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NATIONAL ASSEMBLY HANSARD - 21 JANUARY 2014 VOL. 40 NO. 23

Tuesday, 21st January, 2014.

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

 

PRAYERS

(THE DEPUTY SPEAKER in the Chair)

ANNOUNCEMENTS BY THE DEPUTY SPEAKER

INVITATION TO A SPECIAL MASS

MADAM SPEAKER: I have to inform the House that the Roman Catholic Church has scheduled a special dedication Mass for Members of the 8th Parliament of Zimbabwe, in particular the Catholics, at the Roman Catholic Cathedral, Corner 4th Street and Herbert Chitepo Avenue, Sacred Heart Cathedral on Wednesday, 22nd January, 2014, at 05:30 p.m. Members are invited to attend.

MOTION

FINANCE BILL: BUDGET DEBATE

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

Question again proposed.

MS. MANGAMI:

INTRODUCTION

The Committee on Small and Medium Enterprises and Co-operative Development (SMECDs) deliberated on the 2014 budget allocations for the ministry and also received oral submissions from officials of the ministry on their analysis and observations. The ministry had expected to get adequate funding for their programmes on recurrent and capital expenditures. However, their votes were grossly underfunded in the 2014 budget as evidenced by the ministry's requirements of US$81 269 937 against an allocation of US$8,695,000.

THE SIGNIFICANCE OF SMES IN THE ECONOMY

The ministry is responsible for promoting growth of micro, small and medium enterprises (MSMEs) and co-operatives in Zimbabwe. It seeks to create and maintain an enabling environment that promotes vibrant SMEs and co-operatives. The ministry achieves this through research and development, resource mobilisation and project development as well as provision of technical services.

A growing economy is characterised by a flourishing SMEs sector. SMEs have a propensity to employ more labour-intensive production processes than large enterprises. Consequently, they contribute significantly to the provision of productive employment opportunities, the generation of income and eventually, the reduction of poverty in line with MDG goal number 1 of eradicating extreme poverty and hunger.

According to the Finscope Survey of 2012, Zimbabwe's SMEs contribute more than 60% to GDP and employ more than 5.8 million people. SMEs also have the potential to help broaden the tax base and are also a major driver of rural development. However, the sector requires support in resolving challenges in access to finance, lack of appropriate infrastructure and technology, limited marketing and business management skills as well as stringent regulations. It is against this background that the committee feels that more attention should be given to the sector.

MINISTRY OF SMALL AND MEDIUM ENTERPRISES AND CO-OPERATIVE DEVELOPMENT BUDGET VOTE ANALYSIS.

The ministry was allocated US$8,695,000 which translates to 0.21% of the 2014 budget, having marginally decreased by 0.04% from 0.25% in 2013. This budget allocation also represents 11% of the initial bid provided to Treasury. At least 1% of the total budget should be allocated to the ministry for the country to achieve MDG goal number 1 of eradicating extreme poverty and hunger by 2015. Generally, this was gross underfunding considering that the ministry required about US$81 269 937 as an allocation in their bid for the 2014 budget. This budget allocation registered a decrease of 8.4% when compared to that of 2013. The ministry is one of those with the least allocation in the 2014 budget. Moreover, it dropped on priority ranking from being the 13th least allocated in 2013, to being the 4th least allocated in the 2014 budget (See Table 1) which is not a welcome development to the ministry. This actually shows that the ministry was not carefully prioritised as it plays a major role in poverty reduction because most activities that people depend on in Zimbabwe are of small to medium scale.

Despite being grossly underfunded in 2013 (where only US3 605 977 was released against a budget of US9 479 000), the ministry utilised the resources disbursed effectively and timeously to improve internal capacities and efficiencies. Some of the major achievements that the ministry recorded in 2013 include the following among others:

· Established a data observatory unit and carried out a small business survey;

· Capacitated 11 936 micro, small and medium enterprises;

· Registered 286 co-operatives;

· Acquired premises for incubation;

· Mobilised US$4 million from 8 development partners;

· Installed machinery at 3 Indo-Zim Common facilities;

· Trained 16 Technicians in Computer Numerical Controlled Technology;

· Provided infrastructure to 6363 micro, small and medium enterprises;

· Piloted the COMESA Passenger and Manifest System between Zimbabwe and Zambia;

· Piloted sustainable livelihoods projects in 6 districts; and

· Formed 62 cluster and 929 businesses.

TABLE 1: Percentage Change in Budgetary Allocations from 2013 to 2014

 

2013

2014

% change

Current Expenditure

3 692 000

4 175 000

13

Employment Costs

1 679 000

2 075 000

23.6

Goods and Services

1 279 000

1 157 000

-9.5

Maintenance

206 000

268 000

30.1

Current transfers

5000

5000

-

Programmes

523 000

670 000

28.1

Capital expenditures

5 800 000

4 520 000

-22

Acquisition of fixed capital assets

-

140 000

-

Capital transfers

800 000

30 000

-96.2

Lending and Equity participation

5 000 000

4 350 000

-13.0

TOTAL

9 492 000

8 695 000

-8.4

Current expenditure increased by 13% from $3,692,000 in 2013 to $4,175,000 in 2014. Notable increases in the current expenditure components are Employment Costs (23.6%), Maintenance (30.1%) and Programmes (28.1%). Current Transfers remain unchanged at US$5000 for both 2013 and 2014. The capital expenditure budget allocations decreased by 22%. This is against an overall decrease in the SMEs budget of 8.4%. Capital expenditure constitute the greatest proportion of the SMEs budget; 51.9% capital expenditure against 48.0% current expenditure. This shows that the budget has recognised the role played by capital expenditure to Small and Medium Enterprises in economic development. This is a characteristic of a developmental budget.

Lending and equities expenditure takes the largest chunk of the capital budget, taking 96.2% which is also 50.1% of the total vote allocation to the ministry. This allocation, although inadequate will enhance the SEDCO lending programme to SMEs, assuming the funds are released on time. Capital transfers decreased by 96.2% in the 2014 budget. This decrease in the capital transfers is not a welcome development to the ministry because it is going to negatively affect infrastructure development and capacity building of micro, small and medium enterprises and co-operatives in the SMEs sector. Allocation for acquisition of fixed capital assets in the 2014 budget amounted to 140 000 which is a welcome development to the ministry because this was not allocated in the previous year.

TABLE 2: Distributional Expenditure as Percentage of Budget Allocation

 

2013

2014

Change

Current Expenditure

38.8

48.0

9.2

Employment Costs

17.2

23.9

6.7

Goods and Services

13.5

13.3

-0.2

Maintenance

2.2

3.1

0.9

Current transfers

52.7

57.5

-4.8

Programmes

5.4

7.7

2.3

Capital expenditure

61.2

51.9

-9.2

Acquisition of fixed capital assets

-

1.6

-

Capital transfers

8.4

9.2

0.8

Lending and Equity participation

53.7

50.1

-3.6

Current expenditure has increased by 9.2% from 38.8% of the ministerial allocation in 2013 to 48.0% in 2014. The major source of funds for SEDCO (Lending and Equity Participation) decreased by 3.6% as a proportion of the budget allocation. This may be in line with gradual weaning off of the parastatals so that they become self-financing.

OBSERVATIONS

The Committee observed the following:-

· The amount of US$8,695,000 allocated to the ministry is not enough to address its recurrent and capital expenditures;

· The budget to the ministry has prioritised capital expenditure as opposed to current expenditure in the 2014 budget. This is developmental in nature although still grossly inadequate. However, the ministry needs to be adequately resourced in the form of vehicles. A bid for 102 vehicles and 75 motor cycles had been made but an allocation of only $60 000 was made for that purpose. Only $80 000 was allocated to cover for purchase of furniture and equipment for provincial spread;

· There is inadequate funding at district offices to cater for general office expenses. In addition, lack of offices is also making supervision to be difficult whilst critical posts in the ministry remain unfilled;

· The ministry needs to resource the incubation centre for SMEs under the Africa-India initiative for all the civil and allied works, up-keep of the Indian experts. A bid of US452 595 had been put forward and an allocation of only US150 000 was made for this bid;

· SEDCO's allocation of US$4,350 million for the lending programme is only 9% of the ministry's bid and hence, the lending programme will be greatly compromised;

· There were no allocations for the following programmes: HIV/AIDS; Small Business Advisory Council to be established under the new Act; Publicity of ministry programmes and activities; and Resuscitation of ministry companies;

· SEDCO's allocation of US$30 000 on infrastructure will mean some intended projects will not be completed in the year;

· Not enough is being done to ensure a market for SMEs products;

· A late disbursement of funds by Treasury is compromising a lot of projects in the ministry. Also, there is a problem where projects approved by Cabinet in the ministry are not funded.

RECOMMENDATIONS

The committee made the following recommendations:-

· There is need for more priority to be given to the SMEs ministry on the backdrop that adequate financing of the sector will lead to economic development since the greatest population depends on the sector for survival. This will help us achieve MDG goal number 1 of eradicating extreme poverty and hunger by 2015;

· The ministry should make an effort that those projects that do not need money are done without fail. District officers in the ministry should liaise with councils or Voluntary organisations in their respective areas to implement some of the projects;

· Treasury should expeditiously release funds to the ministry;

· All incomplete projects and other outstanding programmes be prioritised so that their completion is brought to a logical end;

· SMEs should be encouraged to channel their revenues through the banking sector as this may help them easily access loans from the banks. In addition, Government should find a way of restoring confidence in the banking sector.

· The ministry should continue to identify markets for the SMEs to counter viability problems facing these SMEs;

· The following budget items be allocated funds if the ministry is to deliver optimally:-

◦ Vehicles- The budget item on motor vehicles in which the ministry requested for 102 vehicles and 75 motor cycles received insufficient funding in the 2014 budget. Lack of mobility will adversely affect the rate of recovering loans from borrowers; a major deliverable of the ministry;

◦ Computerisation-This was also cited as critical for the discharge of the ministry's duties. This also means there is urgent need for internet installation in all provinces.

◦ Staff complement-There is also need to increase the staff complement from the current 330 people to at least 400. This will assist the ministry in advancing its cause effectively;

◦ Ministry Centre- The ministry depends on rentals which takes away a large chunk of the budget. There is need for the Government to consider for this important ministry, a premise to operate from; and

◦ SEDCO- for the lending programme

CONCLUSION

The Committee appreciates the effort being made by the ministry to meet some of the demands under the grossly underfunded budget. In light of this, it is imperative that there are a number of key issues that need to be addressed in 2014. Therefore, the budget allocation for the ministry must be fully met, raised and funds should be timeously released by Treasury. I thank you.

THE DEPUTY SPEAKER: Order Hon. Members. Can I remind Hon. Members that the Minister of Finance would like to have your copies of the reports.

MR. CHAPFIKA: Thank you Madam Speaker. I rise to present the Report of the Portfolio Committee on Finance and Economic Planning.

  • INTRODUCTION

· Mr. Speaker Sir, the Committee appreciates the circumstances surrounding the presentation of the 2014 National Budget that was eventually tabled on the 19th of December 2013. The Committee thanks the Hon. Minister for the consultations that were carried out among stakeholders.

· The Committee notes with concern that this is the first time in many years that it has failed to carry out pre-budget consultations with stakeholders due to resource constraints.

· The Committee is pleased to advise that during its subsequent stakeholder consultations carried out after the budget presentation, a large section of the stakeholders expressed satisfaction that the 2014 Budget had indeed adopted most of their submissions.

· The Committee is fully aware and concerned about the challenges that this economy faces, in particular rising unemployment levels, low investment levels, the worsening liquidity conditions, negative current account balance, and high incidences of corruption, among others.

· In its comprehensive analysis of the budget interventions to stimulate economic activities, the Committee wishes to highlight some important issues that the Hon. Minister of Finance and Economic Development needs to consider.

  • AREAS OF CONCERN

Clarity on Key Policies

· Mr. Speaker Sir, the Committee commends the 2014 Budget Statement's significant emphasis and clarifications on key policy issues relating to the continued use of the multiple currency system, clarifications on the Indigenisation and Economic Empowerment Regulations as well as the commitment to setting guidelines for joint venture partnerships.

· Consistency and certainty on policies remain critical pillars in building investor and public confidence and as such the Committee applauds the Minister for going at length in clarifying policy direction on these key issues

· The Committee therefore implores the Minister of Finance and Economic Development to remain consistent on these policies and urges that the Ministry of Finance and Economic Development engages some of the Ministries and Government departments that are directly responsible for implementing these policies so that there is no policy discord emanating from the implementation modalities or any other such pronouncements that might be to the contrary.

Banking Sector Confidence

· Mr. Speaker Sir, the stability and vibrancy of the financial services sector remains central to the recovery of the economy, more so at a time the economy is facing serious liquidity challenges. Therefore the role of the banking industry in allocating credit to the needy areas of the economy must not be under-estimated.

The Committee notes interventions from the Budget regarding measures aimed at restoring confidence in the banking sector. The proposed re-capitalisation of the RBZ, the commitment to demonetise the Zimbabwe dollar balances and the proposed assumption of the $1.35 RBZ debt, among other measures, are all commendable efforts to restore confidence and stability within the banking sector.

· The Committee further takes note of the initiative by the Minister of Finance and Economic Development towards revival of meaningful trading activity on the interbank market through the proposed $100 million African Export-Import bank facility beginning 1 April 2014.

· The Committee however recommends that in as much as announcing these policy interventions is important for signaling purposes, the intention to revive the interbank market has been on the policy cards for the past three years whilst nothing material has transpired on the same. The Committee, therefore, urges the Ministry of Finance and Economic Development to take this matter seriously as a way of demonstrating credibility.

RBZ $1.35 Billion Debt Assumption

· Mr. Speaker Sir, the Committee takes note of the proposed RBZ debt assumption as an important policy intervention to restore the credibility of the RBZ. The Committee however implores the Government to be transparent on these issues that impose a huge burden on taxpayers.

2.9 The Committee is therefore recommending to the Minister of Finance and Economic Development that information regarding the specific creditors making up this $1.35 billion be made public to ensure that there is more transparency and accountability with respect to this debt assumption exercise.

Addressing Bank Failures

· Mr. Speaker Sir, the Committee is deeply concerned by the frequent cases of bank failures and troubled banks that continue to take advantage of the innocent depositors. Issues of poor corporate governance remain endemic within the banking sector, with insider loans to directors and shareholders continuing to be pervasive and having resulted in the loss of public confidence in the banking sector. It is the Committee's view that culprits responsible for bank failures as a result of unethical practices be prosecuted.

2.11 The Committee therefore implores the Ministry of Finance to closely supervise the RBZ's role on the banking sector in order to protect depositors, more so at a time the Deposit Protection Board is incapable of insulating the general banking public from losses arising from bank failures. There is need for Government to assist indigenous banks, which are currently receiving the same treatment as big banks, so that we do not continue to witness the reversal if the indigenisation policy in the banking sector.

Manufacturing Industry

2.12 Mr. Speaker Sir, the Committee takes note of measures taken towards bringing viability to the Manufacturing Industry. Capacity utilisation has been deteriorating sharply in the Manufacturing Industry hence the genuine need for policy intervention. The policy measures of reducing duty on some key raw materials for particular industries, and the increases in custom duty on some finished imported goods are all welcome measures to protect local industries and improve their viability.

2.13 In as much as protection of local industry is a noble cause, the Committee recommends that the proposed protective measures be clear on implementation timelines in order to ensure that consumers are not over-burdened unnecessarily by the inefficiencies of manufacturers and producers that may be too slow to take advantage of these noble policy interventions. The Minister of Finance and Economic Development therefore, has to work closely with the Ministry of Industry and Commerce to come up with clear import substitution policy and supporting the creation of new industries.

Mining Industry

2.14 Mr. Speaker Sir, mining remains one of the key industries anchoring positive economic turnaround expectations in Zimbabwe. The Committee is pleased with interventions made by the Minister with regards to curbing mineral leakages, in particular the alluvial diamond industry whose contributions to the fiscus have been well below the expectations.

2.15 For greater transparency and accountability on this important national resource, the Committee proposes that all diamond mining companies be compelled to publish their financial statements half yearly for public consumption just the same way banks are obliged to do.

2.16 The Committee further supports Government thrust with regards to value addition on gold, platinum, chrome, diamond, coal and other key minerals. The Committee however is of the considered view that in as much as value addition is very important in optimising the contributions of the mining industry to economic growth, equal emphasis should be put on increasing the existing inadequate power generation capacity in order to accommodate the expected surge in power demands associated with new smelters and refineries coming on stream.

2.17 The proposed forfeiture to the Government of un-worked claims after three years is a noble initiative. However, the Committee believes that there is need for proper clarity of definition on the same. In some instances, it may not be practical or desirable to have all claims worked on in three years and therefore this policy has to be balanced properly with ground rental fees so as not to discourage proper long-term investments in mining. In addition Government should determine a maximum limit of claims an individual person or company should be entitled to.

2.18 The Committee urges the Ministry of Mines and Mining Development to review the mining fees and royalties to realistic levels. The need for conducting geological surveys to determine the quantities of the country's mineral reserves should be treated as a major priority necessitating the provision of adequate funding to the relevant department.

Indigenisation

2.19 Mr. Speaker Sir, the Committee notes with concern the effective date in allowing deductibility of direct and indirect costs incurred by a company in the process of implementing approved Indigenisation plans.

2.20 According to the budget statement, this is effective 1 January 2013. Whilst the Committee commends this progressive policy intervention that reduces the cost of complying with the indigenisation laws, the effective date of implementation set therein unfairly penalises those companies that were pro-active and complied with the indigenisation laws much earlier. For the purposes of fairness, the Committee therefore recommends that incentives be offered to those companies that complied much earlier.

National Social Security Authority (NSSA)

2.21 The Committee is deeply concerned by the very slow progress regarding the review of the NSSA Act at a time NSSA continues to receive and mis-direct monthly contributions from the workers. The Committee, therefore, implores the Ministry of Labour, Public Service and Social Welfare to review the Act as a matter of urgency. It is our considered view that NSSA investments should be broad-based and should benefit the shareholders who are in effect the workers that make monthly contributions.

Prompt Payments on Maize Deliveries

2.22 Mr. Speaker Sir, the late payment of farmers for maize deliveries to GMB has become a perennial problem and the Committee recommends that the Government prioritises clearing all GMB arrears for all maize delivered in order to cultivate confidence with maize production.

2.23 The continuous decline in maize production countrywide is, to some large extent, attributed to the unjust treatment of farmers that would have delivered their maize to the GMB. Unless proper and just interventions are made in the marketing of maize through GMB, maize imports will continue to be an unnecessary drain on the fiscus.

2.24 The Committee strongly believes that Government should come up with a clear policy on genetically modified products (GMOs). This is against the backdrop of foreign products landing cheaply and flooding the markets at the expense of local producers. Examples of such products are potatoes, tomatoes and fruits which are produced in abundance by local farmers.

Allocations to Parliament of Zimbabwe

2.25 Mr. Speaker Sir, Section 325 (1)(b), spells out that "The Government must ensure that adequate funds are provided to Parliament, to enable it and its committees to meet whenever it is necessary". The Committee feels that the allocation to Parliament is demeaning to its stature as one of the three arms of government. As such, we recommend that the Minister of Finance reconsiders the vote with a view to increasing it significantly, given the enormous tasks bestowed on Parliament by the Constitution.

CONCLUSION

2.26 In conclusion, Mr. Speaker Sir, whilst the Committee acknowledges that the budget cannot meet all the needs and expectations of the populace. The issues mentioned above are very important and need to be looked at carefully and be incorporated in the policy framework in order to assist in the effectiveness of policy implementation.

2.27 Mr. Speaker Sir, with these proposals which we strongly recommend for the Hon. Minister's consideration, we will not find it difficult to pass the budget. I thank you.

MS. A. NDHLOVU: Thank you Madam Speaker. I am presenting the post-budget report for the Portfolio Committee on Environment, Water, Tourism and Hospitality Industry.

Background

The committee examined and deliberated on the 2014 budget allocations for the Ministries of Tourism and Hospitality Industry and Environment, Water and Climate and also received oral submissions from officials of the respective ministries on their observations and analysis. The two ministries had expected to get adequate funding for their programmes on recurrent and capital expenditures. However, their votes were grossly underfunded in the 2014 budget as evidenced by the ministries' requirements and funding history. Budget allocations for 2014 were:

  • Ministry of Tourism and Hospitality Industry was allocated US$6 194 000 against a bid of US$73 172 472; and
  • Ministry of Environment, Water and Climate was allocated US$93 474 000 against a bid of US$429 000 000.

