identity documents has been adjudicated upon by the courts and found to be unconstitutional.  It is improper for the authorities to subvert court judgements through legislation.  The provision is wrong and bad, considering the difficulties of securing identity documents in Zimbabwe.  This provision was challenged in a court of law by a Lawyer called Mr Brian Elliot.  He was arrested for not carrying an identity document and he challenged that and the Supreme Court found that requirement was unconstitutional.  

21)                      Liability for damage should lie with the actual perpetrator of the damage and not the convener.  If the police have been properly notified and failed to secure peace, they should be held accountable.  Under the current Act, the person who convenes a meeting is liable for whatever damage occurs as a result of disturbances at that meeting. If ZANU PF convenes its meeting and members of the MDC-M come and disrupt that meeting, it is ZANU PF who are liable for damages even if he or she has not caused that damage.  So this clause is abusable and members of the public think that it must go.  It offends some of the key principles of our criminal law, the principle of nula poena simetuva what that means is, there must never be liability without false.  So, in so far as it makes a person who is not at fault liable – it must  go.  The other objection,

22)                      The Act should make provision on how the Police can be held accountable for improper and illegal conduct and the use of excessive force.

23)                      The provision barring public gatherings within certain distances of protected places is wrong – they felt that the reason why people may want to demonstrate to Parliament is in order for those in Parliament to hear them.  Now if you say they must demonstrate from Parliament, away from Parliament then it negates the whole purpose of the law. They went on to add that if people demonstrate at the Courts, they want the Courts to hear and this provision which says they must not demonstrate within certain distances negates that  right.

24)                      In certain areas, I am saying what the public said, in certain areas it is a difficult statute to comply with as members of the public have to travel to the Police Station to make the application.  An example of such an area would be the distance between Gwanda and Beitbridge – that is a very long distance, there is no where  that the people can apply.

25)                      The Act does not provide specific numbers that constitute the public – the Act needs to be clarified and given a more positive name and not a name that is associated with oppression.  Members of the public who are of this view think that this Act is now notorious, that it has generated a bad name, that there must be a change in its name, it must be rechristened so that it is not associated with the bad things that happened under it. 

26)                      While the Bill is a positive development, these are members of the public now commenting on the Bill – they feel that the bill is not adequate enough to address the ills that are posed by the current Act. They then said it is  worth to support this bill because it represents incremental change in our desire to democratize Zimbabwe.

27)                      The requirement that  individuals should produce identity cards should be removed from POSA to some other legislation which is user friendly – at any rate they argued the courts had already dealt with that. 

          The public then went on to make a submission to further amendment of the bill.  The amendment is that there is need for a clause that will  insert  a new Section 30 into the Act which will require Police whenever they use force to disperse a gathering, to prepare a report justifying the use of that force.  - Mr Speaker, I beg your leave to read the amendments to the bill that have been suggested by members of the public – it is an amendment in  Section 30 the heading is, Police to report on the use of force during public gatherings.

          “Whenever one or more police officers use force in order to disperse a gathering or to prevent disorder at a gathering, the Police Officer or Senior Police Officer concerned, as the case may be, shall without delay, in any event within four days thereafter, prepare a written report” - Whenever there has been use of force, fire arms, button sticks, teargas, whatever weapon that will be used, then within four days, the Senior Police Officer in charge of that Unit must prepare a report detailing the following: (a)  The circumstances under which the force was used – why Mr Sergeant did you use force?  Because the crowd was threatening to burn the supermarket, because the crowd was threatening to kill a member of the Police force – all that must be justified  (b)  The nature of the force used – so that we see whether the threat posed is proportional to the force used.  In other words, in retaliation to a verbal assault, is it proper to then shoot the person or the force used must be proportional to the offense committed  (c)  The identity of the Police Officer who has used the force.  Some hon. members may worry about this provision but the  logic is if a Police Officer has used force reasonably then he needs not worry.  But if the Police Officer has used force unreasonably, then he must be held accountable in his personal capacity – that is the essence of this amendment  (d)  The report must also show any dates, injuries or loss of or damage to property that has occurred as a result of the use of that force. And shall cause copies of the report to be forwarded without delay to the Minster – in this case the Minister of Home Affairs and to the convener...

          MR SPEAKER:  Order, order.  Hon. member, you are left with five minutes.

          MR MWONZORA:  Thank you Mr Speaker, and shall cause copies of the report to be forwarded without delay to the Minister responsible for the administration of this Act and the convener of the gathering. 

          OBSERVATIONS OF THE COMMITTEE 

          Your Committee observed that the majority of stakeholders appearing  before the Committee  had unkind words about the Principal Act.  They supported the amendment on the Bill.  Some felt the proposed amendments did not go far enough as they should have completely repealed POSA which they perceived to be oppressive and retrogressive.  Yes, we had all the recommendations of the Ministry, members of the public, and members of the Police themselves.   Your Committee has made the following recommendations:  (i)  That  the relevant Minister or Ministers reflect on the Act, the political environment in Zimbabwe at the time the Principal Act was passed,  vis-a-vis the current scenario in the regional context and consider repealing the Act altogether (ii) The Act be reviewed beyond the current bill as proposed by the mover and to ensure that it is user friendly – that the proposed amendment by members of the public be incorporated into the Bill  (iii)  That the Act be renamed to reflect a more tolerant and democratic Zimbabwe  (iv) That the Police should undergo intensive training in human rights issues and correct interpretation of this Act or any amendment arising from any Act of Parliament (v) That the powers currently reposed in the Police should be reviewed and generally curtailed and that some of them should be moved to the courts which are more independent and objective.  (vi)  That the discretion that the Police has on matters affecting fundamental rights be reviewed as they have tended to use the Principal Act selectively and without objectivity.  (vii)  That there is need for clarity in the Act to ensure that the Police understands their role and the extent of their powers.  At times the Police believe that they are the ones who should authorize meetings and gatherings – under the current Act, the Police are notified only.   Lastly, (viii)  That the Commissioner -General be directed to deal with issues of image of the Police Force.  There was a general consensus from stakeholders admissions that the Police had problems  in interpreting the Act and that they were not objective in its application.   The admission given to the Committee by the Police, convinced the Committee that the Police were not objective because they tended to reject everything in the Bill.  Your Committee noted with great concern that even those aspects of POSA that are deemed positive are mired by the bad aspects of POSA that are deemed positive are marred by the bad aspect of POSA. 

          Lastly Mr Speaker Sir, this report is the Report of the Portfolio Committee on Defence and Home Affairs on the Public Order and Security Amendment Bill [H. B. 11, 2009].  The Committee consists of the following Members of Parliament: Hon Madzore (Chairperson), Hon Mafios, Hon Moyo, Hon Mutseyami, Hon Rtd. Brig. Mutinhiri, Hon Rtd. Major Mhandu, Hon Mangena, Hon Chaderopa, Hon Silulu, Hon Sibanda, Hon Huruba, Hon Ziteya and Hon Yours Truly......

          MR SPEAKER:  Order, your time has expired.

          MR MWONZORA: I thank you Mr Speaker.

          MR GONESE: Thank you Mr speaker Sir, I think to all fairness to all hon members, I know that some of them might have seen the Bill sometime last year and cannot remember where it is right now and they may want to refresh their memories and I also want to study the report of the committee.  For that reason Mr Speaker, I propose that the debate do now adjourn to accord all hon. members an opportunity to debate meaningfully and contribute towards the amendment of this Bill. 

          MR KANZAMA: I second.

          Motion put and agreed to.

          Debate to resume: Wednesday, 30th  June, 2010.

MOTION

FIRST REPORT OF THE PORTFOLIO COMMITTEE ON STATE ENTERPRISES AND PARASTATALS MANAGEMENT ON INDUSTRIAL DEVELOPMENT ENTERPRISES

          MR MAVIMA:  I move the motion standing in my name that this House takes note of the First Report for the Portfolio Committee on State Enterprises and Parastatals Management on Industrial Development Enterprises in Harare and Chitungwiza.

          MR MATIBE: I second.

          MR MAVIMA:      

1INTRODUCTION

 

1.1             The Portfolio Committee on State Enterprises and Parastatals in carrying out its oversight   function resolved to enquire into the operations and activities of the Industrial Development Corporation- IDC. The IDC is a state agent created in 1963, to enable the state to invest in industry .In 1984 the act was amended to allow the corporation to promote the  investment and economic co-operation across the borders.

 

1.2 Broadly, the Committee was concerned by the fact that State Enterprises and Parastatals (SEPs) have remained a drain on the fiscus, on account of their losses, lost corporate governance, low tax revenue and non-delivery of basic services. Against this background,  the Committee undertook the enquiry taking cognizance of the fact that line ministries have the oversight responsibility over Parastatals under their jurisdiction in the day to day  operations and activities whist the  Ministry of State Enterprises and Parastatals  as  a responsibility in terms of  cross-cutting policy  issues such  as Corporate  governance as pronounced in the vision and mission of IDC .

 

Vision

Dynamic and responsive driver for sustainable development

in Zimbabwe’

 

Mission

To spearhead the development of industrial capacity in Zimbabwe for  the provision of dependable  value added goods and services that meet the needs of . the market, through identification  of viable investment opportunities, mobilization of appropriate resources and good corporate governance’

 

1.3            The Committee  sought to establish  whether the IDC was carrying out its core , business sticking to its mandate and  objectives to;

  • Promote, guide and assist in the financing of new industry and industrial   undertakings 
  • Expansion schemes
  • Better organization and modernization of existing industries
  • Undertake the development management and technical expertise
  • Development of expertise in project analysis, evaluation of investment opportunities, and consultancy services.