Ministry of Tourism and Hospitality Industry

Introduction

The Ministry of Tourism and Hospitality Industry's mandate is to develop, implement and review tourism policies in Zimbabwe. This is carried out by overseeing the development, implementation and review of the Tourism Master Plan and Tourism Development Strategies, coordinating and implementing all Regional Economic Communities (RECs) blocs and tourism projects and programmes; coordinating joint commission of bilateral and multi-lateral matters pertaining to tourism, supervision and monitoring standards of all tourism facilities.The tourism sector plays a significant role in the growth of the economy as it is assumed to have a GDP contribution of 10%, a contribution to employment of 13% and an expected 15% GDP contribution by 2015.

Ministry of Tourism and Hospitality Industry Vote Analysis

The ministry was allocated US$6,194,000 which translates to 0.15% of the 2014 budget, having marginally decreased by0.01% from 0.16% in 2013. Generally, this was gross underfunding considering that the ministry required US$73 172 472 as an allocation in their bid for the 2014 budget. This budget allocation was a decrease of 34.2% when compared to that of 2013. The allocated amount represents 8.4% of the ministry's total bid. The ministry is the least prioritised in 2014, which is not a welcome development. This actually shows that the ministry continues to be less prioritised despite the major role it plays in reviewing the Tourism policy in Zimbabwe. However, the ministry recorded major achievements in 2013, which include the following amongst others:

· Successfully co-hosted with Zambia, the UNWTO 20th General Assembly;

· Zimbabwe was appointed as the ATA President for 2013/14;

· Seychelles and Zimbabwe co-hosted the international Carnival in February 2013;

· Capacitated a number of Community Based Tourism projects;

· The ministry held the Tourism Day celebrations;

  • Successfully hosted the Sanganai/Hlanganani Travel and Tourism Fair; and

· Participated in a number of fairs to market the country, for example, China, Namibia, Spain and South Africa.

TABLE 1: Percentage Change in Budgetary Allocations from 2013 to 2014

 

2013

2014

% change

Current Expenditure

8 762 000

5 854 000

-33.2

Employment Costs

475 000

654 000

37.7

Goods and Services

1 270 000

825 000

-35.0

Maintenance

178 000

241 000

35.4

Current transfers

2 000 000

1 988 000

-0.6

Programmes

4 839 900

2 146 000

-55.7

Capital expenditures

650 000

340 000

-47.7

Acquisition of fixed capital assets

150 000

80 000

-46.7

Capital transfers

500 000

260 000

-48.0

TOTAL

9 412 900

6 194 000

-34.2

Current expenditure decreased by 33.2% from $8,762,000 in 2013 to $5,854,000 in 2014. Notable increases in the current expenditure components are Employment Costs (37.7%), Maintenance (35.4%). Programmes and Goods and Services recorded decreases of 55.7% and 35.0% respectively. Current Transfers marginally declined by 0.6%. The capital expenditure budget allocations decreased by 47.7%. This is against an overall decrease in the Tourism budget of 34.2% from 2013 to 2014.

Current expenditure constitute the greatest proportion of the Tourism budget; 94.6% current expenditure against 5.4% capital expenditure. This is a characteristic of a consumption budget.

Capital transfers take the largest chunk of the capital budget, taking 76.4%. This allocation, although inadequate will enhance ZTA's programmes and activities, assuming the funds are released on time. Acquisition of fixed capital assets decreased by 46.7% in the 2014 budget. This decrease in the acquisition of fixed capital assets is not a welcome development to the ministry because it is going to negatively affect the acquisition of furniture and equipment in the ministry.

TABLE 2: Distributional Expenditure as Percentage of Budget Allocation

 

2013

2014

Change

Current Expenditure

93.1

94.6

1.5

Employment Costs

5.0

10.6

5.6

Goods and Services

13.5

13.3

-0.2

Maintenance

1.89

3.89

2

Current transfers

5.3

4.2

-1.1

Programmes

51.4

34.6

-16.8

Capital expenditure

6.9

5.4

-1.5

Acquisition of fixed capital assets

1.59

1.29

-0.3

Capital transfers

5.3

4.2

-1.1

Proportion of current expenditure increased by 1.5% from 93.1% of the ministerial allocation in 2013 to 94.6% in 2014 and it remains relatively high in both years.

Observations

· The ministry tabled a bid of $73,172,472 but was financed to the tune of $6,194,000 which translates to 8.4% of the bid. This allocation is not enough to address the ministry's recurrent and capital expenditures in 2014;

· A late disbursement of funds by Treasury is compromising a lot of projects in the ministry. Also, there is a problem where projects approved by Cabinet in the ministry are not funded;

· The ministry's parastatal, Zimbabwe Tourism Authority (ZTA), was grossly under-funded with an allocation a US$1 716 000 (5.6% of the bid) from a bid of US$30 887 221. This will pose serious operational challenges in the marketing and promotion of tourism in 2014. For instance, ZTA will reduce International Travel shows from 33 to 8 in 2014;

· Introduction of the 15% VAT on non-resident tourists with effect from January 2014 will have an adverse effect on the Tourism sector because this is not done anywhere in the world;

· The Tourism sector received a paltry US$8.2 million as line of credit from the loans approved through the External Loans Coordinating Committee (E.L.C.C). However, it is interesting to note that the tourism sector is the only sector that had a 100% disbursement of allocated funds. This is against allocations of US442.5 million for the Finance sector, US$441 million for the Agriculture sector and US$158 million for the Mining sector. However, all these sectors failed to have a 100% disbursement of the allocated funds conforming that the capacity to utilise for funding is there in the Tourism sector;

· Reinstating the duty free exemptions for importation of capital goods by the Tourism sector and the importation of safari vehicles for a period of 12 months starting from January 2014 is a welcome development to the sector. However, operators feel this should be extended beyond the current financial year limit;

Recommendations: Tourism

The Committee recommends the following:

1. There should be timeous disbursement of finances for ministerial activities to be carried out in good time;

2. Government should reconsider its position on charging VAT to non-resident tourists as this risk pricing Zimbabwe out of business as the tax has to be an add-on to pricing of the tourism products, thus adversely affecting the country's competition in the region. This will become more expensive for tourists visiting Zimbabwe and our country will be the first one in the world to charge that tax. In addition, this will already be destroying the gains achieved by the UNWTO 20th General Assembly;

3. Treasury to help mobilise lines of credit for the Tourism sector. This will help in setting up a Tourism Revolving Fund for onward lending to the tourism players which will help them to refurbish and expand their facilities. However, there is need for the ministry to initiate revenue generating projects to supplement its budget allocated funds; and

4. Ministry of Finance should extend the statutory statement on duty exemption beyond the current financial year limit in order to give operators more time to mobilise resources to be able to benefit under this facility.

Ministry of Environment, Water and Climate

Introduction

The ministry mandate is to promote sound environmental practices and sustainable development and utilisation of natural and water resources. This is carried out by planning, researching and developing environmental, natural resources, climate change and water policies.

Environment, Water and Climate Vote Analysis

From a bid of almost US$429 000 000, the 2014 budget availed $93,474,000 to the ministry, representing a decrease of 7.9% from the 2013 allocation of $101,494,000. The ministerial allocation is only 21.8% of the initial bid posing some operational challenges on the ministry in discharging its mandate. Both the ministry and the parastatals are not content with their budget allocations since they strongly feel that the allocation is inadequate to execute their objectives. Effectiveness, efficiency and scope of operations will be hampered hence illegal activities like poaching and environmental degradation will thrive.

TABLE 1: Percentage Change in Budgetary Allocations from 2013 to 2014

 

2013

2014

% change

Current Expenditure

6 065 500

7 254 000

19.6

Employment Costs

2 035 000

2 180 000

7.13

Goods and Services

3 428 300

4 675 000

36.4

Maintenance

582 200

399 000

-31.5

Current transfers

7 328 000

7 190 000

-1.88

Programmes

20 000

-

-

Capital expenditures

88 100 500

79 030 000

-10.3

Acquisition of fixed capital assets

948 000

1 180 000

24.5

Capital transfers

87 152 500

76 100 000

-12.7

TOTAL

101 494 000

93 474 000

-7.9

The capital expenditure budget allocations decreased by 10.3% while the current expenditure budget allocation increased by 19.6%. This is against an overall decrease in the budget of 7.9%. Capital expenditure constitutes the greatest proportion of the budget; 84.5% capital expenditure against 15.4% current expenditure. This shows that the budget has recognised the role played by capital expenditure to the management of environment, water and climate change. This is a characteristic of a developmental budget.

Capital Transfers takes the largest chunk of the capital budget, taking 81.4% which is also 83.3% of the total vote allocation to the ministry. This increase in the capital transfers, though inadequate is a welcome development to the parastatals in the ministry.

TABLE 2: Distributional Expenditure as Percentage of Budget Allocation

 

 

 

2013

2014

Change

Current Expenditure

13.2

15.4

2.2

Employment Costs

2.00

2.33

0.33

Goods and Services

3.38

5.00

1.62

Maintenance

0.57

0.43

-0.14

Current transfers

7.22

7.69

0.47

Programmes

0.019

-

-

Capital expenditure

86.8%

84.5%

-2.3

Acquisition of fixed capital assets

0.93%

1.26%

0.33

Capital transfers

85.9%

83.3%

-2.6

Current expenditure has increased by 2.2% from 13.2% of the ministerial allocation in 2013 to 15.4% in 2014. However, the share of current expenditure remains predominantly low compared to capital expenditure. Capital expenditure, as a proportion of the ministry's budget, decreased by 2.3%. However, the share of current expenditure to the ministry's budget remains predominantly high.

Table 3: Distribution of Current Transfers

 

2013

2014

Change %

CURRENT TRANSFERS

7 041 000

7 074 000

0.47

EMA

2 210 000

2 377 000

7.6

Forestry Commission

4 465 000

4 636 00

3.8

Parks and Wildlife Management

350 000

50 000

-85.7

Subscriptions to various organisations

16 000

11 000

-31.2

Environment Management Agency (EMA)

Table 3 shows that EMA was allocated $2,377,000 which is 34.2% of their bid of $6,950,773. There is a marginal increase of 7.6% from the 2013 allocation. The 2014 allocation was deemed insufficient for the Agency's operations to maintain a strong presence in environmental law enforcement and monitoring. Some of the activities that would be constrained include;

· Procurement of equipment and chemicals to measure/test various types of pollution;

  • Training and equipping communities against veldt fires; and
  • General environmental monitoring [1] .

With the proposed budgetary allocation, EMA is in a position to cover its employment costs only. Whilst EMA ought to be self-sustaining, the revenue generated from Environmental Impact Assessment fees and penalties in some areas such as land degradation and mines is inadequate hence the need for continued Government budgetary support. The penalties charged are deemed not to be deterrent enough as many offenders find it better to pollute and pay the associated fine. There are also challenges with regards to disused mines that have not been decommissioned properly as these pose a serious threat to mankind and livestock. Decommissioning of a mine is very costly and EMA is not in a position to bear the cost.

Parks and Wildlife Management Authority

Parks and Wildlife Management Authority made a bid of $28,303,400 but were granted 5.5% of that amount which translates to $1 550,000. Most of the money was earmarked for acquisition of vehicles and equipment for anti-poaching and law enforcement, refurbishment of parks facilities and infrastructure development and installation of information and communication technology facilities. This allocation cannot cover these requisite needs. With a mandate that includes anti-poaching law enforcement and animal control, the availed resources are insignificant considering the task at hand. The opportunity of self-financing is a welcome development but the Authority is yet to reach levels of generating self-sustaining revenues. To further compound the problem, the Authority faces arrears that accumulated over time. The arrears are crippling the Authority's operations and humbly requests for Government intervention in this area.

Forestry Commission

From a bid of $7,144,000 the Forestry Commission, mandated to regulate the Forestry Sector, was allocated $4,636,000 which is mostly Employment Costs. The overall implication of this inadequate budget is that the organisation will not be able to fulfill its mandate as it would have desired and that the challenges faced during the previous years will continue. Forestry Commission bided $3 707 400 for capital expenditure and got an allocation of $250 000, less than 7% of the bid. This has a negative impact on intended capitalisation and re-tooling, particularly with regards to vehicles, tractors, water engines and boreholes. Vehicles are critical for purposes of making field operations possible, more-so with the increased poaching threats by cyanide poisoning poachers.

Environment and Natural Resources Department

The Department of Environment and Natural Resources was allocated a global figure of $1 500 000 for the four divisions namely; Environmental and Natural Resources, Climate Change Management, Legal Services, Finance and Administration and Human Resources. As a department, they had requested a total of $1 300 000 for raising environmental and natural resource awareness and to reduce pollution, deforestation, veldt fires and poaching. The amount allocated is limited considering the amount of work to be done by all the mentioned divisions. In light of this, the department will not be able to carry out much of its mandate in 2014.

Meteorological Services Department

Meteorological Services Department was allocated $3 838 000 against a bid of $32 153 438 which translates to 11.9% of the bid. The amount allocated to the department is not enough to address its recurrent and capital expenditures. The department emphasised on the need to invest in cloud seeding and paying subscriptions to international organisations. Currently, the department just participates and does not vote because of the arrears that are not paid up to these international organisations.

Zimbabwe National Water Authority (ZINWA)

ZINWA was allocated $76,000,000 which is 23% of their bid of $212,810,000. Similarly, the overall implication of this inadequate budget is that the organisation will not be able to fulfill its mandate as it would have desired and that the challenges of water woes faced during the previous years will continue. This will have adverse effects on the economy as it affects ZIM ASSET priority areas such as ensuring food security and nutrition, ensuring social services and poverty eradication, providing adequate infrastructure and utilities and value addition and beneficiation by 2018. We can only have food security and beneficiation of raw materials when there is enough water. Other efforts being done by the other ministries and organisations to achieve the ZIM ASSET targets cannot be achieved if the issue of water is not fully addressed.

Observations: Environment, Water and Climate

· The amount of US$93,474,000 allocated to the ministry is not enough to address its recurrent and capital expenditures;

· The parastatals are not in a position to cope due to under-funding. Despite the fact that they have been tasked to generate their own financial resources, current revenue inflows are inadequate for operations in the various parastatals;

· Disused mines as well as irresponsible mining practices pose a threat to humans and livestock, thus the need for decommissioning of mines and greater oversight on would-be polluters;

· Operations by some of the parastatals are adversely affected by the accumulated arrears to various bodies;

· The budget to the ministry has prioritised capital expenditure as opposed to current expenditure in the 2014 budget. This is developmental in nature although still grossly inadequate;

· A late disbursement of funds by Treasury is compromising a lot of projects in the ministry. There is also a problem where projects approved by Cabinet in the ministry are not funded;

· Tokwe-Mukorsi resettlement exercise could not be allocated any funds and this will affect the compensation and relocation of the affected families;

· The revenue generated from Environmental Impact Assessment fees and penalties by EMA is inadequate and not deterrent enough to stop the illegal activities; and

· Parks and Wildlife Management Authority requested for non-monetary assistance for them to efficiently lodge their duties in 2014.

Recommendations: Environment, Water and Climate

After careful consideration on submissions by the Ministry of Environment, Water and Climate the Committee strongly recommends the following;

3 With respect to the Parks and Wildlife Management Authority, the Committee recommends;

· That the accumulated arrears be retired by Government to improve operations of the Authority; and

· In view of the macro economic challenges that the country is facing, the Authority should be granted its request for non-monetary assistance such as:

(i) relaxation of the requirements that public institutions can only purchase new vehicles for their operations;

(ii) exemption of duty on capital goods and

(iii) Government to support them procure vehicles.

4 With respect to the Environment Management Agency, the Committee recommends;

· EMA be financed in-part from revenue generated through Carbon Tax to carry out Green Projects as well as decommissioning of mines;

· Mines set aside funds for decommissioning just as they do for Environment Impact Assessment; and

· EMA to revise its penalties upwards in some areas such as land degradation and mines so that they become deterrent enough as well as imposing a custodial sentence on top management of firms polluting beyond limits. For instance, where Zimbabwe charges a penalty of US$5000, Zambia charges US$25 000.

5 With respect to ZINWA, the committee recommends:

· All incomplete projects that are in line with ZIM ASSET priorities and other outstanding programmes such as Tokwe-Mukorsi, Gwayi-Tshangani, Marovanyati, Semwa, Kunzvi (for Harare supply), Aberfoyle (Gweru water supply) and Muda (for Chitungwiza water supply) be prioritised so that their completion is brought to a logical end;

· Government to prioritise the resettlement expenses for families affected by the building of dams; and

· The accumulated arrears be retired by Government to improve operations of the Authority.

6 With respect to the Forestry Commission, the committee recommends:

· That, the Commission streamline its operations and concentrates on core activities such as anti-poaching, fireguard grading, control of indiscriminate cutting of trees, regulation, forest education as well as to continue with on-going research and training activities;

· The Commission should sub-contract some of its operations such as logging and sawmilling in order to mitigate the low capacity to boost own revenue; and

· The Commission should cooperate with organisations such as FAO, UNDP, NGOs and other industry investors to reduce costs through joint funding and shared responsibilities.

7 Treasury should fully and timeously release funds to the ministry; and

8 For the Meteorological Services Department, Government should allocate funds for the payment of subscriptions to International Organisations and also cloud seeding requires proper funding.

DR. LABODE: Madam Speaker, the Health Committee met with stakeholders, analysed and debated the budget. The Committee noted that the budget allocation for the Ministry of Health decreased from $381.4 million to $337 million in 2014, representing a decrease of 11.6%. The funds allocated in the budget to the Ministry of Health represent 47.3% of the Ministry's original bid of $712 million excluding employment costs. The allocation to the Ministry of Health does not meet the Abuja Declaration that recommends a threshold of 15% of the total budget. This amount is short of the Abuja Declaration by 6.8%.

The estimated per capita budget allocation for 2014 is $25.92 which is a decrease from the 2013, per capita allocation of $31.74. This decrease comes at a time when child mortality, adult morbidity and mortality from non communicable diseases and communicable diseases is on the increase and the welfare cases are increasing in the country due to unemployment. What then happens Madam Speaker, is that if people cannot pay for Health Services they also get sick, they are under-fed and they are likely to consume more of those health services.

The Committee further notes with dismay that the hospital total allocation in the budget, amounts to $23.8 million for all the hospitals in Zimbabwe and the same institutions owe suppliers $36.4 million. This effectively means that the hospitals have no budget in 2014. At the same time they are saddled with a debt of $12.4 million, hence Madam Speaker, the Committee recommended that the Ministry of Finance assumes this debt of $36.4 million.

The Committee also noted with concern that Natpharm, a non- profit making Government Company that was created to improve affordability of drugs to all Government Institutions is in limbo. The company was created so that it could purchase drugs centrally at a cheaper price, store them and then distribute them to all health centres as per their needs. What has happened to this company now - the Ministry of Health owes Natpharm $12.5 million and the same Ministry of Health in 2014, allocated a budget of $2.5 million to Natpharm. Last year 90% of the drugs that were distributed by Natpharm came from donors and 2% came from the National Aids Council. The Ministry needs to seriously put money in Natpharm because this donor dependency could be a danger to the problem. If a donor pulls out it will mean we have no drugs and Natpharm has nothing to distribute. The Committee recommends that the Ministry of Finance assumes the debt of $12.5 million and find some money with immediate effect so that Natpharm can procure essential drugs for the nation.

The Committee also notes a continued disparity in resource allocation between curative and preventive services. In the 2014 budget, curative services got 78%, while the 8% went to preventive services. All the rural areas' health facilities come under the preventive services. So the 78% which has been allocated implies that we want to be dealing with the problem once it has happened rather than stop it. When a nation is in dire straits, it is better to actually stop people coming to institutions by preventing illnesses. The Committee recommends that more money be allocated to the preventive operations of the Ministry of Health.