 

1.5     The Committee’s other intention  was to  appreciate  the challenges that are being faced by the companies so that they may be able to find short and long term solutions.

 The Committee also intended to establish the capacity of Parastatals and the strategies being employed to fit into the country’s turn around programme.

         

2.       METHODOLOGY

2.1     The Committee received written and oral evidence from;

a)          The Permanent Secretary for the Ministry of State Enterprises and Parastatals

b)          IDC Officials –ref  annex 1ist of witnesses

2.2       Analysis of submissions and exhibits.

2.3      Fact-findings visits to selected IDC Enterprises in Harare and Chitungwiza.

2.4      Analysis of case studies and research findings/references.

 

3.       MANDATE OF THE MINISTRY OF STATE ENTERPRISES AND PARASTATALS MANAGEMENT.

 

3.1     Function of the Ministry of State Enterprises and Parastatals Management.

3.1.1.  During an oral evidence hearing session with the Ministry officials, the Committee was informed the role of the ministry was to ensure that Parastatals and State Enterprises are managed to maximize performance and shareholder value.

 

3.1.2.  It was also brought to the Committee’s attention that for the past few years, State Enterprises and Parastatals, like some enterprises in the private sector suffered from inadequacy of financial resources, particularly foreign currency and skills drain. In addition, the other challenges were lack of proper monitoring, supervision and evaluation of boards by the line ministries.

 

3.1.2   Currently the ministry  is working   to identify areas that might require policy legislative review. Government  is the major shareholder, yet  there is perpetual mismanagement in parastatals.

 

3.1.3   The Industrial Development Corporation management also briefed the Committee that   the Corporation earns income from management fees, dividends, director’s fees, dividends, consultancy fees, rent, security guarantees and other service income from the group. In addition, the Corporation can only declare a maximum dividend of 8 per cent by statute but this has not been achieved due to an outstanding capital debt to China Eximbank in respect of Sino Zimbabwe Cement Company. 

 

3.1.4.   The Committee was informed that IDC plays an important role in the country’s turnaround strategy. Companies in the Corporation are grouped into clustered strategic business units. Almost all  companies have joint ventures with external and local corporate  and individual investment  partners  who provide capital, market access, technical and technology support as well as  management support.

 

Ref  annex  I-Organogram  of the Group Subsidiary  and Associated companies

 

3.1.5.   The Committee   carried out fact finding visits and conducted tours and interviews

With the following enterprises;

a. Motor and Transport

  • Motec Holdings – private limited group-75 per cent
  • Willowvale Motor Industries –private limithed-58 per cent

            b. Real Estate Development

  • Sunway City  Privates  limited Group 100 per cent
  • Sunway Professional Services private limited-100 percent.

c. Fertilizer and Chemical

  • Chemplex Corporation limited Group 100 per cent
  • Trading division – Chemplex   Marketing
  • Animal and Pubic health

 

 

    

  4.      COMMITTEE'S FINDINGS , OBSERVATIONS AND RECOMMENDATIONS.

 

4.1            Willovale Motor Industry

 

Structure Of Motec Holdings (Pvt) Ltd

 

4.1.1   The Committee was informed that Willowvale Motor Industries is a subsidiary   of    Motec Holdings Private limited which was  established  in 1998.The composition of shareholding is that  the company is owned 75% by IDC and 25% Itochu Corporation of Japan. Motec Holdings is the holding company of all motor services including Autologistics Services (Pvt) Ltd, WMMI, Deven Engineering (Pvt) Ltd and Amtec (Pvt) Ltd. Auto logistics Services is owned 60% by Motec and 40% by WMMI and is the importer and wholesaler of parts to Mazda dealers.

4.1.2    WMI Pvt.Ltd  is owned  58% by Motec Holdings, 25% by Mazda Motor Corporation (Japan), 8% by Itochu  Corporation (Japan)  and 9%  by Staff Trust. WMMI is the assembly plant for all vehicles.

 

4.1.3    Deven Engineering is wholly owned by Motec holdings and is responsible for assembling  of the body of the vehicle. Amtec on the other hand have convenience shops for parts and service products for vehicles. It is owned 55% by Motec,  30.1%  by Staff trust, and 14.9%  by Inchape Motors Int. Plc.

Ref annex I for other Motec subsidiaries.

     Tour Of Operations    

4.1.4    The tour of  the  WMMI  premises and workshops,  the Committee observed that the Corporation  has   vast operations and  machinery , which has a potential  assemble  all kinds of vehicles , but currently Mazda vehicles are a priority. Other equipment included machines for assembling parts, spray-painting machines and  ovens to dry up  paints.  In terms of quality control, after a vehicle is finished , it is road tested before being put in a ware house while waiting to be sold. The  Committee noted that there were newly assembled vehicles worth  USD5.2 million. The ranges of the vehicles that were in stock included Mazda 3 which is currently going for USD29 000 and Mazda BT-50, 2.2  going for USD18 000. They also had a workshop for repairing damaged vehicles.

 

4.1.5    Although the company has vast machinery at its disposal there is no production taking place and the workshops were deserted leaving the company with no option but to pay idle workers and other unavoidable fixed costs.

     Challenges

Declining  Sales  Volumes

4.1.6. The sales volume has continued to decline over the years for new vehicles both passenger and commercial. This is because of the competition in the industry both locally and internationally. If we compare their vehicles with their South African counterparts in the industry the prices  at WMMI are not competitive enough hence they end up selling less and less vehicles as people now prefer to go and buy second hand vehicles from the neighboring South Africa which is far much cheaper.

            High Production cost

4.1.7    It was also brought  to the Committee’s attention that the company is facing high costs of production such that the cost of the finished product is uncompetitive. Since they cannot source kits locally they have to import and in their case they are provided by  Itochu Corporation  who then demands payment after they have sold the vehicles. Also Mazda Motor Corporation has to come in and specify the models to be made, thereby increasing the number of middlemen involved. The problem is that now the vehicles are there but are not selling because of the high prices they are charging and the company is sitting on a debt of USD3.4 million to Itochu  which  must be paid by the 18th of March or they will withdraw.

 

4.1.8     The company has no liquid cash since its cash is tied up in stock. Thus the company is finding it difficult to pay 210 workers most of which are now idle because of no production. The non production has had a chain effect in the industry because the company used to buy materials from companies such as Astra, Dulux and PG Glass and now there is nothing being produced and those companies are negatively.

             Limited Credit Lines

4.1.9   The company is failing to secure credit facilities from lending institutions because of uncertainty in the business they are in. The company is owing Itochu USD3.4 million and no bank is willing to lend them such an amount and if they do they are charging very high interest rates of 15- 20% per annum. This prompted the company to approach the major shareholder who is the government maybe to chip in through NSSA and they said that NSSA by Thursday the 25th of February had confirmed to offer them assistance so that they would be able to settle the debt and reorder new kits from Itochu.

              Import Duty

4.1.10     Import duty has been reduced from 40% on one tonne pickup trucks in 1997 to 25% currently. This has increased importation of vehicles especially from South Africa (SA) thus increasing competition in the industry. Thus they were calling for the government to come in with incentives such as export rebates so that maybe the company can compete with their SA counterparts.

              Policy Inconsistencies

4.1.11   The policy inconsistency in the country has led to lack of investment in industry as a whole because investors are reluctant to invest in a country where policies are not consistent.

           Long lead time

4.1.12                                   The lead-time of the Itochu deal is 6 months and this means that even if the debt is paid the company has to wait for another 6 months before they start producing again. This means that the company will still be paying idle workers until say 6 months after they have placed a new order.

       Interventions by the Commmittee and the Executive

  • Assistance in  sourcing finance to pay the Itochu debt with Ministry of Finance acting as surety.
  • Help in phasing out second-hand vehicles with time that are being imported into the market so that the local industry is allowed to regroup and grow.
  • Adjust the duty being paid on imported vehicles so that imports become expensive and people start buying from the local industry.
  • Audit order numbers because most government ministries are said to be getting tenders to buy from WMMI but when the tenders have been won and the money is released from Finance they then go on to buy from other dealers.
  • Help them so that they become the sole supplier of all government needs for vehicles.

Recommendations

  • WMI  should  consider selling the current stock, despite that Itochu  has a major stake  and on credit  and Ministry of Finance should  be the guarantor
  • The Corporation should also concentrate on producing low cost vehicles, targeting the middle class  since the  economy is beginning to improve and the middle class is now able to buy cars.
  • WMI can also enter into contract assembling for other dealers who are importing fully made brands.
  • The Corporation should consider producing vehicles for all government departments,  especially the BT-50s that are very much in demand
  • Lobby for policies that help to lure investors in the  motor and encourage the industry  to grow .

4.2   SUNWAY CITY (PVT) LTD

4.2.1.  The Committee was informed that  Sunway City was established  in 1998. It is a subsidiary company IDC. It was stressed  to the Committee that  it’s main objective is  to develop world class integrated residential, commercial, industrial, institutional and recreational parks. Its target also is to provide relevant infrastructural development to facilitate industrialization and economic growth of Zimbabwe as well as regional integration. Currently the company is in the process of developing its 1559-hectare land bank located about 11km form Harare CBD.

4.2.2.   The Company has a lot of activities going on and as such has clustered its areas as follows:

  • Export Processing Zone (EPZ) Cluster
  • High Tech Cluster
  • Light Industries/ Terrace Factories cluster
  • Ware houses
  • Office Park
  • Inland Port
  • Regional shopping centre
  • Lorry park
  • Residential Cluster
  • Oil Products Cluster Park
  • Recreational Facilities Cluster
  • Institutional Facilities e.g. schools.