The Committee also noted that the disparity between the two hospitals in the same city, namely Parirenyatwa and Harare is mind boggling. Harare Hospital carries a huge burden of diseases and if there is an outbreak of cholera in Harare tomorrow, all patients will be sent to Harare Hospital and not Parirenyatwa. If you look at the statistics that are available, it is evident that Harare Hospital has a bigger workload but this 2014 budget allocated Harare Hospital $1.5 million and went on to allocate Parirenyatwa Hospital $5 million. We know for sure with evidence that Parirenyatwa Hospital makes US$6m from user fees and the monies that come from user fees are for some reason not mentioned anywhere in the budget and that worries me because that money has a reflection on equity issues.

There are institutions that do not make anything. If you go to Uzumba Maramba Pfungwe, they make US$100. If you come somewhere else they are making US$100 000 per month and for use I know institutions that make US$20 per month because the surrounding community cannot afford to pay. We are not saying that the Ministry of Finance should take the money and distribute it. NO! It should be taken into account when they are distributing the money.

The committee recommends that on the tale of the two cities in Harare, the Statutory Instrument governing the Parirenyatwa Group of Hospitals needs to be revisited and interrogated by the Health Committee. The committee is also concerned with the fact that the ZimAsset blueprint has one of its goals - a construction of 1500 clinics which translates to 300 clinics per year and yet the 2014 budget has only budgeted for 10 clinics.

The committee further notes that the resource allocation formula used by the Ministry of Finance for onward distribution of the scarce resource promotes inequality and raises issues of equity. The formula turns a blind eye to the contribution of the revenue raised from the Health Services Fund and the distances between facilities in provinces. On average, the distance between health facilities in Matabeleland North is between 50 and 70km. It also turns a blind eye to the poverty index. The poorest provinces in Zimbabwe are Matabeleland North and Mashonaland Central and when you look at the budget, you do not see that reflection.

I have summarized my presentation and I will hand over the copy of our report to the Minister of Finance and I hope you will consider this.

MR. MUTOMBA :

  • Introduction

· The Ministry of Industry and Commerce's major mandate is to provide a conducive environment for economic growth and development through sustainable industrialisation and trade. This can be achieved through its coordinating role in the implementation of the Industrial Development and National Trade Policies. Key to these policies is the revival of the manufacturing sector and accelerated industrialisation through value-addition and beneficiation which are fundamental to Zimbabwe's economic transformation. The parastatals under the Ministry's purview are Industrial Development Corporation, Zimbabwe Iron and Steel Company, Zimbabwe International Trade Fair Company as well as grant aided institutions which include: Consumer Council of Zimbabwe, Competition and Tariff Commission, National Incomes and Pricing Commission, Standards Association of Zimbabwe and ZimTrade.

· In the Zimbabwe Agenda for Sustainable Social and Economic Transformation (ZimAsset), the Ministry has the task to make industry and commerce the engine for economic growth and development. The Ministry will therefore focus on implementing the Industrial Development and National Trade Policies which are aimed at reviving the manufacturing sector and accelerated industrialisation through value addition and beneficiation which are fundamental to Zimbabwe's economic transformation.

  • Overview of the budget

· Budget objectives to industry:

9 Restoring the role of manufacturing by enhancing competiveness in both the domestic and foreign markets through value addition.

10 Industry protection through high tax rates for finished products and low duty for raw materials.

11 Promoting and developing value chains in industry.

  • 2014 Budget Submission versus Budget Allocation

· The Ministry had proposed a total allocation of US$303 million in the 2014 budget of which US$16, 036 million was for the Ministry's operations including transfers to various organisation. The rest of the proposed expenditure was meant for the resuscitation of the industries with the largest component being US$100 million for the Industrial Development Fund which was to be administered through the IDC for lending to ailing industries. However, when the Ministry submitted this proposal to Treasury, the response was that Treasury was not in a position to provide such an amount through the budget but would assist the Ministry in sourcing it through other channels outside the budget. The Ministry was advised to submit expenditure proposals directly related to their mandate as outlined in the Zim Asset. Table 1 below shows the appropriation of the bid submitted to treasury.

Table 1: US$ 303 902 750 bid break down

Budget Item

Proposed Budget

(US$)

Actual Allocation

Resuscitation of Industry

US$236 963 750

NIL

Treasury is not in a position to provide funding from the existing budget due to limited fiscal space. It is therefore necessary to raise funding through International Development Partners and specialised agencies such as UNIDO.

1. The country needs to access funding under European Development Fund 11 (EDF 11) where €500m is available and this requires pursuing, participation and representation at meetings.

2. Global Environment Fund 4 (GEF 4) has about €20m available for climate change and biodiversity. This requires participation and presentation of viable projects

3. Resuscitate access to Commodity Funds such as Common Fund Commodities (CFC), International Sugar Organisation (ISO). International Coffee Organisation (ICO).

IDC Rights issue

47 300 000

NIL

Shareholder (Government) need to inject capital

Recurrent Expenditure

16,034 000

US$6,054 000

· The Ministry received only US$6,054 million excluding employment costs from the submitted bid of US$16, 036 million. The amount allocated represents 37.8% of the bid by the Ministry. The 2014 total budget allocation to the Ministry of Industry and Commerce of US$7,369 million is 3.75% lower than the 2013 budget allocation of US$7, 656 million. The Ministry of Industry and Commerce's budget allocation for 2014 as a percentage of the national budget is 0.17% and is very low considering the importance of the roles of the Ministry in promoting economic growth.

  • Appropriation of 2014 budget expenditure

· The Ministry's total bid was US$16,036,000 excluding the wage bill which was appropriated as in table 2.

Table 2

   

Submitted Bid (US$)

Actual Budget allocation (US$)

Actual allocation as a percentage of bid (%)

Current expenditure

     
 

Goods and services

1,885,000

1,496,000

79.4

 

Maintenance

296,000

239,000

80.7

 

Current transfers

9,245,000

1,249,000

13.5

 

Programmes

4,240,000

2,820,000

66.5

   

15,666,000

5,804,000

37.0

Capital expenditures

     
 

Furniture and equip

100,000

100,000

100.0

 

Vehicles and mobile equip

200000

80000

40.0

 

Constructions

30,000

30,000

100.0

   

330,000

210,000

63.6

Capital Transfers

40,000

40,000

100.0

TOTAL BUDGET(excluding employment costs)

 

16,036,000

6,054,000

37.8

· A large proportion of the bid was on current transfer to cater for subscriptions to various organisations (US$8,700,000) of which only US$500,000 was provided.

· The 2014 allocation of the ministry is US$7,369,000 which excluding employment costs, which are outside the ministry's control, amounted to $6,054,000.

  • EXPENDITURE ANALYSIS FOR 2014

· From the US$7,369,000 allocation; current expenditure will take 79.7% of theMinistry's budget allocation whilst 16.9% of the Ministry's budget allocation will go towards current transfer to grand aided bodies and 3.4% is for capital expenditure.

Goods and Services

· The Ministry received US$1,496 million for goods and services which include communication, foreign and domestic travel, institutional provisions, office supplies and other operational expenses. The amount allocated for goods and services represents 79% of what the Ministry had proposed to Treasury. The financing gap will thus affect foreign travel requirement as the Ministry is involved in extensive international travel to participate in various core, unavoidable and non optional meetings such as the SADC Trade Ministers' meeting, SADC Council of Ministers, ACP Trade Ministers, ACP-EU Joint Council of Ministers, WTO Ministerial meetings, ESA Council of Ministers, SADC-COMESA-EAC Tripartite FTA meetings, et cetera. Thus the amount allocated to the Ministry for foreign travel will affect the effective participation of the Ministry at various meetings which are important for the growth of trade.

Maintenance

· The expenditure category is adequately funded as the Ministry got 80% of the proposed expenditure for 2014. The amount allocated for this expenditure item is 190% greater than the US$126 000 allocated in 2013.

Current Transfers

· The Ministry of Industry and Commerce's budget requirement for subscriptions to international organisations is US$2,367 million and Treasury allocated only US$500 000 which leaves a financing gap of US$1,867 million. The amount allocated is just 21% of the Ministry's requirement for subscriptions to international organisations. As a result of the underfunding, the country will continue to accumulate arrears in respect of its obligations to international organisations.

Support to grant Aided Institutions

· Institutions under the Ministry's purview did not receive meaningful allocations in the 2014 budget. The inadequate funding to the parastatals will greatly affect their operations. Of concern is the failure by Treasury to allocate any money to the Standards Association of Zimbabwe (SAZ) at a time the country is facing a problem of stigma for poor quality local products. Zimtrade did not receive any allocation because it gets income from surcharges levied on imports / exports.

Programmes

· The Ministry had submitted US$4,240 million and was allocated US$2,820 million for programmes which include ZITF, Milan Exposition in 2015 and Trade Promotion. For the ZITF, the US$150 000 allocated is adequate to successfully host the event. For the Milan Exposition, the US$200 000 allocated against a US$350 000 bid is not enough to kick start preparations for the successful participation at the exposition. With respect to Trade Promotion, the allocated amount is not enough as it is only enough to meet annual salaries and rentals.

FISCAL POLICY INTERVENTIONS TO ADDRESS CAPACITY UTILISATION IN INDUSTRIES

· In November 2013, the Ministry of Industry and Commerce submitted proposals to Treasury to review duty on some key raw materials and finished goods which compete with locally manufactured goods. Duty on raw materials and the influx of imported finished goods have continued to impact negatively on the competitiveness of locally produced goods. Approximately 87% of the tariff lines that advocated for the removal of duty especially raw materials were accepted in the 2014 budget and about 78% of the tariff lines advocating for upward review of the general/MFN rates on finished products were also accepted. The committee noted that the response by Treasury to these requests by industry is very much encouraging and if complemented by financial support will boost production in our industries.

· Below is an analysis of the proposed POLICY changes made by treasury.

Industry

Proposed Policy Change

Comment

Motor Industry

· Completely Knocked-Down (CKD) policy to become operational within 6 months

· Upward review of customs duty rates on Completely-Built-Units imports from South Africa

The enactment of the CKD policy will ensure quick turnaround of the local automotive assembly sub-sector. However, the Committee feels that as a starting point Government should have considered allowing the importation of Semi-Knocked Down (SKD) kits which will not take time to assemble and also does not require high cost machinery to assemble.

Agro-processing

  • 25% surtax on cooking oil maintained

· Duty on raw materials for cooking oil reviewed downwards and upward review of duty on finished products

· Removal of cooking oil and laundry soap from travellers' rebate

The proposed changes will discourage the importation of cooking oil and laundry bar soap while encouraging the consumption of the respective local products. However, the Committee strongly feel that the policy on the removal of cooking oil from the travellers' rebate should not completely shut out the door but should set a limit on the quantity a traveller can enjoy rebate on duty.

· Upward review of duty on imported sugar, dairy products

Will result in an increase in the cost of imported sugar and dairy products hence discouraging imports and stimulate demand for locally produced sugar and dairy products.

   

Clothing

· Creation of EPZ for clothing manufacturers

· Extension of the rebate of duty on imported raw materials in the manufacture of clothing by 1 year

This will consolidate the gains that have already been realised in the clothing sector which include low cost of production and competitiveness.

Leather and leather products

Export tax of US0.80 per kg on exports of raw hides and skins

This will encourage value addition while discouraging the exportation of raw hides and skins

· Other products where duty on raw materials has been reviewed downwards include biscuits, rubber, metals and electrical, chemicals and fertiliser, aluminium and flour. The downward review of duty on these raw materials will boost competitiveness of our local products.

COMMITTEE OBSERVATIONS

Budget Allocations

· The Treasury is not timeously disbursing the allocated funds to the Ministry, in 2013 as of November; Ministry of Industry had only used 55% of the allocated budget. This has the effect of affecting the operations of the Ministry in fulfilling its mandate.

· The Ministry received 34% of its proposed expenditure with some subheads receiving 100% of the bids.

· The budget to the Ministry is only for operations of the Ministry and has no intentions of contributing to economic growth as the ministry did not receive any budget for the IDC for lending to ailing industries. This will result in further distress among companies in need of funding for recapitalisation and working capital. Among those companies that should be considered for funding is ZISCO STEEL. The Government should not wait for the Essar Deal but should take some initiatives that will see the company resuming operations even at low capacity levels.

· The Ministry of Industry and Commerce is accruing arrears of subscriptions to international organisations and will limit the benefits from services provided by various trade organisations as some benefits are linked to subscriptions.

· No allocation made in respect of SAZ, this will negatively impact on the quality promotion programmes which SAZ has been carrying out and compromise on the capacity of SAZ to enforce the adherence to minimum standards.

Fiscal Policy Interventions

· The committee greatly welcomed the proposed policy changes announced in the 2014 budget but remained concerned that due to rampant corruption at border posts, many products whose duty has been reviewed upwards will continue to enter into the country duty free as long as corruption is not dealt with.

· The Industry protection is being strengthened through the upward review of duty on most finished products which our local industries have the capacity to produce. However, these policies could produce positive results if they were complemented by financial support to be extended to companies to allow them to manufacture price competitive products. Otherwise if not properly supported by a sound financial package, these policies may drive prices upwards and result in inflation.

· By not allocating any money to the IDC for lending to ailing industries, Treasury is indirectly allowing industries to collapse. If industry falls, revenue base falls and there is loss of employment. It is also important to note that shut down companies are difficulty to resuscitate. The budget shows that there is little political will from Government to resuscitate the local industry.

Recommendations

· The Committee welcomes the various fiscal interventions proposed in the budget, especially regarding the downward review of duties on raw materials and upward review of duties on finished products. However, of concern is the lack financial support to industries to complement these policies. The Committee therefore, recommends that the Government assist companies in acquiring modern technology that will enhance price competitiveness of locally produced goods.

· The Government should not mix business with politics so as to attract investment into the country. The Committee therefore recommends that Government comes up with policies that promote foreign direct investment which is what the country requires at the moment to help resuscitate our ailing industry in light of liquidity challenges in the country.

· The Committee noted that the Treasury is taking time to disburse funds. To ensure successful execution of programmes, the Treasury must timeously release funds as per request.

· Budget to Ministry of Industry should prioritise financing distressed companies that are facing cash flow problems rather than the operations of the ministry.

· Funding for industries should be directly allocated through the budget rather than depending on external financing which is uncertain.

· There is need for clarity on assets in parastatals and ascertaining the true values of most assets. This valuation of assets will help in determining which parastatals the Government can keep and those where it needs to invite investment partners. Those Parastatals which are perennial loss makers should be considered for privatisation.

· The industry needs to be restructured following years of economic decline and companies are using outdated technology. Even if more money is injected for capitalisation without improving technology, domestic industry will not be competitive due to technical inefficiency. The committee recommends seed capital injection through the IDC that will roll over the funds.

· The Committee recommend for further intervention in promoting value addition by imposing tax or any other restrictive measures on goods not value added that would otherwise be.

· Quality promotion programmes were not provided for even though the country is facing a problem of stigma for poor quality local products and at the same time failing to penetrate foreign markets due to poor quality goods. There is need for policy intervention to promote quality of goods. Thus, the Committee recommends that the Standards Association of Zimbabwe must be adequately funded to enable it to enforce adherence to minimum standards in order to promote local goods quality and control the influx of poor foreign goods.

· The trade missions must be effective, the Ministry should consider maintaining those Trade Promotion Officers where positive results have been coming rather than continuing financing Officers who have never brought any results. In such cases, as a way of cutting costs, the Ministry should have a trade promotion officer based in a country but will be responsible for a number of countries.

· Parastatals that are doing well should invest part of their profits in ailing industries or guarantee loans borrowed by distressed parastatals from banks.

· Government should come up with a policy that promotes the importation of Semi-Knocked Down (SKD) kits which will not take time to assemble and also does not require high cost machinery to assemble. Once capacity utilisation in the motor industry has picked, then the Government would then consider the CKDs. I thank you.

Sorry Madam Speaker, I do not know whether I could use this opportunity to also present my own report. This was actually for the Committee and I also have got my own personal report as an individual.

THE DEPUTY SPEAKER: No, I think presentations from individuals members will come later.

MR. MUTOMBA: That is alright. Thank you Madam Speaker.

MRS. NYAMUPINGA: Thank you very much Madam Speaker for giving me this opportunity to present the Report of the Portfolio Committee on Women Affairs, Gender and Community Development, Vote 23 of the 2014 post National Budget analysis.

Mr. Speaker Sir, the Ministry of Women Affairs, Gender and Community Development is mandated to empower women, promote gender equity and community development as well as fund various community projects. It seeks to improve livelihoods. When we talk of livelihoods, we are also talking of economic growth. It actively engages in gender mainstreaming in all sectors. The ministry's key departments are Women Affairs, Gender and Community Development. It again has supporting departments namely Finance and Administration, Human Resource Management, Audit and Legal Services. The ministry works with UN agencies, development agencies, civic organisations involved in women empowerment, gender issues and community development.

The role played by the ministry is key in human development in general. We all know that if we have human development, it will accelerate growth. Not only growth but economic growth and yet all human efforts including working to achieve economic growth, are earned at human development as the ultimate goal. The 2014 National Budget allocates $5 130 000.00 to the entire ministry. The original bid by the ministry is $30 256 756.00, this leaves an underfunding of $25 126 756.00.

Mr. Speaker Sir, if we are not funding ministries like Women Affairs, I do not know whether we still have interest in developing our communities and also increase our GDP. All that can only happen if our women are empowered and they are producing, wherever they are in the community. We will increase the GDP that we are crying to increase and not only increasing growth but also increasing economic growth. In fact, budgetary allocations that do not accord prominence to the ministry responsible for women affairs, gender and community development may run into problems of worsening gender disparities and negate all the strides already made by the Zimbabwe Government in addressing gender related challenges.

Mr. Speaker Sir, I will just outline major achievements of the ministry in 2013. First, it is the launch of the broad-based women and economic empowerment framework. Secondly, 493 women's groups with membership of 2 151 were funded in 2013 for a total amount of $778 600 revolving money. The national gender based violence strategy was finalised and the draft national gender policy was revised. The Zimbabwe combined CEDAW report was presented to the United Nations and 360 women miners were trained through women mining capacity building. 115 women accessed market through participation in local and regional exhibitions while 493 women groups were funded under the Women Development Fund.

Enhancing food security at the household level by providing inputs in all provinces and capacitating communities to grow potatoes in bags. I think now, wherever we go, we are seeing potatoes in bags. Cluster women in mining capacity building workshops were held to facilitate transformation of women miners business from informal to formal. A total of 30 women and 15 men participated at ZITF and they got sales amounting to $25 000. Those were some of the achievements that were achieved by the ministry in 2013.

Policy priorities for 2014 to 2016

· They intend to operationalise the broad based economic empowerment framework;

· They would want to capacitate 27 000 community members in internal savings and lending in order to improve their businesses;

· Enhance women's participation and representation in politics and other decision making levels;

· Gender mainstreaming in all sectors; and

· Promote women's success to justice, funding of women's projects.

Mr. Speaker Sir, you know that in this House, as hon. members, we are all looking and checking which women in our constituencies and districts have actually accessed these women's projects. Without giving these women projects, coming back to this House might be a challenge. The ministry's success story for the Ministry's success story for the year 2013 and what the Ministry wants to do in 2014 gives a clear picture of the extent to which the Ministry is indispensable. It makes immense contributions not only to human development in general but also to the viability of the overall economy in terms of its actual contribution to the nation's GDP.

I will now go to allocation of different departments. I will start with Women Affairs. It had requested for US$16 165 700 and it was only allocated US$2 875 leaving a variance of US$13 290 700. On this one, Mr. Speaker, Sir, I will just pick on women development fund which is the most important instrument to use if we want to increase our GDP. The Ministry required US$15 000 000 and they were only allocated US$2 500 000. We all expect them to give projects to different provinces and if they have only been allocated US$2 500 000 and to divide the amount with the ten provinces, it is a challenge. Mr. Speaker, it means only few women will actually be funded. There is need for the Minister of Finance to reconsider the issue of women development funds among other things that were underfunded in this department of Women Affairs.

Let me proceed to the department of Gender, the department requested for US$2 638 690 and it was only allocated US$630 000 leaving a variance of US$1 771 120. On this one again Mr. Speaker Sir, I will pick on two programmes, one of them is the Gender Commission. We all know that we enshrined the issue of gender commission in our Constitution and it needs to be put in place so that it starts executing its mandate. Mr. Speaker Sir, there is a big disparity when it comes to gender. For the department to be allocated only US$50 000 where they had requested US$250 600, means it is going to be a challenge for the Ministry to set up the Gender Commission. It means we are not complying with the Constitution that we put in place.