      Developments to date

4.2.3.    The following developments have been made to date:

  • Offsite infrastructure services have been put in place while onsite water tanks which have a capacity of 5 megalitres each and road works in part of the EPZ were developed.
  • Three factories were constructed and are already operational in the EPZ; the first producing bleached cotton products (sanitary ware), the second manufacturing animal and public health products and the third processing chrome. NOCZIM was one of its first customer when they constructed their plant.
  • Four buildings are currently under construction; two of which are textile factories, one is a software development park and the fourth is a storage warehouse.
  • Infrastructure service in one residential phase was completed and 225*2000sqm stands were sold. Infrastructure service in the second residential phase is underway.

  Challenges

         Skills Drain

4.2.4   The Company is losing very experienced staff to the Diaspora currently  has  a staff compliment of 22 employees .

      Financial constraints

4.2.5.  The company requires  working capital amounting to USD74 million to develop the park and finish those buildings under construction. They have applied for loans from IDBZ for housing development and also NSSA.. The total cost of the area after it has been developed is USD163 million.

Financial Investors

4.2.6.  They are also looking for investors and said that they will be giving them 49% of the shareholding. This condition is barring mostly foreign investors who need a controlling interest from investing. The Committee observed that the project is too ambitious, noting the small capital base.

Power Utilities Failure

4.2.7   Electricity just like in most parts of the country has remained a major blow to their operations but they had made provisions to use solar systems in case of power cuts.

Recommendations

The recommendations coming from the deliberations are that:

  • The company should not be a cry baby but should take advantage of schemes available in IDBZ and NSSA.
  • The company should try to look for investment because they have a lot of potential and so need financial assistance.
  • There is a need to restructure the management, which is top heavy, as well as complying with corporate governance, for instance,the Vice Chairperson is responsible for the day to day of the subsidiary. 

They have a local development plan No. 33 which they wish to forward to the government for consideration and assistance which spells out all they wish to do in their development of the area in question.  See annexture

4.3     MODZONE ENTERPRISES (PVT) LTD

4.3.1 Modzone Enterprises is a textile producing  blankets and clothing fabrics. It has two subsidiary companies Travan blankets which manufacture blankets and Irazim textiles which produces clothing fabrics.

          TRAVAN BLANKETS (PVT) LTD

4.3.2. The Committee was informed that that  the  company is owned 82% by Iranians and 17.32% by IDC. The company is responsible for the production  of blankets . Power Sales is their major customer to which they sell their finished products. They import raw materials like used jerseys and at the moment they have very little stocks of raw materials which they say would last them only 8 weeks.

4.3.3    The Iranians are planning to offload 70% of their shareholding to anyone who would like to buy the shares. This is because they are saying the proceeds of their investment have not been forthcoming so they see it worthwhile to sell them. The Committee was astonished to find out that the Iranians never made any improvements at the subsidiary before handing it over to IDC in  2009 .

 

4.3.4    The blankets produced at Travan   are expensive compared to imports and other similar companies. There is stiff competition, as blankets imported do not pay duty. The major set back which the Committee observed is that the company ‘s machinery is antiquated and there is no capital to improve the production levels The company has plans to increase their production to 1 million units per year but since their machine are deteriorating they can only produce 120 000units per year.

 

 

4.3.5    During a tour of the facilities, the Committee noted that Travan has a very huge plant but they are producing only   120 000 per annum instead of more than 800 000 units per year. Their capacity utilization is between 20-30% per year signaling the need for the company pull up their socks to stay afloat.

CHALLENGES

  Outdated Equipment

4.3.5   Although they have vast equipment the equipment is too old and cannot help to meet the demands of their customers.

   Competition

4.3.6   The company is facing stiff competition from other manufacturers like National Blankets and also from imports. The imported blankets are coming in duty free and so are selling cheaply ranging from USD14-17 where as the premier range at Travan cost USD14.73 to manufacture before any mark up is added.

   Skills drain

4.3.7   The Company is losing very critical skills as many are going for greener pastures in the Diaspora. The company used to employ 500-600 workers but currently they have a staff compliment of 200 which may go down further if their current status persists.

  

   Utility Failures

4.3.9    The company is heavily affected by the power cuts being experienced all over the country. This has negatively impounded on their business because they said sometimes they get their electricity only 6 hours per day which is not conducive to any industry set up.

   Inherited Debt

4.3.10 The company inherited a debt in electricity on 1 December 2009 which has now accumulated to a very high figure. The company has been given up to July 31st to pay up or have transformers supplying their company removed. The company owes a lot other stakeholders some large sums of money like USD215 000 in short term loans, USD116 000 in long term loans, USD120 000 to a shareholder called Jabal, USD440 000 to ZESA, rates and water USDUSD30 000, Telone USD6 000 and USD40 000 for the workers’ wages.

   Working Capital Problems

4.3.11 The company is failing to secure any credit lines because their account does not have any cash hence they do not have security for the loan. Although the company has a lot of stock  it is not selling because of  cheap imports that have flooded the market. Right now the company has 10 000 units of the premier range which is selling for USD19.30, a price that is not competitive. In total they are sitting at USD290 000 of finished stock that have not been sold.

Interventions by the Committee and the Executive

  • The government to increase tariffs especially import duty or embargos so that there is no dumping off of cheaper commodities and the local industry is allowed to grow.

 

  • The government to help the company to source finance so that the company is able to get back on its feet again. Currently they need USD350 000 to finance their short term requirements for the winter season requirements.

 

  • The government to intervene on the issue of ZESA tariffs so that realistic bills are paid and that would help ease their burden on them.

RECOMMENDATIONS

It is therefore recommended that:

28)           The company quickly source funds to buy the 70% shareholding that the Iranians want to offload so that they gain a controlling interest in the company.

29)           The company source investors who will help to raise their finance to replace the dilapidating equipment with state of the art equipment.

30)           The company to sub-contract the companies that supply them with raw materials so that they can source them cheaply and locally.

 

     4.4   IRAZIM TEXTILES (PVT) LTD

4.4.1    Irazim Textiles is also one of Modzone Enterprises and like the Travan Blankets is owned 82% by Iranians and 17.32% by IDC. The company occupies larger part of the premises, which is also ARDA land. The amount of ease of the premises is sub-economic. The company has a capacity to produce 1 million meters per month at full capacity but now the company is producing only 200 000 meters per month.

 

4.4.2    The company currently is doing remarkably well because they have a niche market they serve. They produce army regalia and also tsetse control regalia and this has kept the company on its feet. Furthermore they have 500 000 meters of confirmed orders which they are producing and they are selling at USD1.50 per meter giving a total of USD750 000 they should be getting. Like Travan, Irazim is facing a lot of challenges that has seen its production capacity going down to between 20-25%. There is thefore a need to urgently subsidize the companies.

CHALLENGES

Power Failures

4.4.3.   Power cuts have been hampering  production because  and the Committee learnt that 5 000 machine hours  were lost in January and February alone. Electricity is limited  to  5-6 hours a day  there is no  schedules for the shedding. In clothing, industry,  if a batch is disturbed  by power failures during the production process, the whole of it is damaged and this has been the case at Irazim.

Erratic Bills

4.4.4   The Company is losing large sums of money to pay bills especially the ZESA bill which they say is averaging USD77 000 per month. This has increased expenditure for the company especially given the fact that Irazim pays 70% of the bills.

  Funding

4.4.5   The company is failing to secure funding for the refurbishing of their equipment since most   of it is outdated and cannot meet the demands of their market. The company currently needs massive cash injection about USD2 million to buy a new dye machine, USD700 000 for it to run smoothly.

Raw Material Shortage

4.4.6.  The Company use mostly cotton to manufacture their material but have been facing shortage of the cotton locally the major reason being decline in the agricultural industry.

Pricing Structure

4.4.7   The Committee was informed that the pricing structure is not in the subsidiaries’ interests. ‘Prices are pegged against the Liverpool Stock Exchange which always fluctuates upwards. Thus the company has lost its competitive edge in the textile industry.

  Import Substitution

4.4.8.  The price of imported finished material is USD0.55 which is equal to the cost of raw material before any value addition is done on the local scene. The same finished products are entering the market duty free making them cheaper as compared to those produced locally.

RECOMMENDATIONS

It is therefore recommended that:

  • The company sub-contracts farmers so that they can source the raw materials locally and more cheaply.
  • The government intervenes on the pricing structure so that the price is reviewed as per local quota and stabilized.
  • The government intervenes by imposing restrictions like quotas, embargos or increase import duty so that there is no dumping off of clothing material from outside the country.

 

4.5  CHEMPLEX CORPORATION LIMITED GROUP

4.5.1 The Committee was informed that  the enterprise is a holding company of Zimbabwe   Phosphate Industries Limited (ZimPhos) and Chemplex Animal and Public Health (CAPH). 70% of their operations are devoted to the fertilizer industry and in the fertilizer industry there are 4 companies involved Sable Chemicals, ZimPhos, Zimbabwe Fertilizer Company Limited (ZFC) and Windmill. Sable chemicals and ZimPhos produce chemicals which are then passed on to ZFC and Windmill who are the distributors to final users. To produce the fertilizers they need to import chemicals like potash and ammonia without which they cannot produce. They also need raw materials like sulphuric acid, phosphates and Ammonia from Iron Duke Mine and Dorowa Mine.

4.5.2 The company is facing water shortages since the Harare City Council is failing to give them enough water since they cannot produce without water. Currently they are drawing water from Cleveland damAlso the statistics they produced showed that there is a decline in agricultural output and this has reduced fertilizer usage. The company used to export about 40 000 tonnes to Zambia.

CHEMPLEX OWNERSHIP STRUCTURE

4.5.3 Chemplex Corporation is wholly owned by IDC while Chemplex itself has a 50% stake in ZFC, 36% in Sable Chemicals, 100% in Zimphos, 100% in Chemplex Marketing and 100% in CAPH. Zimphos owns 100% stake in GD Haulage as well as in Dorowa Minerals.