There is also the programme of gender based violence. The Ministry required US$602 941 and the Ministry was allocated US$170 000 leaving a variance of US$432 941. Mr. Speaker Sir, we all know that the issues of gender based violence are actually increasing. I think you were listening to the hon. member who was giving a notice of motion. She was giving statistics of how gender based violence cases are increasing even though we are just coming from 16 days of activism. It means there is a lot of work that needs to be done about information dissemination down to the villages. The Ministry is not going to be able to carry out this programme because it has really been underfunded and through this House, I am appealing to the Minister of Finance to revisit the issue of gender based violence. Mr. Speaker Sir, if there is a lot of violence in a country, where women are affected, it means also they will not be able to do their chores and their projects, it means decrease in the GDP and no economic growth.

Once again, there are serious variations coupled with non-allocation for capacity building. A budgetary allocation of US$630 000 will not be anywhere near the figure allowing smooth flow of activities within the gender section.

Let me move to Community Development Mr. Speaker Sir. The Ministry required US$5 708 177 and US$175 000 was allocated, leaving a variance of US$5 533 177. On this department of Community Development, I will pick on the community development fund. The Ministry required US$4 995 012 and they were not allocated anything. I will go back to 2013, where they were actually allocated an amount between US$2m to US$3 million. That amount was not even disbursed and in this budget they got nothing. I do not know Mr. Speaker, if we are serious in developing our communities when we do not allocate a single cent to them. I also want to appeal through you Mr. Speaker Sir, that the Minister of Finance needs to revisit the issue of community development and at least have something allocated.

The budgetary allocations that I have just presented show wide discrepancies on bid amounts and what was actually allocated. These variances ignore the fact that women constitute more than 52% of Zimbabwe's population. There is therefore need to take them on board in development initiatives. The Ministry itself has offices at national level, provincial, district, and even at ward level. All activities target people in wards and essentially take place in wards. There is therefore need to allocate resources right from the ward up to the national level.

The 83% variance between the Ministry bid and the actual Treasury allocation is worrisome. The Ministry got 0.26% of the budget in spite of its large mandate. In the past, the Ministry has had challenges in the disbursement of the allocated funds. Government's full commitment is required in terms of devoting resources to ensure the viability of the Ministry. The Ministry does not necessarily need to survive on donor funds as is normally the case. There is need for Government to place women right at the centre of growth strategies and engage them as economic actors so as to turn around the economy. The drop in budgetary allocations is a major concern for the Ministry and stakeholders. It is even surprising that the budgetary allocations are such that the Ministry is getting into 2014 with a debt overhang of US$367 000.

Mr. Speaker Sir, before I go to recommendations, for the Ministry of Women Affairs to get less than 1% of the overall national budget is actually undermining the number of women who constitute 52% of this country. We are not dealing with women only Mr. Speaker Sir, gender means men and women. If they have only got less than 1%, my question is, where is the whole budget going? The allocations are not matched by disbursements in a number of cases including the core programmes such as women's economic empowerment.

There is need, Mr. Speaker, Sir, for harmonisation of funds for certain activities which the Ministry of Women Affairs also has interests in and is also involved in those programmes - ministries like health, education, girls and young women empowerment and also youth. There is need to harmonise that funding so that the Ministry of Women's Affairs will be able to invite those ministries and find out what exactly is happening with what the women should be getting from those ministries.

Positive development in institutional strengthening and resources for gender audit and gender budgeting have been availed and we want to thank the minister for that. But, it is a very small amount considering that there is a lot of training that needs to be done in various departments for them to understand what we mean by gender budgeting.

The issue of strategy development of the recently adopted revised Gender Policy is key and this is underfunded; this is serious because without a strategy, it is a challenge to harmonise programming, plan effectively and put resources where they are most needed.

The Ministry of Finance budget call circular requires, since 2007, that all ministries must ensure that they mainstream gender in the budget. What this means is that all ministries must consider gender issues as they budget. It is not only the Ministry of Gender that has the mandate to address gender issues. All ministries have the mandate because gender is a cross cutting issue, therefore, it is multi-sectoral. So, when we do a gender budget analysis, we will not only look at allocation to the Ministry of Gender but we will look also at the other ministries.

There are two levels at which the budget needs to respond to gender equality and women's empowerment commitments. At the institutional level, namely resources going towards building the institutional capacity of Government to practice gender mainstreaming because the policy is already there. Secondly, financing of the programmes that close gaps to improve gender relations and empower women specifically.

Mr. Speaker Sir, in order to address institutional gaps, we have argued that each ministry must have a gender mainstreaming budget line. In the 2014 budget, only three ministries, namely Agriculture, Local Government and Higher and Tertiary Education have a gender mainstreaming budget line aside from the Ministry of Gender, Women's Affairs and Community Development. However, this is still commendable. Nothing has been allocated by other ministries. The challenge is that, the gender mainstreaming allocations in these ministries are small, e.g. Agriculture $20 000.00; Local Government $50 000.00; Higher and Tertiary Education $10 000.00. In all cases, no disbursements were made in 2013.

From the perspective of financing or programming of gender, we have noted some interesting developments particularly in social sectors. We have argued that investing in the social sectors is as equally important as investing in the so-called economic sectors because there can be no thriving economy without a healthy and educated human capital. Also, these are very important indicators to economic growth. Of course, all social sectors are underfunded, so the point should not be laboured. However, two examples can be cited, most information from the Blue Book, of some important developments to promote gender equality.

Ministry of Health - the introduction of the Cancer Advocacy Fund of $500 000.00; the reproductive health budget $200 000.00 although still miniscule given the magnitude of challenges faced by women in accessing reproductive health care but surely, we want to commend the minister for that. However, the fact that the hospital service budget allocation for 2014 wiped out the existing debt means a definite deepening of a crisis in terms of women accessing already compromised health services. This is likely to impact areas such as maternal mortality.

Mr. Speaker Sir, the issue of primary and secondary education, scholarships for junior and infant education are important initiatives to support children in need. However, the budget allocations for 2014 are small at $18 000.00 and $4 000.00 respectively. The challenges with BEAM are evident and directly impact on the Governments' ability to maintain gender parity at secondary level; if less children are going to benefit from BEAM, the experience is that the girl child will suffer the most. No disbursements were made in 2013, an allocation of $631 000.00 was made in 2014.

On the whole, we are seeing systematic gender related budgeting across sectors, both in terms of institutional strengthening and in programming for gender.

Now, I will go to the recommendations of the committee Mr. Speaker Sir. The current budgetary allocation of 17% of the original bid gives a figure that is extremely difficult to work with. The Minister of Finance is, therefore, requested to revise the allocation and possibly align it with the original bid of $30 256 756.00, excluding salaries.

It may solve problems of misallocations if for future purposes budgetary allocations are on a percentage bases. As things stand, the Ministry of Women Affairs, Gender and Community Development has less than 1% (0.26%) of the national budget. A situation that sends wrong signals regarding the Government's commitment to solving gender related problems.

The ministries should be allowed to virement, that is, to transfer allocated funds from one vote to another in accordance to their priorities. Treasury should release allocated funds timeously to avoid inconveniencing the ministry's activities and programmes.

I thank you Mr. Speaker Sir.

DR. MATARUSE: Thank you Mr. Speaker. Allow me to present the 2014 post budget analysis report of the Portfolio Committee on Higher Education; Tertiary Education and Science and Technology Development.

The mandate of the ministry is to ensure human capital development, science and technology development, research, development and innovation as well as quality assurance. The key objectives of the ministry include producing highly competent human capital for socio-economic transformation and sustain the growth of Zimbabwe; equal opportunities in higher and tertiary education; to develop a science technology and innovation culture; to increase the intensity of research and development in institutions in the country; to increase up on recess and development results by the industry as well as to increase bilateral and multi-lateral partnerships including resource mobilisation.

 

2. Overview of the Ministry's budget

1. The ministry's budget constitutes 8.1% of the total budget in 2014. It was 7.2% in 2013.

2. The overall allocation of the ministry increased by 13% in 2014. The same budget increased by 5.5% in 2013 and by 70% in 2011.

3. This budget is one of the top 10 priorities of Government occupying position 5 in 2014. This was the same position in 2013.

3. Analysis of the Economic Classification of the Ministry's budget.

The Higher Education budget is highly recurrent with 89.8% of the budget constituting current expenditure, leaving only 10.2% for capital expenses. The budget is also becoming more recurrent as the capital budget was 12.7% in 2013. Current transfers take the bulk of the ministry's budget (66.7%). Current expenditures are proposed to increase by 34.5% in the 2014 budget. These major expenditure items that are proposed to increase in the 2014 budget are employment costs (38.8%), programmes (29.8%) and current transfers (11.1%). A negative growth is expected in capital expenditure (-9.7%) distributed as a reduction of 32.9% in acquisition of fixed assets and a 5.4% reduction in capital transfers. This is in respect of ongoing projects for which the Treasury is still in arrears from the previous years. This may affect the work in progress and delay benefits of the projects to the economy. Table 1 shows the economic classification of the vote.

Table 1: Economic classification of the vote.

Economic classification of the vote

2013

2014

%change

% Proportion

2013

% Proportion

2014

% Change in proportion

Current expenditures

57265000

77015000

34.5

19.5

23.1

3.7

Employment costs

49665000

68944000

38.8

16.9

20.7

3.8

Goods and services

2052000

2186000

6.5

0.7

0.7

0.0

Maintenance costs

612000

595000

-2.8

0.2

0.2

0.0

Programmes

1186000

1540000

29.8

0.4

0.5

0.1

Teachers colleges

1500000

1500000

0.0

0.5

0.5

-0.1

Polytechnics

2250000

2250000

0.0

0.8

0.7

-0.1

Current transfers

199762000

222016000

11.1

67.9

66.7

-1.1

Capital expenditure

37310000

33700000

-9.7

12.7

10.2

-2.5

Acquisition of fixed assets

5800000

3890000

-32.9

2.0

1.2

-0.8

Capital transfers

31510000

29810000

-5.4

10.7

9.0

-1.7

Total

294337000

332731000

13.0

100.0

100.0

0.0

 

4. Analysis of the Sub Votes of the Ministry

The ministry has three sub votes namely, Administration and general, Teacher Education and Technical Education and Training. The Administration and general supports 11 grant aided institutions which include nine universities, special projects and technical departments. All the votes will increase in the 2014 budget with a major increase expected in the Teacher education vote, which will increase by 40.6%, administration and general vote will increase by 8.4% while the technical education and training vote will increase by 8.4/%. The increases are a reflection of the increase in the overall ministry's budget. As a proportion of the ministry's budget, administration and general vote constitute the greatest proportion of 78.4% in 2014; a decrease from the 2013 level of 81.7% by 3.4%. This decrease in proportion is compensated for by an increase in the proportion of the Teacher education budget which constitutes 17.7% of the ministry's budget compared to 14.2% in 2013. A marginal decrease in proportion of the Technical education and training budget of 0.1% is expected in 2014, that is, from 4.1% in 2013 to 4% on 2014. Table 2 shows expenditure categories of the ministry.

Table 2: Expenditure categories of the ministry

Expenditure distribution

2013

2014

% change

% proportion 2013

% proportion 2014

% change in proportion

Administration and general

240503000

260706000

8.4

81.7

78.4

-3.4

Teacher education

41867000

58874000

40.6

14.2

17.7

3.5

Technical education and training

11967000

13151000

9.9

4.1

4.0

-0.1

Total

294337000

332731000

13.0

100.0

100.0

0.0

4.1 Analysis of the Administration and general budget

The Administration and general budget as the main sub vote of the ministry constituted 78.4% of the ministry's vote and it will increase by 8.4% in 2014. Current transfers in the main sub vote of the Administration and general budget taking 85.3% of the ministry's vote in 2014 compared to 83% in 2013 (an increase on proportion of 2.2%). The current transfer's budget will increase by 11.1% in 2014. This budget caters for scholarships, grants and loans to colleges and universities. The increase in proportion of the current transfers' budget is in line with the need to undertake human resources capacity development programmes to enhance the acquisition of requisite skills as enshrined in the Zim Asset blue print. Table 3 shows the Administration and General Budget.

Table 3: Administration and General Budget

Administration and general

2013

Exp to Nov 2013

2014

Proportion of exp allocated in 2013

%change to 2014

Proportion 2013

Proportion 2014

Change in proportion

Current expenditure

               

Employment costs

5111000

4174538

4549000

81.7

-11.0

2.1

1.7

-0.4

Goods and services

2052000

1205415

2186000

58.7

6.5

0.9

0.8

0.0

Maintenance costs

612000

237795

595000

38.9

-2.8

0.3

0.2

0.0

Currents transfers

199662000

171131482

221916000

85.7

11.1

83.0

85.3

2.2

Programmes

1186000

368836

1140000

31.1

-3.9

0.5

0.4

-0.1

Capital expenditure

             

0.0

Acquisition of fixed assets

370000

71502

110000

19.3

-70.3

0.2

0.0

-0.1

Capital transfers

31510000

14034173

29810000

44.5

-5.4

13.1

11.5

-1.6

total

240503000

191223741

26070600

79.5

8.4

100.0

100.0

0.0

4.11 Analysis of the current transfer budget

The current transfer budget for 2014 shows that all universities 'and special projects' budgets will increase in 2014 by percentages ranging between 6% and 35%. Decreases in expenditure are proposed in the National Education and Training fund (by33.3%) and the Zimbabwe Manpower Development Plan (by 33.1%). The proportion of the budget going towards established institutions is expected to decrease to pave way for newly established institutions. This is done to ensure equal opportunities to the Zimbabwean community. Table 4 shows the Current Transfer budget breakdown.

Table 4: Current budget breakdown

Current Transfers

2013

2013 exp to Nov

2014

Proportion of exp to Nov 2013

%change to 2014

Proportion 2014

Proportion 2014

% change in proportion

Bindura University of Science and Technology

13090000

11417482

14670000

87.2

12.1

6.6

6.6

0.1

Chinhoyi University of Technology

15591000

14299853

18262000

91.7

17.1

7.8

8.2

0.4

Great Zimbabwe University

15826000

16101480

21220000

101.7

34.1

7.9

9.6

1.6

Harare Institute of Technology

8450000

7829713

10180000

92.7

20.5

4.2

4.6

0.4

Lupane State University

5155000

5290094

6560000

102.6

27.3

2.6

3.0

0.4

Midlands State University

26842000

23229727

28893000

86.5

7.6

13.4

13.0

-0.4

National Education and Training Fund

12000000

3500000

8000000

29.2

-33.3

6.0

3.6

-2.4

National University of Science and Technology

22441000

20699392

26171000

92.2

16.6

11.2

11.8

0.6

University of Zimbabwe

53410000

47990836

58828000

89.9

10.1

26.8

26.5

-0.2

Zimbabwe Council of Higher Education

1132000

 

975762

1226000

86.2

8.3

0.6

0.6

0.0

Zimbabwe Open University

18642000

16208704

20555000

86.9

10.3

9.3

9.3

-0.1

Scholarships-foreign students

2000000

534000

2000000

26.7

0.0

     

Zimbabwe Manpower Development Fund

1000000

 

669000

0.0

-33.1

1.0

0.9

-0.1

Biotechnology Authority

294000

186104

388000

63.3

32.0

0.5

0.3

-0.2

Finealt

1649000

1318918

1784000

80.0

8.2

     

Innovation and Commercialisation Fund

250000

 

250000

0.0

0.0

0.1

0.1

0.0

Verify Engineering

1830000

1549417

2140000

84.7

16.9

0.9

1.0

0.0

Subscription to various organizations

60000

 

120000

0.0

100.0

0.0

0.1

0.0

Total

199662000

171131482

221916000

85.7

11.1

100.0

100.0

0.0

4.2. Analysis of Teacher Education Budget

The department of Teacher Education caters for 10 State Teachers Colleges. The teacher education budget will increase by 40.6% in 2014 driven by 48.4% increase in employment costs. Acquisition of fixed assets will decrease by 42.2% while the budgets towards operational expenses and current transfers will remain fixed. The bulk of the Teacher education budget will go towards employment costs (94.6% in 2014 compared to 89.6% in 2013). This shows an increase in proportion with acquisition of fixed assets decreasing most by 3.9%. Table 5 shows the Teacher Education budget breakdown.

Table 5: Teacher Education budget breakdown.

Teacher Education

2013

2013 exp to Nov

2014

Proportion of exp to Nov 2013

% change to 2014

Proportion 2013

Proportion 2014

% Change in proportion

Employment costs

37517000

40093318

55684000

106.9

48.4

89.6

94.6

5.0

Operational Costs

1500000

254136

1500000

16.9

0.0

3.6

2.5

-1.0

Current Transfers

100000

0

100000

0.0

0.0

0.2

0.2

-0.1

Acquisition of fixed assets

2750000

0

1590000

0.0

-42.2

6.6

2.7

-3.9

Total

41867000

40347454

58874000

96.4

40.6

100.0

100.0

0.0

4.3. Analysis of the Technical Education and Training

This vote caters for 11 institutions and Industrial Trai9ning and Trade Testing Department. The budget towards Technical education and training will increase by 9.9% in 2014 driven by only employment costs which will increase by 23.8%. Operational expenses will remain constant while acquisition of fixed assets will decrease by 18.3%. As a proportion of the total Technical education and training budget, employment costs constitute 66.2% in 2014 compared to 58.8% in 2013 (an increase of 7.4%). This increase is compensated for by decreases in the proportion of the remaining budget items. Table 6 shows the Technical Education and Training budget breakdown.

Table 6: Technical Education and Training budget breakdown

Technical Education

2013

2013 exp to Nov

2014

Proportion of exp to Nov 2013

% change to 2014

Proportion 2013

Proportion 2014

% Change in proportion

Employment costs

7037000

6541505

8711000

93.0

23.8

58.8

66.2

7.4

Operational Costs

2250000

46972

2250000

2.1

0.0

18.8

17.1

-1.7

Acquisition of fixed assets

2680000

121934

2190000

4.5

-18.3

22.4

16.7

-5.7

Total

11967000

6710211

13151000

56.1

9.9

100.0

100.0

0.0

The Budget items considered underfunded

The following budget items in table 7 were considered grossly underfunded by the Treasury.

Table 7: Underfunded budget items of the ministry

Budget item

Bid

Allocated

Shortfall

% Allocated

Biotechnology Authority

3,870,000.00

588,000.00

3,282,000.00

15

Verify Engineering

37,725,324.00

2,640,000.00

35,085,324.00

7

Finalt Engineering

23,120,797.00

1,984,000.00

21,136,797.00

9

Higher Education Examination Council

     

13

Implications

· The non construction of new state universities colleges will mean that the difference of 13 500 students absorbed by current institutions from the 40550 a level students each year will have nothing to do.

· The arrears of over $63 million on the cadetship programme will be difficult to settle let alone cater for new students with the current allocation of $8 million towards the cadetship programme. This will increase the number of unskilled youths on the streets.

· The specialised projects that have potential to sustain themselves as well as develop the economy will remain babies of the Treasury.

· Higher education examination council budget is only sufficient to run one nanotechnology biotech examination session.

· Lupane State University.

5 Conclusion and recommendations

5.1 Conclusions

1. 8.1% of total budget in 2014 was 7.2% in 2013

2. Higher education budget increased by 13% in 2014.

3. This budget is one of the top 10 priorities of Government occupying position 5 in 2014. This was the same position in 2013.

4. Current expenditure constitute the largest portion of the budget (89.8%) leaving 10.2% for capital expenditure.

5. The largest share of current expenditure is current transfers which constitute 66.7% of the Higher Education budget.

6. Comparing the 3 sub categories of the Ministry's budget. Administration and general constitute 78.4%, teacher education 17.7% and Technical Education and Training 4%.

7. From the administration and General budget, 85.3% goes towards current transfers. These current transfers are allocations to universities and supporting institutions.

8. The bulk of the budgets for teacher education and Technical Education and Training go towards employment costs; i.e. 94.6% and 66.2% respectively.

9. There is a negative variance for monthly disbursements for operations budget with the treasury disbursing insufficient funds fo a particular month.

10. The limited funding for cadetship defeats the objective of

developing a quality human capital base for the country.