ZIMPHOS

BACKGROUND

4.5.4    Historically this company used to meet 85-95% of the national demand for phosphates, alum sulphate and 3 other water treatment chemicals. It is also key supplier to mining and industrial sectors, major buyer of local services and user of indigenous resources. Of late it has been recognized for its manpower development role and large contributor to GDP.

 

4.5.5    Zimphos is said to be complying with health and safety regulations as an industry that produce harmful substances in their manufacturing processes since it is ISO and OSHAS certified and we had the pleasure of meeting some auditors from ISO doing their work at CAPH. In terms of human resources the company has 640 workers 74 of which are engineers, chemists, accountants and technicians the rest being workshop workers. They have a village where most of their staff is housed.

 

4.5.6    They also have huge gypsum deposits which they are exporting to Zambia. Some of the gypsum is dried up at ZFC plant before being packed and sold in 50kg bags at USD7 per bag. They have built the new Calcine dam and a tailings dump site where they dump off some of poisonous waste chemicals. A gum tree plantation has also been planted as the company tries to conserve the natural resources of the country. With the estimated demand they have the company is able to sell   300 000 tonnes of fertilizer as compared to the 150 000 tonnes they sold last year.

CHALLENGES

Poor Cash Flows

4.5. 7 The company has been in the past years been receiving poor cash inflows because of price controls, plant breakdowns, lack of forex, low capacity utilisation, no capital reserves for working capital and refurbishment.

Poor Market Liquidity

4.5.8 There was no cash in the market hence the company failed to secure cash for it keep afloat.

Financing

4.5.9.The company is failing to secure financing from lending institutions and if they do it is short term and expensive as the lenders are charging high interest rates of 15-20% per annum.

Market Distortions

4.5.10 A lot of dumping off is taking place in the country especially in the alum case as their competitors are finding it cheaper to import say ammonia duty free making it cheaper. This has caused Zimphos to be uncompetitive.

  Utilities Failure

4.5. 11 The company has not been spared form ZESA power cuts and inefficiencies in the country and as such has seen a lot of bottlenecks in its production and supply chain making them unreliable.

 Competitiveness

4.5.12                                                           Import duty being paid on imported finished products is not viable for business because they are coming in duty free like fertilizers from China have flooded the market making Zimphos uncompetitive. On the contrary when the company is importing raw materials like sulphur they pay 5% duty and 15% VAT giving a 20% cost of raw material before processing is done.

 

CURRENT SITUATION AT ZIMPHOS

Plants Online:

  • Sulphur burning acid plant
  • Alum and chemicals units
  • Phosphates den

Mothballed Plants

  • Pyrites burning plant
  • Phosphoric acid plant

Short Term Recovery Plan

The company has lined up activities they need to pursue in the short term:

  • Secure utilities priority being to make sure ZESA is permanently restored at Dorowa and also to ensure efficiency in NRZ.
  • Restore capacity utilisation to 80% since -Secure credit lines for immediate working capital and major capital refurbishment.
  • the company is operating currently at 50-60%.

 

  Contract by Government.

The Committee observed that Government’s contract with Chemplex affects the planning . Each year the subsidiary waits for Government to before   production.

Under the Liberalization,  Chemplex should take the advantage and broaden its horizons.

RECOMMENDATIONS

It is therefore recommended that:

  • The company generates more cash by borrowing from financial institutions, increase their export base and also by recovering lost markets establishing the existing ones.
  • They restock spares and raw materials so that there are no bottlenecks in the chain of production.
  • The government implement policies that promote fertilizer industry recovery for example to issue cash to farmers who are their customers so that they are able to buy the fertilizer.
  • The company implement plant refurbishment to raise capacity utilisation from 35% to 70% in 2010.
  • There should be a permanent water system besides the Cleveland dam because they say it is not enough and at one time Sable chemicals had to close for 3 months because there was no water at their plant.
  • The government help in adjusting certain legislation so that the company get strategic partners that will help them to source other raw materials like sulphur.
  • The government give zero duty on sulphur as this is increasing their cost of production and also subsidies so that they are able to produce competitive products
  • The government to intervene on the tariff structure and ensure that there is no dumping off of fertilizer products from outside the country.

4.6        CHEMPLEX ANIMALS AND PUBLIC HEALTH (CAPH)

             Background

4.6.1.This company has been manufacturing dips and other chemicals at Zimphos since 1942 under the license from coopers which was terminated in 1999. They started to trade as CAPH in 2000 with extensive research and development so as to develop in-house formulations. CAPH then relocated to Sunway city in 2004. Their technical support base is drawn from chemists, engineers and marketing experts. Like Zimphos , CAPH ISO certified, registered with Medicines Control Authority of Zimbabwe (MCAZ) and also they are registered with AREX. They manufacture dips, pesticides, veterinary remedies as well as detergents.

4.6.2 CAPH supports several sectors like agriculture where they supply dips and veterinary remedies, crops sector where they support with grain protectant and rodent. They also supply the health sector with malaria indoor spraying chemicals and household pests control chemicals.

        Challenges

4.6.3  The challenges being faced by CAPH are the same as those being faced by Zimphos that include:

  • Unstable power supply
  • Competition from companies like Syngenta
  • High cost of local inputs
  • Shortage of long term funding
  • Bottlenecks in the supply chain of their products to the final destination

Outlook

The company is looking forward to the following:

  • Growth in market share
  • Introduction of new products
  • Competitive pricing with cost reduction

Fertilizer Policy Proposals For Government

The company proposed the following from the government:

  • Prioritize support for local industry
  • Subsidy mechanisms
  • Fertilizer regulations and registration
  • Companies with capacity for technical and extension services
  • Anti-dumping mechanisms
  • Fertilizer raw material on zero tariffs
  • No VAT on phosphates
  • Duty free window on spares and capital imports
  • Concessionary power tariff
  • Favorable legislative framework.

5. Chemplex   Corporation and  Harare    City Council

 

5.1 The Committee sought  to find out  the  position  of Harare City Council and Chemplex Corporation.   The Committee was informed that currently Chemplex is operating   below capacity, about 20 per cent. Traditionally, Chemplex was the major source of  Aluminum  Sulphate    for  Harare city council and other local authorities. However the trend as been sifted. Whereas Harare City Council used to procure  Liquid Alminium Sulphate, the council , and other local   authorities  are now preferring to use Granular Aluminum Sulphate. Citing deterioration   in quality.

5.2  It was brought to the Committee,s attention that in January February 2009 the liquid Aluminum deliveries were not reliable and of poor quality.  It was further explaned that currently Harare City Council is procuring 155 Mertric Tonnes of bulk Aluminum  Sulphate   monthly from Chemplex, but through UNICEF. The Harare City Council prefers to use granular citing a reduction in transport costs, and quality.

5.3 The Committee also noted that the Zimhos plant was designed and built specifically to meet Harare City Council’s requirements.

 

RECOMMENDATION

There is need for taking measures to avoid a shut down of Zimphos. The end result are that people will loose their jobs  as well as revenue to Government.

There is need for the urgent  intervention  by all concerned with ultimate expand industrial growth and a plus to the turn around of the ecomy.

Conclusion

The fact –finding visit an eye opener and revealed challenges that are being faced by the subsidiary companies of IDC. It showed a lot of transparency as the representatives of the concerned companies aired out their views openly given such an opportunity and honour from hon. members of the Committee to listen to their plight and take the issues for debate in Parliament. The Committee will make follow ups with all concerned in a bid to find lasting solutions.

 

          MR. MATIBE: Mr. Speaker, I think my Chairman has said all that needs to be said in this House, but I will just add on a few things with regards to what is happening at Willowvale Motor Industries.  I think it was very distressing when we went there and saw what we saw.  We think that people like Willowvale are not being innovative, vajaira to be assisted by Government because we have got companies like Tarta and other companies from China, they are bringing in cars which are being sold far cheaper than cars at Willowvale.  We thought they could get into partnerships with companies like these, allow them to bring in cars, creating employment for the staff at Willowvale.  Not everybody wants a BT 50, there are other models. 

          We do not know if they  managed to pay US$3.4 million that is required by Japan and this also is very disturbing because we thought it is supposed to be a shareholder in the company but they will not let Willowvale get rid of some of the stock they are holding onto and why does Willowvale have to go through a middleman to buy kits from other motor industries like Japan? Why can they not go direct?  The Chairman also talked about Modzone Industries where we have got two other companies Travan and Irazim, where the Iranians hold their big stakes in those two companies.  They have got the money back and now they want to dump the companies like what my Chairman has said.  Sure, there are a lot of people crying for 49% in companies yet there are some some companies where people can go and get 70%.  The other thing is that, with these cheap things from  China, it is not only Modzone which is being affected but we have got companies like David Whitehead who were at the verge of shutting down because of these cheap Chinese imports.  Fortunately, Irazim stopped producing thin material clothes.  They are now into things like Army uniforms, for those are the things  that the Chinese are not producing.  I do not know whether they are not able to produce or they are not interested.

          THE MINISTER OF STATE ENTERPRISE AND PARASTATALS:  I move that the debate do now adjourn. 

          Motion put and agreed to.

          Debate to resume: Wednesday 30th June 2010.

          On the motion of THE MINISTER OF STATE ENTERPRISE AND PARASTATALS, the House adjourned at Six Minutes past Four o'clock pm until Wednesday, 30th June 2010.

          

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National Assembly Hansard Vol. 36 NATIONAL ASSEMBLY HANSARD - 18 March 2010 VOL. 36 NO. 29