11. The budget items with potential to generate more funds (such

as specialised projects) remain underfunded. This also defeats the Zim Asset objectives of developing these projects into full fledged viable businesses.

5.2 Recommendations

1. The Government should disburse funds proposed in the blue book in the year in which they should be used.

2. There is need to increased the overall operations budgets as most funds of the Ministry are absorbed by employment costs. The increase should be mainly on key priority areas that help the Ministry to discharge its duties efficiently. These include teaching and learning materials, refurbishment and construction of infrastructure.

3. Monitoring is key for achieving high results and thus there is need to monitor and evaluate the budget given to the ministry.

4. The Ministry should identify potential projects and activities that can be commercialised and ensure self sustenance of the Ministry on certain budget items so as to reduce the burden on the fiscus. These may include the specialised projects as well as the user fees paid by students. The funds generated should be retained by the Ministry particularly for operational expenses.

5. The Government should consider increasing allocations for the cadetship programme and scholarships so as to make higher education accessible to vulnerable students of our society. This will ensure equal opportunities to all citizens irrespective of income levels.

6. The dream of having at least a university in each province will only become a reality if funds are allocated to such potential projects. The current budget is silent about funds to construct the 3 remaining universities in Mashonaland east, Manicaland and Matebeleland south as well as building a polytechnic in Mashonaland West Province. This is despite the Zim Asset policy advocating for teachers' college's establishment.

7. The Government provides funding to clear the contact and sabbatical funds backlog. The universities are becoming highly indebted due to nonpayment of these contractual obligations.

8. The budgets foe specialised projects, namely Biotechnology, Verify Engineering and National Nano Technology are too thin. If these budgets are increased substantially, they have potential to generate more revenue for the fiscus either directly or indirectly through beneficiation and value addition. This is highly supported by the Zim Asset policy document. I thank you.

MS. MAJOME: The Parliamentary Portfolio Committee on Justice, Legal and Parliamentary Affairs has an oversight role over the Ministry of Justice, Legal and Parliamentary Affairs. The Ministry has three key Sub Votes which are: Administration and General, Prisons and Correctional Services and the Attorney General's Office. The Ministry's Vote is thus subdivided into these three Sub Votes. The Ministry has a duty to deliver Justice throughout the country and ensure the upholding of the Constitution of Zimbabwe as well as rehabilitating offenders to which the Portfolio Committee has to oversee that these duties are carried out judiciously. The Ministry plays a key role in the economic development of the country. Two of the key indices that investors look for before committing themselves are the efficiency of the justice delivery system of a country and the ease of doing business which in turn ultimately affect the performance of the budget itself.

1.1 Key Result Areas of the Ministry

The Ministry of Justice, Legal and Parliamentary Affairs has laid down its priority objectives for the 2014 Financial Year and these are the:

· Administration of Justice in accordance with the laws of Zimbabwe

· Provision of legal services to all Zimbabweans

· Incarceration and rehabilitation of all offenders

1.2 Major achievements during 2013

During the 2013 Fiscal Year, The Ministry achieved the following:

· Conducting a referendum on the new Zimbabwean Constitution and holding the harmonised elections

· The Appointment of the Prosecutor General

· Hosting the China-Africa Cooperation Forum and

· Launching the Pre-trial diversion programme with three offices being opened in Harare, Bulawayo and Gweru among other achievements.

1.3 Ministry's Policy Priorities for 2014-2016

The major policy priorities for the Ministry are;

· To adequately resource the Zimbabwe Prisons and Correctional Services' farms with inputs, implements ,equipment and machinery to enable production efficiency

· To operationalise the National Prosecuting Authority

· To decentralise the Legal Aid Directorate to facilitate equal access to justice

· To operationalise the Zimbabwe Human Rights Commission

· To capacitate the Constitutional and Parliamentary Affairs Department

· To capacitate the Community Service Programme

· To decentralise the Pre -Trial Diversion Programme for juvenile offenders

· To decentralise the Civil Division to Bulawayo and

· To capacitate other departments within the Ministry

2.0 The National Budget

The overall budget estimate for 2014 is projected at US$4 120 000 000, which is an increase of 6.7 % from the 2013 budget of US$3 860 000 000. The Ministry of Justice, Legal and Parliamentary Affairs received an allocation of US$108 957 000 and this allocation is 12.4 % less than the previous allocation. The top ten ranked beneficiaries of the National Budget are shown in the table below:

Table 1: Top Ten Rankings

   

2013 Allocation (US$ 000)

% of budget

     

2014

Allocation

(US$ 000)

% of budget

1

Education, Sports, Arts & Culture

754,937

19.6

 

1

Primary & Secondary Education,

865,669

21.01

2

Health

380,980

9.9

 

2

Defence

368,054

8.93

3

Defence

356,699

9.2

 

3

Home Affairs

364,183

8.84

4

Home Affairs

308,042

8.0

 

4

Health and Child Care

337,005

8.18

5

Higher & Tertiary Education

286,781

7.4

 

5

Higher & Tertiary Education

335,231

8.14

6

Finance

218,076

5.6

 

6

OPC

206,054

5.00

7

OPC

161,024

4.2

 

7

Finance and Economic Development

199,552

4.84

8

Agriculture

147,839

3.8

 

8

Public Service, Labour and Social Welfare

168,707

4.09

9

Public Service

140,441

3.6

 

9

Agriculture, Mechanization and Irrigation Development

155,256

3.77

10

Justice

124,365

3.2 [2]

 

10

Justice, Legal and Parliamentary Affairs

108,957

2.64

From table 1 above, the Ministry of Justice, Legal and Parliamentary Affairs is ranked tenth in the overall budget allocations. This is comparable to the previous fiscal year where it was ranked the same. The Ministry's overall allocation is 2.64% of the national Budget which is a decline from the previous allocation of 3.2%. The Ministry had filed a bid of $279 876 996 to Treasury but was allocated $108 957 000. This means that the Ministry got only 38.9% of its bid. This therefore means that in terms of real allocations the Ministry was given less preference in allocations. It will be difficult for the Ministry to achieve its set objectives for the fiscal year because of the inadequate funding allocated. The fact that the ministry is ranked among the highest ten recipients in the budget shows the economic and social importance of the ministry, but due to the paltry sums allocated, the ranking will do little to impact on the role of the ministry.

2.1 Vote allocations for the Ministry

The Ministry of Justice, Legal and Parliamentary Affairs has three major sub votes namely Administration and General, Prisons and Correctional Services and the Attorney General's Office. Table 2 below shows the distribution of the Ministry's allocations within its sub votes.

Table 2: Distribution of allocations according to sub votes.

Sub Vote

Amount (US$)

%age of share

Administration and General

20 579 000

18.9

Prisons and Correctional Services

83 663 000

76.8

Attorney General's Office

4 715 000

4.3

Total

108 957 000

100.00

The Department of Prisons and Correctional Services got the largest share of the budget, getting 76.8%, Administration and General got 18.9% while the Attorney General's Office was allocated 4.3%. Prisons and Correctional Services continue to enjoy the lion's share of the Ministry's allocations when in fact it should be resourced enough to also generate income through its various income generating projects.

Table 3: Administration and General

Item

2013

2014

%change

As % of 2014 allocation

Current Expenditure

'000'

 

'000'

   

Employment costs

2 348

2 311

-1.6

11.3

Goods and Services

3 337

1 817

-45.5

8.9

Maintenance

623

689

10.6

3.4

Current transfers

33 602

14 708

-56.2

71.6

Programmes

518

524

1.2

2.6

Capital Expenditure

       

Acquisition of fixed assets

120

130

8.3

0.1

Capital transfers

6 050

400

-93.4

1.9

Total

46 598

20 579

-55.8

100.00

 

From table 3 above there was a decrease of 1.6% in the allocation for employment costs, 45.% on goods and services, 56.25 current transfers and 93..4% capital transfers while there was an increase in the allocation for maintenance, programmes and acquisition of fixed assets. Overall there was a decrease of 55.8% on the allocation on the sub vote for Administration and General which is certain to negatively impact on the performance of the Ministry's budget. For the 2014 budget allocation on the sub vote of Administration and General, 11.3% goes to employment costs, 3.4% to maintenance, 71.6% to current transfers, 2.6% to programmes, 0.1% to the acquisition of fixed assets and 1.9% goes to capital transfers. The bulk of the allocation in this sub vote goes to current transfers and these transfers are allocated to the Human Rights Commission, Judicial College, Law Development Commission, Legal Aid Directorate, National Prosecuting Authority, political parties and the Zimbabwe Electoral Commission. [3]

Table 4: Prisons and Correctional Services

Item

2013

2014

%change

As % 2014 of allocation

Recurrent Expenditure

'000'

'000'

   

Employment costs

52 103

62 624

20.2

74.85

Goods and Services

13 717

13 624

-0.01

16.28

Maintenance

1906

2226

16.79

2.66

Current transfers

31

26

-16.1

0.00

Programmes

1162

724

-37.69

0.01

Military procurement, supplies and services

47

159

238.3

0.01

Capital Expenditure

       

Acquisition of fixed assets

5 400

4 280

-20.7

5.12

Total

74 366

83 663

12.51

100.00

 

The sub vote on Prisons and Correctional services received the largest allocation of $83 663 000 which is 78.6% of the total Ministry budget. The allocation shows that expenditure on employment costs will increase by 20.2% from the previous budget, maintenance by 16.79% and military procurement, supplies and services by 238.3% while there will be a decrease in expenditure of 0.01% on goods and services, 16.1% on current transfers, 37.69% on programmes and 20.7% on the acquisition of fixed assets. From the sub vote allocations for the 2014 fiscal year, 74.85% of the expenditure will go towards employment costs, 16.28% will go towards the procurement of goods and services, 2.66% will go towards maintenance, 0.01% will go towards programmes, 0.01% military procurement, supplies and services and 5,12% will go towards the acquisition of fixed assets. The Prison Services Department should be more productive and should not over rely on the fiscus for funding as it can engage in commercial activities that generate income. More resources should be allocated towards the productive projects of the department so that it can sustain itself in some critical areas like providing food to inmates and other amenities.

Table 5: Attorney General's Office

Item

2013

2014

%change

As %age 2014 of allocation

Recurrent Expenditure

'000'

'000'

   

Employment costs

2643

2925

10.67

62.03

Goods and Services

470

1512

221.7

32.02

Maintenance

238

238

0.00

5.94

Capital Expenditure

       

Acquisition of fixed assets

50

40

-20.0

0.01

Total

3401

4715

38.63

100.00

Expenditure on employment costs on this sub vote is expected to increase by 10.67% and the expenditure on goods and services will also increase by 221.7%. Expenditure on maintenance will remain the same while there will be a decrease on the expenditure on the acquisition of assets will decrease by 20% which is anomalous given the capital expenditure necessitated by separation of the former criminal division of the Attorney General's Office to the National Prosecuting Authority. Employment costs will consume 62.03% of the sub vote while 32.02% will be spent on goods and services and 5.94% will be spent on maintenance. Only 0.01% will be spent on the acquisition of fixed assets. Employment costs and goods and services together constitute about 94.05% of the sub vote. The allocation on this sub vote is insufficient to decentralise the Civil Division of the Attorney General's office to Bulawayo which is long overdue and now imperative given the devolution objective of the new constitution.

Table 6: Economic Classification of the Vote

Item

2013

2014

% change

As %age of 2014 allocation

Current Expenditure

79112000

89 373 000

12.97

82.02

Employment costs

57094000

67 860 000

18.86

62.27

Goods and Services

17524000

16 953 000

-3.26

15.56

Military procurement, supplies and services

47000

159 000

238.29

0.001

Maintenance

2767000

3 153 000

13.95

2.89

 

Programmes

1680000

1 248 000

-25.71

1.14

Current transfers

33633000

14 734 000

-56.19

13.52

Capital Expenditure

11620000

4 850 000

-58.26

4.45

Acquisition of fixed assets

5570000

4 450 000

-20.10

4.08

Capital transfers

6050000

400 000

-93.38

0.004

Total

124365000

108 957 000

-12.38

 

 

Table 6 shows that recurrent expenditure will increase by 12.97 percentage points and employment costs will also increase by 18.86 percentage points. Military procurement supplies and services and maintenance will also increase by 238.29 and 13.95 percentage points respectively. Expenditure on goods and services, programmes current transfers and capital will decrease. 82.02% of the budget allocation goes to recurrent expenditure and of this 62.27 goes towards employment costs. Capital expenditure is only 4.455.That 82.02% of the budget goes towards recurrent expenditure and only 4.45% is allocated for capital expenditure shows that the budget allocation is not developmental but consumptive.

The Department of Constitutional and Parliamentary Affairs was created to formulate and administer Constitutional Reform policies, to promote and ensure the efficient and timeous conduct of Parliamentary sessions and is also responsible for the administration of Constituency Development Funds. The Department intended to carry out the following activities in the 2014 fiscal year:

· CDF Induction Workshops for Members of Parliament (1 in each Province) and

· Monitor and Evaluate the CDF projects in the 210 Constituencies

For these activities to be carried out the Ministry had filed a bid of US$ 21 000 000, but unfortunately the 2014 National Budget allocated nothing for the Fund. The Department will therefore be negatively affected and will find it difficult to achieve its objectives for the financial year.

The Zimbabwe Electoral Commission (ZEC) had filed a bid of US$ 18 199 318 but received an allocation of US$9 329 000 which is 51.26% of the required amount. The Commission needs vehicles and needs to update the Voter's Roll on a regular basis as required by the Constitution. With such an allocation it will be difficult for ZEC to meet its Constitutional obligations. The Commission is required by the Constitution to be independent and would therefore need its own allocation separate from the Ministry.

The Ministry had filed a bid of US$ 36 262 360 to operationalise the National Prosecuting Authority but instead it received an allocation of US$ 500 000 only, just 1.4% of the filed bid. This is a very critical department which needs adequate funding for it to operate independently, professionally and efficiently in terms of the new Constitution. The Authority needs its own allocation independent of the Ministry.

The Legal Aid Directorate has the mandate of providing legal aid to those who cannot afford private legal services. Currently legal aid is only accessible to people in Harare and Bulawayo. To decentralise the operations of the Directorate for greater access to justice and in keeping with the devolution tenets of the new Constitution the Ministry had filed for a bid of US$ 5 096 000 but only got US$ 220 000. The amount is not sufficient to fund the directorate's decentralisation programme and justice will therefore not be accessible to all the needy people.

The Community Service Department needs to be capacitated as this will result in the reduction of expenditure because offenders with less serious criminal cases will not be incarcerated. The Department had filed for a bid of US 928 139 but was allocated only US$224 000 which is grossly inadequate.

It is critical at this juncture that the Law Development Commission be adequately resourced, which it has not been, in order to ensure statutory law is revised so that it is consistent with the new Constitution.

2.2 Conclusion and Recommendations

The Ministry of Justice, Legal and Parliamentary Affairs had filed for a bid of $279 876 996 to Treasury but was allocated only $108 957 000. The allocation means that the Ministry has to revise downwards its priorities for 2014 but this will have dire consequences for the administration of justice and the economic development of the country. The Ministry needs to operationalise the National Prosecuting Authority by establishing its Secretariat. The Authority needs to be resourced up to district level. For this purpose the Ministry had requested $ 36 360 000 but was only allocated $500 000 and the Committee finds this allocation grossly inadequate. The Authority needs to have its own offices to enable it to carry out its duties properly but with the allocated funds this will not be possible.

The Human Rights Commission needs to be operationalised also. For this purpose the Ministry had requested a budget of $5 310 000 but was allocated $2 018 000 which is not adequate since the Commission needs to establish its Secretariat, establish offices in each province, procure office furniture, vehicles, attractive salaries for staff recruitment and retention and needs to hold awareness workshops. This is a very important Commission that needs serious funding that reflects its independence from the Executive.

The Zimbabwe Prisons and Correctional Services have benefited from the Land Reform Programme and have been allocated farms throughout the country. This should ideally enable the department to feed its inmates. Unfortunately there were no provisions for the purchase of farm inputs in the budget to improve productivity and efficiency on the utilisation of these farms. There are also no provisions for the children of inmates and female inmates are not provided with sanitary ware.

The Ministry has outstanding debts of $16 810 992.81 from the previous budget which, without separate provision for it, will consume 15% of the Ministry's vote.

The Committee therefore recommends that:

· There should be sufficient expenditure to ensure that human rights of prisoners are respected at all times. Expenditure on the health of the prisoners should be increased. Generally conditions in the prisons should be improved.

· The skills department within the Zimbabwe Prisons and Correctional Services should be well resourced so that it can be able to train the inmates on various technical skills that will improve the productive efficiency on farms and workshops and help them when they come out of prison. There should be a rationalisation of the productive facilities so that the department can generate revenues to fund some of its activities.

· There should be an allocation for prison workshops so that they are well equipped to improve on the training and rehabilitation of inmates that will enable them to live an honest life after prison time

· There should be a transparent disclosure of prison farm output produce and what they get from the workshops.

· The independence of Commissions should be reflected in the budget, that is, the Zimbabwe Electoral Commission, the Human Rights Commission and the National Prosecuting Authority should have stand-alone budgets. They should be treated the same as the Judicial Services Commission

· The Ministry had bid for $21 000 000 for the CDF but nothing was allocated in the budget. The Committee therefore recommends that there be an allocation for the Constituency Development Fund for development projects to be undertaken and to complete some of the projects that had already been started

· The Ministry should be allocated $500 000 to buy its own vehicles as hiring could drain $2.1million which is more expensive and a drain from the fiscus. An allocation for purchasing vehicles would save $1.5 million which can be applied to vital functions of the Ministry which are underfunded

· Treasury should offset all debts accrued by the Ministry in the previous fiscal year not for the debts to be offset with the current allocations for the Ministry.

· Treasury should timeously disburse funds to the Ministry for smooth running of its day to day activities.

· In general the Ministry's allocation should be increased by up to 50% so that it is meaningful and enables the ministry to begin to fulfill its mandate of ensuring justice delivery, the rule of law and upholding of the Constitution.

I thank you Madam Speaker.

MR. L. SIBANDA: Thank you Madam Speaker. I am going to present a report on the Portfolio Committee on Defence, Home Affairs and Security Services starting with the Ministry of Defence, vote 4 of the Budget which was allocated USD368 054 000. Your Committee Madam Speaker examined the 2014 Budget allocations for the Ministries of Defence and Home Affairs and also received oral submissions from officials of the respective ministries, on their analysis.

The two ministries expected to get adequate funding for their programmes on recurrent and capital expenditures but got a standstill budget. The ministries' votes were grossly compromised in the 2014 Budget as they had debts carried over from the previous year. The requirements and funding history of the two ministries demand top priority as they are of a security nature.

2. Ministry of Defence - Vote 5 (US$356 699 000)

2.1 Functions of the Ministry of Defence

The Ministry's mandate is to safeguard the country's territorial integrity and sovereignty over the land and air space against both internal and external aggression. The Defence Forces provide rescue assistance to civilians in times of disasters and promote peace through participation in peace-keeping missions.

The Ministry of Defence is an integrated ministry comprising of the following:

Zimbabwe National Army (ZNA), Airforce of Zimbabwe (AFZ) and

Civil service personnel.

The administration of the ministry is a merger between the Defence Forces headquarters which is in itself a combination of senior army and Air Force officers and a complement of civil service personnel. The ministry provides assistance to war veterans through the administration of the War Veterans' Fund.

The ministry has seven priorities that are major cardinal points for the period 2013-2016. These relate to the following:

Constitutional and statutory obligations, maintenance of existing Defence Forces equipment and facilities, training, re-equipment, refurbishment and upgrading, research and development, defence projects and food security.

3.0 Overview of the Ministry of Defence Budget

3.1 The ministry was allocated (US$356 699 000) which translated to 8.9% of the 2014 Budget and is ranked second on national priority allocation. However, this is grossly inadequate considering the ministry's special needs to fulfill its mandate.

The allocation is an increase of 3.2% when compared to that of 2013. A table analysis of the ministry's bids and allocations for operations since 2012 is as follows:

Year

Bid

Allocation

Amount disbursed

Variance

% share of allocation

2012

US$640m

US$69m

 

US$571m

11%

2013

US$751m

US$67m

US$58.6m

US$684m

9%

2014

US$939m

US$88.9m

 

US$850.1m

9%

Your Committee noted from the analysis that the Ministry was allocated about 9% of what it had bidded for in 2013. Similarly, in 2014 the ministry's three departments have been allocated about 9% to 11% of the total bid. This depicts serious underfunding for both recurrent and capital expenditure.

The ministry had challenges the previous year resulting from non-disbursement of funds, a situation which led to outstanding debts being carried over to the current financial year. However, despite the challenges faced in 2013, the ministry recorded the following achievements:

(i) Utilised the little resources that were allocated for the financial

year effectively to improve internal capacities and efficiencies,

(ii) Ran training programmes for cadets and recruits as well as internal training.

(iii) Participated in all joint Permanent Commissions with various countries.

Following consultations with the ministry by your committee, observations have been made as outlined:

i) The underfunding is usually exacerbated by non-release of all

funds allocated as evidenced in the previous four years. It is disturbing to note that non-disbursement of funds allocated compromises the fulfillment of the ministry's Statutory and Constitutional Obligations.

ii) Operations have been allocated a sum of $70 million, which is

grossly inadequate to cater for this activity.

iii) The war veterans were allocated only $18 million against a bid

of $64 million. Out of the $18 million allocated, $8 million will be used to pay outstanding school fees for 2013 third term. This will leave a $10 million balance which is insufficient for the 2014 school fees, administration costs and other welfare needs.

iv) War Veterans Projects have never been funded since the inception

of the War Veterans' Department in 1997.

v) There are a number of incomplete Public Sector Investment

Projects (PSIPs) which are affected by the non-disbursement of funds in 2013. This has led to the procrastination of the completion of the following projects:

a) Dzivaresekwa Housing Project,

b) 5:2 Infantry Battalion Housing Project,

c) Zimbabwe Military Academy Project,

d) Rehabilitation of sewer system at 4:2 Infantry Battalion,

e) Construction of R31 flats at Field Airforce Base and Diagnostic Laboratory.

A sum of $159.5 million is required for the completion of these projects and also for the purchase of furniture and other equipment. It is disturbing to note that only $6.23 million has been allocated in 2014.

Thornhill Air Base hardstand requires $6.5 million but was allocated $700 000 hence, this will adversely affect the rehabilitation exercise.

The de-mining exercise has always been seriously underfunded and this year it has been allocated $500 000 against a bid of $2 million. The ministry needs to get rid of this dangerous legacy of mines currently facing independent Zimbabwe.

Zimbabwe is failing to meet the 1999 Ottawa Convention deadlines which require that all anti-personnel mines in the country be destroyed. Your committee is quite disturbed to note that Zimbabwe might not meet the deadline whose third extension is due to expire in January 2015.

The ministry requires a new fleet of vehicles of all types including specialised ones and to maintain the existing ones. However, it is disturbing to note that only $400 000 out of $91.93 million has been allocated for this item.

The approved establishment of the ministry is 45 944. In-posts there are 32 900 while vacancies are 12 696. The vacancies translate to 27.6% of the total personnel required and that is a clear case of understaffing. This situation compromises the fulfillment of the ministry's constitutional mandate.

Adequate funding is also required for goods and services especially rations, uniforms, military procurement, communication, information and supplies, medical expenses, fuel, utilities and other service charges. Zimbabwe will play host to the SADC combined training initiatives on Ex-Nyaminyami. Despite this pending programme, only $40 964 000 was allocated for goods and services in 2014. The Air Force of Zimbabwe requested for $111 101 647.

Your committee appreciates that the ministry received humanitarian assistance from the International Committee of the Red Cross (ICRC), Norwegian People's Aid and HALO Trust. However, the Ministry of Finance and Economic Planning should provide adequate funding for the Defence Forces.

Zimbabwe National Army has outstanding medical debts which have resulted in refusal by some private medical service providers to offer their services to ZNA members due to non-payments. Your committee also learnt that an average of $50 000 per week is required for medical expenses. The ministry only got $1.75 million out of $2.6 million which was bidded for this item in 2014. This contributed immensely to a decline in health services which deteriorated very badly as drugs availability ran below critical levels as evidenced in the previous five years.

The committee's recommendations after analysing the ministry's budget are:

i) That Treasury should clear outstanding debts and come up with

measures to liquidate the ministry's debt especially on war veterans' children school fees and other utilities.

ii) That funds be allocated for demining activities which remain

critical 30 years after independence.

iii) That all funds allocated to the ministry be disbursed timeously.

iv) That Treasury starts funding projects for war veterans.

v) That additional funds be made available to cater for critical

activities in the ministry such as the War Veterans' Welfare, projects, goods and services, capital expenditure and maintenance.

vi) That outstanding projects such as housing be funded and

completed expeditiously.

vii) That medical expenditure and institutional provisions be

prioritised.

viii) That the Ministry of Defence be given top priority which will enable it to undertake recruitment and training and to ensure that there is adequate and competent manpower to defend the country. It is necessary to have a phased out approach to cover vehicle purchases over the coming five years. There is need to have a high level of alertness to comprehensively and effectively execute rescue operations in times of floods and other natural disasters. The ministry feels that an additional $4.8 million is required for this purpose.

Ministry of Home Affairs was allocated (US$364 183 000).

1.0 Introduction

1.1The Ministry of Home Affairs' mandate is to make the country a safe and secure place to live through maintenance of public order and security, control of entry into and exit out of Zimbabwe's borders, issuance of primary documents and preservation of cultural heritage.

The ministry is made up of one support department (Administration and General) and other technical departments namely, the Immigration Department, Zimbabwe Republic Police, the Registrar General's Office, National Archives and the National Monuments and Museums of Zimbabwe. The Zimbabwe Anti-Corruption Commission (ZACC) also falls under this ministry.

1.2 The ministry's major policy priorities for the period are maintenance of law and order, infrastructure development, adoption of e-passport and automated fingerprint identification system, introduction of e-passport computerised payments system, e-banking and realigning existing policies with the new Constitution.

2.0 Overview of the Ministry of Home Affairs' 2014 Budget.

2.1Your committee was informed that the Ministry of Home Affairs was allocated US$364 183 000 which is 12.2% of the 2014 budget allocation. The ministry is ranked third in the order of national priority allocation. However, its allocation reflected a standstill budget since it remained the same as that of 2013. During that period $365 083 925 was released to the Ministry of Home Affairs. Your Committee noted with dismay that in 2014, only $364 183 000 was allocated to the Ministry, a figure which is less than what was released last year. The total allocation is to be shared among various departments as follows:

Department

2013

Allocation

2014

Allocation

Percentage

change

Administration and General

$6 376 164

$8 610 000

35%

National Archives

$762 844 164

$1 412 000

85%

Immigration Control

$2 263 796

$4 097 000

80.1%

Registrar General

$14 187 862

$14 083 000

-0.7%

Zimbabwe Republic Police

$341 259 000

$335 981 000

-1.6%

TOTAL

$365 083 925

$364 183 000

-0.24%

2.2 Your committee learnt that the 2014 budget allocation is actually lower than that of 2013 hence the serious challenges to the ministry in terms of exercising its mandate. The ministry also registered significant achievement even though operating under an environment characterised by financial resource constraints. These achievements were attributed to the retention scheme which supplemented the budgetary gap. Some of the achievements realised were that it enabled peaceful referendum and harmonised elections in 2013. It created an incident-0free environment during the hosting United National World Tourism Organisation (UNWTO) General Assembly. It increased crime detection from 35% to 50%, reduced crime rate by 35, installed the new synthetic polythene ID system and the population system at 10 district offices, completed construction of Mutoko District Registry, Registered voters and updated the voters' roll, introduced the e-visa system, introduced machine generated receipts at all major ports of entry, acquired shelving to improve preservation of archives, proclaimed nine new sites for national monument status and revamped Khami Site Museum and National Monument.

3. Observations

3.1In 2013, the ministry accumulated outstanding debts to service providers amounting to $45 878 000. The Zimbabwe Republic Police (ZRP) owed $44 900 000 to other service providers for utilities and other service charges such as rent. Your committee was disturbed to note that while Treasury is aware of the existence of this debt, it has not provided any financial means to service it. This has resulted in the name of the Ministry being compromised as a bad debtor. In 2014, only

$8 086 000 was allocated to all departments of the ministry.

3.2 Further observations by your committee are that the Treasury sometimes does not fully release allocations to the ministry as per the budget presentation. This has the effect of overstraining the cash-strapped ministry. The ministry has incomplete Public Sector Investment Projects (PISP) such as the CID headquarters in Harare, AFIS project, Chiadzwa Police Station and the INTERPOL building. All these were grossly underfunded. The 2013 projects were allocated $10 520 000 and only got $1 607 000. Non-disbursements of funds for such projects further paralyses their completion.

Furthermore, the ministry requested $17 070 980 for the same projects in 2014 and was allocated only $10 945 000, an amount which is a paltry $425 more than what was allocated in 2013. The construction of the District Registry offices countrywide and the Central Registry were allocated $2 100 00. However, only $643 594 was released. Also in 2014, the ministry requested $5 400 000 from Treasury but only $3 070 000 which was insufficient for the completion of the construction of works.

Your committee was also disturbed to note that the $1 000 000 allocation meant to cater for Maitengwe office block and Mutare block of flats was never released. This implies that all incomplete projects will take longer than necessary to complete thereby stalling the ministry's operations. Failure by the ministry to disburse the initial allocations to cater for various items of the Ministry distorts the budget and this violates the Constitution. As a result, planning and implementation by the ministry, becomes very difficult. The budgetary gaps remain a challenge especially for ZRP which has a bid of $201 103 740 for recurrent expenditure and was allocated a paltry budget of $26 576 000 in 2014. This represents 22% of the 2014 annual bid for recurrent expenditure allocation.

The acquisition of goods and services particularly uniforms and stationary for immigration personnel and the Police Force Services, office supplies and services, training and development and institutional provisions is not possible. The ministry has critical maintenance works on water and sewer reticulation which needs immediate attention for example; Mukumbuura, Nyanga, Marimba, Nehanda and other various stations. Moreso, the transport fleet is aged hence the need for new vehicles, furniture and equipment but the items are grossly underfunded.

Seven thousand (7 000) vehicles need major service but there are two incomplete service factories for the ministry and only $5 786 000 was allocated across all the departments. Some departments are understaffed while some are in dire need of uniforms and other goods and services but, are grossly underfunded for example, the Anti-Corruption Commission, Immigration Department, National Archives and ZRP, are cases in point. The ministry's departments are computerising their systems to improve efficiency in their operations.

However, it was noted that the computerisation programme was inadequately funded hence may not soon be completed considering that funds from the retention scheme cannot be used for capital projects. Your committee noted that there is a violation of the National Museums and Monuments of Zimbabwe Act by the Department of Parks and Wildlife Management over Victoria Falls where it is collecting revenue. The revenue collected from Victoria Falls could help to supplement the underfunded department of National Museums and Monuments if resolved. Everybody knows that Victoria Falls is an international monument registered with (UNESCO) and rightly falls under the Ministry of Home Affairs.

4. Recommendations

In light of the above observations, your committee made the following recommendations that all funds allocated to the ministry have to be released timeously. Your committee appreciates efforts made by the Ministry of Finance to allow the Ministry of Home Affairs to maintain retention so that it continues to supplement its budget. The ministry has to be allowed to maintain the Retention Fund Scheme so that it can supplement its budget.

The amount of retention of funds by Immigration Control should be increased.

Recruitment in departments with critical manpower shortage such as the Immigration Control, Anti-Corruption Commission and National Archives should be allowed.

The ministry must be capacitated, especially ZRP in the fight against the scourge of corruption within its ranks.

The Anti-Corruption Commission should be capacitated to reduce pilferage of minerals and other wealth which may add to the national fiscus by using internal systems.

Similarly, the Registrar General's Department and Immigration Control should be capacitated to fight the level of corruption in the country.

That Treasury prioritises outstanding items and projects and increases funding towards them, for example, the construction works, maintenance, goods and services and the computerisation programmes.

Treasury has to provide debt relief to the ministry, especially to cover utility bills and other service charges.

Your committee recommends that the violation of the Zimbabwe National Museums and Monuments Act by the Department of Parks and Wildlife Management over Victoria Falls be resolved as a matter of urgency in order to allow the revenue collected from Victoria Falls to fund operations of the Department of National Museums and Monuments. I thank you.

ANNOUNCEMENT BY THE DEPUTY SPEAKER

ZANU PF CAUCUS MEETING

THE DEPUTY SPEAKER: Order, all hon. members from ZANU PF are requested to attend a caucus meeting at the party's headquarters tomorrow at 9:00 am.

MR. MATUKE: Introduction

The Committee on Mines and Energy has an oversight responsibility over the Ministries of Mines and Mining Development and Energy and Power Development. The Post Budget review notes that Treasury has made mining the cornerstone on which the economy is going to grow. However, we note the low allocation to some critical areas in both the mining and energy sectors.

The Ministry of Mines and Mining Development allocation has increased from USD 7 078 000 in 2013 to USD 8 646 000 in 2014, which is a 22.2% increase compared to the 2013 budget allocation on the same. The Ministry of Energy and Power Development allocation has also increased marginally by 12.90% from the 2013 budget figure of USD 20 766 000 to USD 23 445 000 in the 2014 budget. The increase in allocations, though welcome are seriously inadequate given the critical economic responsibilities carried by the two ministries as highlighted in the Government's Economic Blue Print ZIM ASSET.

The committee wishes to express gratitude to the Permanent Secretaries of the two ministries and their officials for availing themselves for the post budget analysis meetings.

2. Ministry of Mines and Mining Development

OVERVIEW

The role of the ministry is to formulate policies that enhance sustainable mining and marketing of resources for the economic and social well-being of the country's citizenry, ensuring compliance with statutory obligations and reducing leakages in the mining sector. However, the committee notes that the ministry has had challenges in dealing with leakages through smuggling and undervaluation of minerals and precious metals. The Macroeconomic Framework in the budget notes that there is lack of transparency and accountability in the exploitation of resources. If the full economic benefits to the citizenry are going to be realized, the Ministry of Mines and Mining Development should put in place policies that increase transparency, accountability and build investor confidence.

2.1 Human Resources and Employments Costs

The allocation for employment costs for the ministry is not in line with the duties and the increase in manpower in the ministry that arise due to the responsibility placed on mining for the achievement of the economic growth. The Ministry of Mines and Mining Development is a highly technical institution that employs technical and professional staff. These employees are in high demand elsewhere, thus there is high staff turnover in the ministry. Currently, the ministry has 312 employees instead of the required 624 and this compromises service delivery. The committee notes with concern that the ministry has a shortage of skilled and experienced personnel, for instance, surveyors, metallurgist and geologists due to unattractive packages. Attractive and retention packages should be offered for this highly technical staff so as to reduce labour turnover within the ministry.

2.2 Mining Promotion Corporation

The criticality of the exploration company is underscored in the 2014 budget. The Portfolio Committee has been advised that the exploration company has been dormant since 1981. Therefore, the ministry made a request of US$ 7 793 148. Of this amount US$4 200 700 was earmarked for capital expenditure and US$3 592 488 for operational expenditure in 2014. In the course of the three years to 2016, the exploration company would require at least US$23 million for it to be fully operational. The committee realises the importance of this company hence the need to fund it to its requirements for 2014 and evaluate progress thereafter. The committee recommends the capacitation of geological surveys with staff to update the geological maps on the extent of minerals in the country.

2.3 Motor Vehicles and Equipment

The committee notes with concern that the amount allocated for motor vehicles is not in tandem with the field work involved in surveillance and statutory inspections nationwide. The committee is also advised that the ministry has unreliable, unsuitable and high maintenance cost vehicles. The committee appreciates the limited revenues. However, there is strong need for Treasury to provide adequate funds for equipment and motor vehicles to the ministry for surveillance and inspections of the country's minerals not to be compromised in 2014.

2.4 Capital transfers-Zimbabwe School of Mines

The Zimbabwe School of Mines had targeted distant learning for miners and artisan small scale miners. However, they are likely not to complete the project due to limited funds allocation by Treasury. The committee notes the noble idea of assisting small scale miners through the Zimbabwe School of Mines. However, the committee is concerned with the dependency of the Zimbabwe School of Mines on the fiscus, yet it charges fees and provides training even to international students. The committee therefore, argues that the School of Mines should run viably and be able to cater for its own capital expenditure from the income they generate.

2.5 Current Transfers

The ministry got an allocation for the Mining Industry Loan Fund of US$460 000 in 2014 which is a 54 % decrease from the 2013 figure of US$1 million. The committee is concerned that, given the number of small scale miners and the capital intensive nature of mining activities, the amount falls far short from the expected demand.

2.6 Platinum; Chrome; Diamonds and Nickel Refineries

The committee welcomes the decision to put timelines on the setting up of the refineries and advises on the need to stick to the deadlines and penal provisions to allow for beneficiation of local resources which has an effect on export value and therefore on the current account.

On chrome, the committee also welcomes the continued ban on export of unbeneficiated chrome as it ensures value addition by chrome miners and smelters for the benefit of the country. The committee, however, calls upon Treasury to provide financial allocation for smelters so that chrome ores are smelted.

The committee notes that nickel is exported as concentrate but smelters and refineries are in the country. Therefore, Treasury needs to provide funding for the resuscitation of the refinery and smelter.

The committee also appreciates the move to zero-rate local sales of diamonds to allow the beneficiation before exportation.

2.8 Small Scale Miners

The budget also allows for formalisation of small scale miners. The committee appreciates the initiative and calls for capacity building programmes for these small miners. Also, the regularisation of activities of small scale artisanal gold miners through an Act of Parliament will ensure they play a role in economic growth and poverty reduction.

2.9 Conclusions and Recommendations

1. A gloomy picture is painted on the resources allocated to the Ministry of Mines and Mining Development.

2. The extent of Zimbabwe's mineral wealth is not known.Therefore, there is an urgent requirement to capacitate the exploration company to ascertain the country's wealth and make use of this for purposes of policy making and planning.

3. Support should continue on small scale miners in terms of finance; skills and tax incentive to ensure they contribute to the fiscus and create employment.

4. Ensure transparency and increase surveillance in the mining sector, especially the diamond sector.

5. Timelines set on platinum refinery should be adhered to and penal provisions should apply.

6. Extra budgetary support should be provided for equipment; employment costs; technical staff attraction and retention.

7. Adequate financial resources should be availed for suitable all terrain motor vehicles for technical staff to carry out monitoring; surveillance and geo-survey.

8. Government should have consistent policies, clear and transparent rules in the mining sector. This eliminates room for corrupt tendencies and also ensures individual investors have less room to negotiate for special treatments.

9. Policies on value addition for all minerals; chrome, diamond, platinum and gold should be pursued and implemented religiously.

10. Mining claims should have clear utilisation timelines. Failure to adhere to that should result in repossession of the mining claims. However, this has to be done with perfect information to all stakeholders so that there will not be abuse of power by those monitoring the timelines.

11. The Ministry of Mines must introduce grants for school students at the Zimbabwe School of Mines, then bond them to the Ministry of Mines for a certain period of time. Therefore, the committee calls upon Treasury to allocate more funds to the ministry to cater for this.

12. Ministry of Mines together with Fidelity Printers and Refineries should be the ones to award gold buying licences as they are the ones who are able to supervise the gold buyers.

3. The Ministry of Energy and Power Development

Overview

The Ministry of Energy and Power Development has the mandate to provide an enabling environment for the production, transmission and distribution of adequate, reliable, affordable and sustainable energy. The ministry budget allocation for 2014 has a marginal increase of 12.9% from the revised 2013 budget of US$20 766 000 to US$23 445 000 in 2014. Although the budget allocation falls short of requirements, this has not been the major challenge. The greatest challenge has been non-release of funds by Treasury. In 2013, Treasury released US$2 159 528 00 only by 31st December 2013, which is about 10% of the allocation. This non-release of allocated funds has a detriment effect on projects which were earmarked for 2013. The Portfolio Committee therefore, notes with concern this inadequate release of funds by the Treasury and its effect on the attainment of macroeconomic objectives as energy is key to industrial and overall economic productivity.

3.1 Employment costs

Though the Civil Service Commission has proposed cuts on human resources, employment costs appear to be on the low side considering the Civil Service is negotiating for reviews. However, the committee was advised that technical staff will not be affected by staff cuts as the ministry needs to retain skilled technical staff. The committee calls for employees in the energy sector to change their attitude towards work and do away with corrupt tendencies.

3.2 Goods; service and maintenance

The amount allocated for goods, services and maintenance for 2014 is adequate. The onus is on Treasury to release the whole amount for the ministry to fulfill its mandate. To this end, the committee commends Treasury for adequate allocation but however, calls upon Treasury to release the allocated funds.

3.3 Current Transfers

The ministry is the country's liaison officer and bears the responsibility for payment of International Atomic Energy Agency (IAEA) as the country's obligation. The committee is concerned that the amount allocated will only cater for 2013 arrears and partly 2014 subscriptions. Given that the allocation mainly covers arrears payments, the country will not be able to benefit from the proposed 6 projects in 2014 in the fields of Agriculture; Crop and Water Management in Health, i.e. Nuclear Medicine and Radiation Safety. The committee is concerned by the failure on Treasury to fully allocate funds for such beneficial programmes.

3.4 Coal Bed methane (CBM)

The amount allocated for coal bed methane for 2014 is US$64 000. Although this is a 106.45% increment on the 2013 figure of US$31,000, it is not adequate for CBM requires millions of dollars for its implementation. This amount could have optimum benefits if allocated under mini hydro power.

3.5 Rural Electrification Agency (REA)

REA has the responsibility for providing infrastructure to rural areas, rural schools, business centers and clinics. The committee commends REA for progress made so far where 50% of rural primary schools; 70% of rural secondary schools; 80% of rural health centres and 80% of the chiefs' homesteads now have electricity. The focus for REA until 2012 has been grid extension and the committee commends the ministry on a job well done. However, the committee is concerned with the release of funds by Treasury. The committee notes that REA has now extended its mandate to renewable energy, that is, biogas and solar energy. REA now has 56 biogas digesters. In the 2014 budget, REA requested for US$1,1million but however, nothing was allocated and the biogas project will not take off unless a supplementary budget is provided.

3.6 Mini Hydro Power Plants

The budget allocation for the project in 2014 is US$100 000. This is a welcome development since in 2013; no allocation was made for this purpose. The committee was advised of a partnership between the fiscus and the Chinese to finance the project to the tune of US$5 million. The committee would like to encourage the Government to ensure that all major dams be constructed in future; and where possible should have a mini hydro power station to address the power shortages facing the country. The budget highlights that the Ministry of Finance and Economic Development shall issue Diaspora bonds. If this is implemented, it will alleviate funding shortages for these power projects.

3.7 Solar Lanterns and Solar Mini Grids Systems

The committee was advised that ZESA had a tender for solar lanterns with at least 25% of local content and there were no takers. The committee commends the budget allocation for solar mini grid systems.

3.8 ZESA

US$10 million was allocated by Treasury to the project with a Memorandum Of Understanding already signed with EXIMBANK of China to finance Kariba expansion to the tune of US$319 million. Negotiations are underway for expansion of Hwange Power Station and ZESA is in the market to obtain funding for various power augmentation projects.

ZESA continues to roll out prepaid meters for domestic consumers with 330 000 prepaid meters installed, although they are falling short of demand. ZESA should incentivise consumers to move renewable energy like solar water geysers.

3.9 National Petroleum Infrastructure Company of Zimbabwe and Petrotrade

The committee notes with concern that the officials from the ministry did not make adequate representation on the fuel sector. On the issue of mandatory blending, the committee could not establish who is benefiting and if there are any benefits on ordinary citizens and the economy as a whole. The committee notes that there is no marked change in pricing from the previous petrol blend and ethanol blending taking place now. However, the committee welcomes the reintroduction of excise duty on ethanol as this will boost the revenue income of the country.

4.0 Conclusions and Recommendations

1. ZESA should be run as a profitable business which declares a dividend to Government.

2. The energy sector should embark on education awareness campaigns on the need to pay for power; also address investor fears on the tariff structure and ability of players to collect owed amounts.

3. Parastatals under the ministry must pay wages above Poverty Datum Line to curtail abuse of resources by staff.

4. ZERA should avail themselves in future portfolio meetings so that their contributions will be considered.

5. Extra budgetary support should be provided to finance renewable energy. The committee notes that this will reduce pressure on ZESA to focus on industrial power supplies and renewable energy for domestic users.

6. For biogas, digester project institutions have to be trained and finance this source of energy on their own.

7. The committee notes that reduction of grid for domestic users, though a highly charged social political avenue, there is need for it to be adopted in the short term to ensure power is provided for industry.

8. The drop in gold prices has forced some miners to negotiate for lower tariffs and this should not be accepted as we have to adopt the user pay principle

9. Government should take measures to ensure power generation projects such as the Gokwe -Sengwa and Batoka Project take off the ground to address challenges in the electricity sector.

10. ZESA should open agents for payment of bills and payment of prepaid meters to reduce unproductive queuing and costs to consumers.

11. Extra budgetary support should be provided for the subscriptions to IAEA to allow the country to benefit from 2014 projects which are alluded to in the report.

12. There is need to ensure that mandatory blending benefits the economy with price of ethanol blended petrol being sold at reasonable and attractive prices to consumers.

13. There is need for private players in the generation of power.

 

W t5.45 - 5.55 21/1/14

MR. DEWA: Thank you Madam Speaker for allowing me to present the report of the Portfolio Committee on Media, Information and Broadcasting Services - Vote 20.

1.0 Introduction.

The Portfolio Committee on Media, Information and Broadcasting Services analysed the 2014 Budget allocations for the Ministry of Information, Media and Broadcasting Services and received oral submissions from the Ministry officials' observations and analysis. The Ministry plays a key role in promoting public communication and image building both locally and internationally. However, this vote was grossly underfunded in the 2014 budget as evidenced by the Ministry's requirements and funding history. This gross underfunding has contributed to numerous operational challenges in the Ministry. While it is acknowledged that Treasury increased the allocation to this Ministry by 18.8% when compared to that of 2013, the discrepancy between the Ministry's bid and actual allocation is worrisome. Thus it should be noted that without adequate funding, this Ministry's priorities will not be achieved.

2.0 Overview of the Ministry of Information, Media and Broadcasting Services.

The Ministry's mandate is to build good image of the country, promote public communication and information dissemination. The Ministry has six departments which are; Rural Communication, Urban Communication, International Communication, Media Services, Content Development and Administration and General. It also has seven parastatals namely Transmedia, Broadcasting Authority of Zimbabwe, Zimbabwe Media Commission, New Ziana, Zimbabwe Broadcasting Holdings, Kingstons and Zimbabwe Film and Television School of Southern Africa.

3.0 Policy Priorities: 2014-2016.

· Digitalisation of broadcasting studios.

· Purchasing of signal distribution and digital terrestrial

equipment.

· Propagating the Zimbabwean viewpoint internationally.

· Building content for national and international communication.

· Completing the broadcasting licensing process.

· Completing the establishment of directorates for the Ministry.

· Capacity utilisation and brand positioning.

· Bridging the rural-urban information and digital divide.

· Fill in the remaining twenty-seven District Information and four provincial Information Officer posts.

4.0 Overview of the Ministry's Budget Allocation.

The Ministry was allocated US$8 730 000 which translates to 0.2% of the 2014 national budget and is one of the five least prioritised Ministries on national priority ranking. This is gross underfunding given that it had submitted to Treasury a bid of US$128 372 940 to cover its priority programmes. The amount allocated translates to 6.8% of the initial bid. In 2013, only $3 661 093 was disbursed to this Ministry by November, resulting in failure by the Ministry to meet the December 2013 SADC deadline for digitalisation. The inadequate funding will negatively affect 2014 core activities of the Ministry. The budgetary bids and allocations are summarised below:

Table 1:2014 Budget Allocations and Variances.

Institution

Bid (US$)

Allocation (US$)

% Allocation

Variance (US$)

% Variance

Head Office

$4,650,517

$3,426,000

73%

$1,224,517

26.33%

ZBC

$75,978,803

-

0

$75,978,803

100%

Transmedia

$29,494,330

$3,693,000

12.52%

$25,801,330

87.48%

New Ziana

$1,633,200

$660,000

40.41%

$973,000

59.59%

BAZ

$1,592,290

$330,000

20.98%

$1,258,290

79.02%

Zimbabwe Media Commission

$2,867,800

$357,000

12.45%

$2,510,800

87.55%

Film School

$803.000

$260,000

32.8%

$543,000

67.62%

Kingstons

$11,353,000

-

0

$11,353,000

100%

Total

$128,372,940

$8,730,000

6.8%

$119,642,940

93.20%

The table above shows very significant differences between what the Ministry bidded for and the allocation awarded. All the parastatals were allocated less than 50% of their bids and this is likely to stall their operations. Both Zimbabwe Broadcasting Corporation and Kingstons were not allocated any funds in 2014 regardless of their dire need for financial resources to fund their operations. It is also very worrying that the allocated amounts may not be disbursed in full.

5.0 Observations and Budget Implications.

5.1 Transmedia.

Ø Transmedia is in the process of migration from analogue to digital and this is an outstanding issue. It aims to meet the 2015 International Telecommunications Union (ITU) digitalisation deadline which it once failed to meet in December 2013.

Ø It should be ready to host twenty- five new radio stations hence more funding is required.

Ø Each radio transmitter costs between $20 000 to $25 000 depending on the size of the transmitter. Therefore, the $3,693,000 is not enough to cover for these activities and other statutory obligations.

5.2 Broadcasting Authority of Zimbabwe.

Ø BAZ is in the process of finalising the broadcasting licensing process with about twenty-five radio stations expected to be licensed in 2014.

Ø The envisaged licensing of twenty-five new commercial radio stations entails requisite monitoring and more equipment. However, it is disturbing to note that no allocation was made for the purchase of the equipment which is valued at $418,000.

Ø The allocation of $334,000 to BAZ is gross underfunding and will result in serious operational challenges

5.3 Zimbabwe Broadcasting Corporation (ZBC).

Ø The institution is involving the Government to assume its debt which it incurred when solving the crisis situation that had rocked it. It is also subjecting itself to a forensic audit in order to expose any shortcomings at the institution and take corrective measures.

Ø The bid which it submitted to treasury had taken into account the retrenchment costs in anticipation of restructuring and downsising of ZBC but was not allocated any funds.

Ø Similarly, New Ziana is embarking on a downsising exercise as a cost cutting measure. The retrenchment costs for both institutions are $7,150,000 and were not catered for in the 2014 budget.

Ø It is disturbing to note that ZBC was not allocated any fund for its operations in 2014 yet it also needs to replace production equipment and its obsolete fleet meant for content production.

Ø No allocation was availed to the Ministry to cater for the Information and Publicity of the 34th SADC summit.

5.4 New Ziana.

Ø New Ziana is in the process of downsising staff and it also requires funding for its outreach programmes in rural areas by way of expanded rural newspaper distribution network.

Ø There is need for mobility when gathering news in rural areas and distributing the newspapers and this is an unavoidable cost. However, no allocation was availed to cater for this item which costs $1,000,000.

5.5 Zimbabwe Media Commission.

Ø Funding for the operationalisation of the Zimbabwe Media Commission is an unresolved issue from previous budgets and it has been overlooked again in the current budget. Commissioners have gone for over three years without even a single aspect of their conditions of service being met. The cost of that is US$1 157 800.

5.6 The Zimbabwe Film Training School.

Ø The Film school has three programmes lined up for 2014, which are:-

i. Procurement of studio equipment,

ii. Purchasing a school bus for outdoor content production programmes,

iii. Recruiting lecturers.

Ø The school had bidded $803 000 to cover these items and other routine operations. However, it was disturbing to note that the school was allocated only $260 000, which is just 32.4% of its bid and its disbursement is not guaranteed.

5.7 Kingstons.

Ø Both Kingstons and ZBC were not funded at all in 2013 and 2014 despite that Kingstons needs to cover its debt and replace its ageing fleet.

Ø Of the US$11 353 000 that was bidded for, nothing was allocated. This will lead to the ultimate collapse of Kingstons since it has gone for three years without Treasury's support.

Ø The Head Office was allocated $3 426 000, but out of this amount, $1 030 000 is used to cover employment costs. This leaves a paltry $2 396 000 for operations and is insufficient.

Ø No disbursement of funds by Treasury was made in 2013 towards New Ziana, Transmedia, Zimbabwe Film Training School and Zimbabwe Media Commission to cater for capital transfers regardless of the fact that there were allocations made initially.

6.0 Recommendations.

In light of the above observations, the Committee recommended that:-

Ø Government should provide necessary guarantee to ensure that allocated funds will be disbursed timeously to facilitate proper planning and implementation.

Ø Treasury should prioritise outstanding programmes and projects and increase funding to cater for the digitalisation process which is being executed by Transmedia so that it will meet the 2015 ITU deadline. This critical and outstanding programme of digitalisation has to be prioritised as a matter of urgency to improve efficiency in information dissemination.

Ø The creation of Media Development Fund needs to be expedited through Treasury support.

Ø More funds should be availed to the Broadcasting Authority of Zimbabwe to enable the institution to complete the licensing process and purchase monitoring equipment.

Ø Resources should be reserved to cater for retrenchment costs for ZBC and New ZIANA to a tune of US$7 150 000.

Ø Funds should specifically be reserved to serve communication and publicity during the 34th SADC Summit.

Ø Avail funds for training so that the employees keep abreast with the new technology used in the Ministry to improve operating efficiency.

Ø Prioritise and operationalise the Zimbabwe Media Commission and allocate funds to it for recruitment of personnel, purchasing vehicles, office equipment and other necessary items. In another related issue, the twenty-seven District Information and four Provincial Information Officer posts have to be filled in to operationalise the Ministry and this requires Treasury's financial support.

Ø Kingstons which has gone for years without Treasury support be prioritised and rescued from collapse through allocating funds for its current and capital expenditure valued at US$11 353 000.

7.0 Conclusion.

Communication plays a vital role in the global village. It fuels up economic growth. However, information production and dissemination requires sophisticated equipment which is very expensive. It is therefore important to consider revising upwards the funds allocated to the Ministry of Information, Media and Broadcasting Services to at least 60% of the initial bid. Failure to increase funding will result in serious challenges which distort the image of Zimbabwe.

MRS. CHIKWAMA: I rise to present a report of the Portfolio Committee on Public Service, Labour and Social Welfare, Vote No. 3.

12 INTRODUCTION

The Ministry of Public Service, Labour and Social Services is responsible for the recruitment, training and retention of public service personnel, critical for the delivery of public services as well as promoting fair labour practices and enhancing labour productivity and provides social services. The ministry falls under the Social Services and Poverty Eradication Cluster of the Zim Asset policy with the thrust of improvingthe living standards of the citizenry for an empowered society and a growing economy through implementing programmes that enhance improved service delivery by all public institutions.

12.12 OBJECTIVES OF THE MINISTRY

· To improve competence levels of 30% of members of the public service by December 2016.

· To improve access to the Ministry's institutions from 12% to 30% by December 2016.

· To increase from 15% to 50% the public services awareness and knowledge about public services by 2016.

· To raise the Ministry institutions technology uptake from 15% to 30% by December 2016.

· To provide social services to 50% of all orphans and vulnerable children by 2016.

· To enhance and regulate labour standards and practices.

· To increase access to social transfers by vulnerable populations from 10% to 80% by December 2016.

· To increase participation of vulnerable households in productive safety nets to 30% of rural non-labour constrained households by December 2016.

· To increase access to health services by vulnerable persons from 25 000 to 100 000 by December 2016.

· To increase compliance with the PVO Act from 6% to 20%.

· To rehabilitate community livelihood projects in 5 districts.

13 OVERVIEW OF THE BUDGET

The expenditure allocated to the ministry increased by 6.1% (from US$159 051 000 in 2013 to US$168 707 000 in 2014- an increase ofUS$9,656,000 in absolute terms). The same budget increased by 9.1% in 2013. This increase is slightly less than the 6.7% increase in the national budget. As a proportion of the total budget, there is a marginal increase of 0.46% in resources allocated to this portfolio; 4.1% in 2014 against 3.64% in 2013. It was 3.54% in 2012, 2.3% in 2011 and 2.5% in the 2010 budget. The marginal increase in priority is in response to the Zim Asset initiative of implementing programmes aimed at reducing poverty through improved service delivery. It is also important to note that the ministry is among the top 10 expenditure priorities of Government occupying position 8, as in previous budget.

14 ANALYSIS OF THE ECONOMIC CLASSIFICATION OF THE MINISTRY'S BUDGET

According to the ministry's budget, current expenditure increased by 6% while the capital expenditure increased by 24.2% in 2014. The bulk of expenditure in this ministry goes towards current expenditure which takes 99% of the vote allocation leaving 1% for capital expenditure. Of the current expenditure, employment costs takes up 80% of the budget which is 79% of the ministry's budget. This can be explained by the nature of the ministry as a service provision ministry. The budget items that witnessed increases in expenditure are goods and services (25.7%), acquisition of fixed assets (12.8%) and employment costs (7%). Decreases in expenditure will be witnessed in current transfers (35.9%), maintenance (27.3%) and Programmes (1.3%). In relation to the total budget allocation to the ministry, positive marginal changes can be noted with positives in employment costs. The increases in expenditure categories are basically a reflection of the increase in the budget estimate for 2014 with marginal priorities changes within the ministry. Table 1 shows the economic classification of the vote.

Table 1: Economic classification of the vote

Budget Item

2013 revised

2014

%change

proportion 2013

proportion 2014

Change in proportion

Current expenditures

157011000

166480000

6.0

98.7

98.7

0

Employment costs

124521000

133207000

7.0

78.3

79.0

0.7

Goods and services

5286000

6646000

25.7

3.3

3.9

0.6

Maintenance

905000

658000

-27.3

0.6

0.4

-0.2

programmes

26299000

25969000

-1.3

16.5

15.4

-1.1

Current transfers

510000

327000

-35.9

0.3

0.2

-0.1

Capital expenditures

1530000

1900000

24.2

1.0

1.1

0.1

Acquisition of fixed capital assets

1330000

1500000

12.8

0.8

0.9

0.1

Capital transfers

200000

400000

100.0

0.1

0.2

0.1

Total

159051000

168707000

6.1

100.0

100.0

0

 

15 ANALYSIS OF THE MINISTRY'S SUB VOTES

The ministry has 4 sub votes which are Administration and General, Labour Administration, Social Services and Training Centres. There has been an increase in resources allocated to these sub-categories from 2013 to 2014 except in the training centres budget item. The largest increase was recorded in the labour administration budget which increased by 59.6%. This indicates the need to refocus labour towards greater productivity and flexibility by amending the labour laws of the country. Small increases are recorded in administration and general (5.8%) and social services (3.7%) budget items while a decrease of 13.9% is noted in the training centres budget item. As a proportion of the total budget labour administration was prioritised at the expense of other budget items by 1.1 percentage points. This again explains the need to align labour to productivity. Table 2 shows the expenditure categories of the Ministry.

 

Table 2: Expenditure categories of the Ministry

Budget item

2013

2014

Change

Proportion of 2013 budget

Proportion of 2013 budget

Change in proportion

Administration and general

121480000

128576000

5.8

76.4

76.2

-0.2

Labour administration

3361000

5364000

59.6

2.1

3.2

1.1

Social services

30252000

31361000

3.7

19.0

18.6

-0.4

Training centres

3958000

3406000

-13.9

2.5

2.0

-0.5

Total Budget of Public Service

159051000

168707000

6.1

100.0

100.0

-0.2

 

15.12 ANALYSIS OF THE ADMINISTRATION AND GENERAL BUDGET ALLOCATION

Looking at the administration and general budget, only two sub items' budgets increased in 2014. These are capital transfers which will increase by 100% and employment costs which will increase by 6.9%. All the other budget items under this category will realise decreases ranging between 30% and 70%. As a proportion of the total administration and general budget, employment costs takes the bulk of the budget (98.3%) in 2014 compared to 97.3% in 2013. This shows the consumptive nature of the budget item. Also, two budget items increased marginally in priority that is employment costs by 1% and capital transfers by 0.1%. The increases in priority are compensated for by decreases in all other budget items' priorities by either 0.1% or 0.2% for each. Table 3 shows the distribution of the Administration and General budget.

Table 3: Administration and General budget

Administration and general

2013

2014

%change

Proportion 2013

proportion 2014

Change in proportion

Employment costs

118153000

126360000

6.9

97.3

98.3

1.0

Goods and services

1771000

1145000

-35.3

1.5

0.9

-0.6

Maintenance costs

297000

127000

-57.2

0.2

0.1

-0.1

Current transfers

510000

327000

-35.9

0.4

0.3

-0.2

Programmes

419000

127000

-69.7

0.3

0.1

-0.2

Acquisition of fixed assets

130000

90000

-30.8

0.1

0.1

0.0

Capital transfers

200000

400000

100.0

0.2

0.3

0.1

Total

121480000

128576000

5.8

100.0

100.0

0.0

 

 

15.12.1 EMPLOYMENT COSTS AS A MAJOR ITEM IN THE ADMINISTRATION AND GENERAL BUDGET

The employment costs budget as the major sub category of the administration and general budget witnessed an overall increase of 6.9% in 2014. The positive items are housing allowances which will increase by 40.3% followed by NSSA which will increase by 20% and PSMAS which will increase by 4.2%. The negatives are transport allowances (11.2%), basic salaries (6.1%) and other allowances (4.6%). As a proportion of the total employment costs of the administration and general, PSMAS constitute 79.1% followed by NSSA which takes away 19.9% in 2014 with the rest shared across other costs. The same budgets were 81.3% and 17.8% respectively in 2013. An increase in priority of the NSSA budget in 2014 was compensated for by the decrease in the PSMAS budget with the rest of other costs as a proportion of the total employment costs remaining constant. The increase in priority accorded to NSSA shows the increase in scope of work to cater for retired people. Table 4 shows the distribution of employment costs in the administration and general budget.

Table 4: Employment costs of the Administration and General budget

Employment costs

2013

2014

%change

Proportion 2013

Proportion 2014

Basic salaries

610000

573 000

-6.1

0.5

0.5

Housing allowance

181000

254 000

40.3

0.2

0.2

Transport allowance

187000

166 000

-11.2

0.2

0.1

Other allowances

175000

167 000

-4.6

0.1

0.1

National Social Security Authority

21000000

25 200 000

20.0

17.8

19.9

Premier Service Medical Aid Society

96000000

100 000 000

4.2

81.3

79.1

Total

118153000

126360000

6.9

100.0

100.0

 

15.12.2 ADMINISTRATION AND GENERAL BUDGET ITEMS CONSIDERED GROSSLY UNDERFUNDED

The ministry officials submitted the following budget items as being critically underfunded as shown in table 5;

Table 5: Administration and general budget items underfunded

Budget item

Bid (US$)

Allocated(US$)

% of Bid Allocated

Administration and General

     

Computerisation of Registry office

63,000.00

 

0

Motor vehicles

175,000.00

 

0

Construction works-ZITF Stand

150,000.00

60,000.00

40

Theministry needs funds to automate the registry office so as to improve on records keeping and ensure efficient service delivery. The department of administration also requires 5 pool vehicles at S$35 000 each. The department currently hires 14 vehicles at an average cost of $2000 per vehicle per month, which translates to $28000 per month or $336000 per year. The ZITF stand construction requires the stipulated bid as per the bill of quantities supplied by the Department of Public Works.

 

15.13 ANALYSIS OF THE SOCIAL SERVICES BUDGET

A marginal increase in the services budget is proposed in 2014; an increase of 3.7%. The budget to social services indicates that there is going to be an increase by 76.5% in funds allocated towards acquisition of fixed assets in 2014. This comes after the same budget item decreased by 49.3% in 2013.This is meant to increase operational efficiency of the ministry. Some increases were also witnessed in goods and services (37.9%) employment costs (7.2%) and programmes (1%). The negative is proposed in maintenance (50.6%). The general allocation reflects some compensating principle to the expenditure items previously underfunded.

The programmes budget takes the lion's share of the social services budget, taking 81.2% in 2014 compared to 83.3% in 2013 showing a decrease in priority as other items except maintenance which also decreased by 0.4% share the variance. We need to further explore the distribution of expenditure in this category to identify the extent to which it addresses the key priorities of the ministry. Table 6 shows the breakdown of the social services budget.

Table 6: Social Services budget breakdown.

Social services budget

2013

2014

%change

proportion of social service budget 2013

proportion of social service budget 2014

Current expenditure

         

Employment costs

3197000

3427000

7.2

10.6

10.9

Goods and services

1282000

1768000

37.9

4.2

5.6

Maintenance

233000

115000

-50.6

0.8

0.4

Programmes

25200000

25451000

1.0

83.3

81.2

Capital expenditure

         

Acquistion of fixed assets

340000

600000

76.5

1.1

1.9

Total

30252000

31361000

3.7

100.0

100.0

 

15.13.1 ANALYSIS OF THE PROGRAMMES BUDGET UNDER SOCIAL SERVICES

The programmes budget under Social Services is the main budget item constituting 81.2% in 2014.Under Programmes, the budget items which registered increases in resources allocated are Children in difficult circumstances (150%), Maintenance of elderly persons (96.5%), HIV/AIDS awareness (30%) and E-Government (25%). These budget items are considered critical and have been poorly funded in the previous budgets. Decreases in allocations are proposed in National Heroes' dependence assistance (50%) and Support to people living with disabilities (12.5%). The rest of other programmes will continue to receive allocations as in 2013. However, most budget items poorly funded are still critical for assisting vulnerable citizens and advancing the pro-poor budget initiative.

In relation to the total budget, the Basic Education Assistance Module continues to takes the largest portion of the budget on programmes (58.9%), and there has been no change in the resources allocated to the item. The remaining programme budget items share the remaining proportion. Table 7 shows the distribution of the Programmes budget under Social Services

Table 7: Programmes budget breakdown

Item

2012

2013

2014

%change2013

%change 2014

Proportion 2014

Basic Education Assistance Module

15,000,000.00

15,000,000.00

15000000

0

0

58.9

Children in difficult circumstances

400,000.00

200,000.00

500000

-50

150

2.0

Children in the streets fund

20,000.00

20,000.00

20000

0

0

0.1

Community recovery programmes

30,000.00

 

50000

-100

 

0.2

Food Deficit Mitigation Strategy

1,500,000.00

1,600,000.00

1600000

6.7

0

6.3

Government Social Protection Institutions

700,000.00

1,000,000.00

1000000

42.9

0

3.9

Harmonised Cash transfer

2,000,000.00

3,000,000.00

3000000

50

0

11.8

Health assistance

2,000,000.00

2,000,000.00

2000000

0

0

7.9

HIV/AIDS awareness

10,000.00

10,000.00

13000

0

30

0.1

Maintenance of Elderly Persons

60,000.00

200,000.00

393000

233.3

96.5

1.5

Millennium Development Goals

30,000.00

30,000.00

30000

0

0

0.1

National Heroes' dependence assistance

252,000.00

300,000.00

150000

19

-50

0.6

Paupers burial

100,000.00

150,000.00

200000

50

33.3

0.8

Poverty assessment Study survey III

60,000.00

   

-100

 

0.0

Private Voluntary Organisation Board

70,000.00

70,000.00

70000

0

0

0.3

Support to people living with disabilities

500,000.00

1,600,000.00

1400000

220

-12.5

5.5

E-Government

20,000.00

20,000.00

25000

0

25

0.1

Total

22,752,000.00

25,200,000.00

25451000

10.8

1

100.0

 

15.13.2 SOCIAL SERVICES AND CHILD WELFARE AND PROBATION SERVICES BUDGET ITEMS CRITICALLY UNDERFUNDED

The pro-poor budget initiative enshrined in several government blue prints including the current Zim Asset policy document will not be realised if some of the critical social budget items remain underfunded. The allocations fall short of achieving the basic goals of improving living standards of the poor and vulnerable citizens. Table 8 shows the budget items suggested by the Ministry considered grossly underfunded by Treasury.

 

Table 8: Underfunded budget items under social services and child welfare

 

Budget item

Bid (US$)

Allocated(US$)

Shortfall

% of Bid Allocated

Social Protection

       

BEAM

73,000,000.00

15,000,000.00

58,000,000.00

21

Child welfare and probation services

       

Community recovery and rehabilitation programme

94,000.00

50,000.00

44,000.00

53

Food deficit mitigation strategy

11,920,000.00

1,600,000.00

10,320,000.00

13

Maintenance of elderly persons

6,487,395.00

393,000.00

6,094,395.00

6

Health assistance

7,600,000.00

3,000,000.00

4,600,000.00

39

Street children fund

80,000.00

20,000.00

60,000.00

25

Children in difficult circumstances

1,364,453.00

500,000.00

864,453.00

37

Government social protection institutions

1,120,000.00

1,000,000.00

120,000.00

89

Millennium development goals

300,000.00

31,000.00

269,000.00

10

Harmonised cash transfers

23,000,000.00

3,000,000.00

20,000,000.00

13

Private Voluntary Organisation (PVO)

241,320.00

70,000.00

171,320.00

29

 

The Government should prioritise budget items that ensure the minimum basic standard of living to vulnerable citizens such as food, basic education, health and shelter. These are basic rights enshrined in the new Constitution of Zimbabwe. This is in light of poor rains received in the previous season, low industrial capacity utilisation and dwindling humanitarian assistance from development cooperating partners, thus increasing the number of poor and vulnerable citizens. Such people include those who cannot afford to pay school fees for their children, children in difficult circumstances (orphans or those whose parents/guardians are deemed unable to support them), elderly persons, street children and pronounced poor households. While some budget items are partly supported by donors, the global picture is that donor funding is currently under strain and the situation is likely to worsen. The Government also needs to disburse funding on budget items supported on a dollar for dollar basis by donors. The traditional situation of the Government waiting for donors to put their monies first and in some case ending up not providing any support to such budget items appears to have no place in this current budget. The key implications of the poor funding of critical budget items include;

· The current $15 million will cater for only 83 000 children against a target of 250 000 at secondary level at $60 per child per term leaving a gap of 167 000 children without access to secondary education. The $15million expected from donors to cater for primary education at a rate of $8 per child per term will assist 625 000 students against a target of 750 000 children if it comes, otherwise all the targeted children will drop out of school.

· A target of 5 700 children in 78 private orphanages require $15 per child per month which translates to $1 026 000 per year but only $500 000 was allocated. This leaves around 2 923 children without funding and such institutions may close down or downsize.

· Only a quarter of the street children identified will be rehabilitated by a budget of $20 000.

  • Government social protection institutions will only run up to the 3rd quarter of the year given a budget of $1000 000.

· A gap of $5 million dollars will reduce the number of beneficiaries for the harmonised social cash transfers.

· The allocation of $3 million for health assistance will all go towards clearing the outstanding health assistance bill. The health assistance is supposed to cater for 60 000 beneficiaries at a cost of $76 per person per visit.

· Only about 6% of the estimated 20 000 old persons will be assisted by the allocated $393 000 at a rate of $25 per person per month leaving a gap of 18 690 unassisted persons

· More than 75% of the estimated 1 848 000 people in need of food assistance will face starvation at the current budget allocation of $1 600 000 towards food deficit mitigation program.

· The current allocation of $31 000 against a target of $300 000 towards Millennium Development Goals (MDGs) means most goals may not be achieved and the crafting of Sustainable Development Goals (SDGs) will remain a dream.

· The community recovery and rehabilitation programme allocation of $50 000 against a bid of $940 000 means that improvement of livelihoods in the 5 initially targeted districts will not be possible, let alone to scale up to the envisaged 10 districts.

· The budget of $70 000 to the Private Voluntary Organisations (PVOs) budget item against a target of $241 320 will only cater for registration of PVOs, leaving other critical areas like monitoring, field visits and the gazetting of deregistered PVOs unfunded.

15.14 ANALYSIS OF THE LABOUR ADMINISTRATION BUDGET

Labour administration budget is proposed to increase by 59.6% in 2014 with major increasing sub budget items being acquisition of fixed assets (140%), goods and services (115.9%) and maintenance costs (63.6%). A marginal increase in employment costs of 10.3% is proposed while the programmes budget under this category is expected to decrease by 21.8%. The overall picture shows that some serious facelift of labour administration is expected in 2014 with the government's priority being to link labour to productivity.

As a proportion of the total labour administration budget, 58.9% will go towards goods and services; an increase from the 2013 proportion of 43.5% while 28.7% will be set aside for employment costs; a decrease from 41.6% in 2013. The rest is shared among the remaining budget items. The distribution is in line with efforts to attain the key deliverable of efficient labour administration. Table 9 shows the breakdown of the labour administration budget.

Table 9: Labour administration budget breakdown.

Labour administration

2013

2014

%change

%proportion 2013

%Proportion 2014

Employment costs

1398000

1542000

10.3

41.6

28.7

Goods and services

1463000

3158000

115.9

43.5

58.9

Maintenance costs

225000

368000

63.6

6.7

6.9

Programmes

225000

176000

-21.8

6.7

3.3

Acquisition of fixed assets

50000

120000

140.0

1.5

2.2

Total

3361000

5364000

59.6

100.0

100.0

 

15.14.1 LABOUR ADMINISTRATION BUDGET CRITICALLY UNDERFUNDED

The ministry indicated that some items under labour administration are in need of additional funding or new funding. Table 10 shows the underfunded labour administration budget items.

Table 10: Underfunded labour Administration budget items

Labour Administration

Bid

Allocated

% of Bid Allocated

 

Labour governance

5,947,804.00

3,415,160.00

57

 

Coordination of labour standards

412,500.00

107,640.00

26

National Employment Framework

303,525.00

79,200.00

26

Model employment office

100,000.00

26,000.00

26

Social dialogue

325,000.00

100,000.00

31

Industrial relations

     

Improvement of conditions of service

286,000.00

40,000.00

14

Establishment of collective bargaining council

     

Attending SADC, AU and ILO labour commission meetings

     

Monotoring public service association staff

     

Re-alignment of legislation to new constitution provisions

     

· There is need for labour law reform to align to the new fundamental rights in the world of work as enshrined in the new constitution.

· There is also need to restore the social dialogue between government, business and labour for economic development as advocated by the International Labour Organisation (ILO).

· Our labour standards should be coordinated to be in line with international best practices. This requires our labour officers linking up with regional and international labour organisations.

· The National Employment Service using the Model Employment Office should be able to register all job seekers and match them to employers.

15.15 ANALYSIS OF THE TRAINING CENTRES BUDGET

The Training centres budget on the overall decreased by 13.3% with all sub categories in red except a marginal increase in employment costs by 5.9%. Employment costs take the biggest share of the training centres budget and the budget item is proposed to increase in proportion by 10.3% in the 2014 budget. Table 11 shows the Training Centres budget breakdown.

 

 

Table 11: Training centres budget breakdown

Training centres

2013

2014

%change

Proportion 2013

Proportion 2014

Change in proportion

Employment costs

1773000

1878000

5.9

44.8

55.1

10.3

Goods and services

770000

575000

-25.3

19.5

16.9

-2.6

Maintenance costs

150000

48000

-68

3.8

1.4

-2.4

Programmes

455000

215000

-52.7

11.5

6.3

-5.2

Acquisition of fixed assets

810000

690000

-14.8

20.5

20.3

-0.2

Total

3958000

3406000

-13.9

100

100

0

15.15.1 CRITICAL ITEMS OF THE TRAINING CENTRES UNDERFUNDED

Training remains key to achieving high results due to the dynamic nature of development of an economy in a changing global village and especially during this period when two ministries are merging together. It is against this background that the ministry should have improved allocations towards training costs particularly for training of supervisors and trainers in RBM and provisions of the new constitution, training of civil servants in mandatory courses, capacity development of heads of institutes and curriculum review. The improvement of the budget on the training loan fund will go a long way in equipping civil servants with the requisite skills to execute mandates in a dynamic environment. Training centres such as ZIPAM should also be well equipped to generate incomes for the ministry and subsequently reduce the burden on the fiscus. Table 12 shows the underfunded Training Centres budget items.

Table 12: Underfunded Training Centres budget items

Manpower planning and development

       

Budget item

Bid

Allocated

Shortfall

% of Bid Allocated

Training of supervisors

500,000.00

107,000.00

393,000.00

21

Training of civil servants in mandatory courses

1,000,000.00

200,000.00

800,000.00

20

Training of trainers in RBM and the provisions of the new constitution

85,000.00

0

85,000.00

0

Capacity development of heads of institutes

30,000.00

6,000.00

24,000.00

20

Curriculum review

60,000.00

6,000.00

54,000.00

10

Training loan fund

800,000.00

200,000.00

600,000.00

25

Training centres

       

Murehwa Training centre construction works

400,000.00

276,000.00

124,000.00

69

Elangeni staff houses and borehole

200,000.00

 

200,000.00

0

Toronto Kitchen and dinning room

85,000.00

65,000.00

20,000.00

76

Chinhoyi hostel refurbishment

50,000.00

0

50,000.00

0

ZIPAM

6,493,800.00

200,000.00

6,293,800.00

3

16 CONCLUSION AND RECOMMENDATIONS

16.12 CONCLUSION

The following conclusions can be drawn from the analysis;

· The expenditure allocated to the Ministry of Public Service increased by 6.1% in 2014. This increase is slightly less than the overall increase in the National budget of 6.7%. As a proportion of the total budget, there is a marginal increase of 0.46% in resources allocated to this portfolio; 4.1% in 2014 against 3.64% in 2013. The increase confirms the greater role played by the ministry in the discharge of government business.

· The ministry is among the top 10 expenditure priorities of Government occupying position 8 as in 2013.

· The bulk of expenditure of the ministry goes towards current expenditure (98.9%) with employment costs taking up 79% of the budget. These are mainly operation expenses, capital expenses and social protection programmes. Such expenditures are critical in assisting vulnerable citizens and advancing the pro-poor budget initiative.

· Some critical budget items received no funding from the treasury. These include Establishment of collective bargaining council; Attending SADC, AU and ILO labour commission meetings; Monitoring public service association staff; Re-alignment of legislation to new constitution provisions; Training of trainers in RBM and the provisions of the new constitution; Child welfare and probation services; Elangeni staff houses and borehole; Chinhoyi hostel refurbishment, Vehicles and computerisation of the registry. These budget items are critical labour administration, social protection and operational efficiency items.

· While some budget items are partly supported by donors, the global picture is that donor funding is currently under strain and the situation is likely to worsen.

  • Theministry needs funds to automate the registry office so as to improve on records keeping and ensure efficient service delivery.

· The department of administration also requires 5 pool vehicles at S$35000 each. The department currently hires 14 vehicles at an average cost of $2000 per vehicle per month, which translates to $28000 per month or $336000 per year.

· The ZITF stand construction requires the stipulated bid as per the bill of quantities supplied by the Department of Public Works.

16.13 RECOMMENDATIONS

The committee made the following recommendations to improve the Ministry's functions;

· The Government should disburse money to all funds proposed in the blue book in the year in which they should be used.

· There is need to increase the overall operations budgets as most funds of the Ministry are absorbed by employment costs. The increase should be mainly on key priority areas that help the ministry to discharge its duties efficiently particularly the need for vehicles and computerisation of the Registry Office.

· Monitoring is essential for achieving high results and thus there is need to improve budget items that ensure adequate monitoring such as vehicles for domestic travel. Renting of vehicles is proving to be more costly than purchasing own vehicles. A case in point is the perceived lack of transparency on the selection of beneficiaries and overall use of funds allocated towards social service programmes like BEAM, Maintenance of Elderly Persons and Support to People Living with Disabilities.

· The Government should consider resuscitating income generating projects like ZIPAM and other training centres to reduce the burden on the fiscus as well as reduce the highly recurrent nature of the budget. Such institutions should be allowed to retain their profits for sustainable development. Funds retention should be increased from the current 10% to at least 60%.

· There is need to increase funding of key social protection budget items under social services. These include; BEAM, Food mitigation, Maintenance of Elderly persons, Children in difficult circumstances, Street Children Fund, Harmonised cash transfers, Health assistance. The maintenance of elderly persons and BEAM are very critical budget items that cannot be overlooked since they are enshrined in the new constitution of Zimbabwe. Besides, if the budget items assist a few people, the biggest question is how are such people to be selected? On the basis of failing to provide for constitutional rights to the people, it makes it very difficult for legislators to face the electorate. Providing inadequate funds to these budget items imply that the Government cares less about the basic lives of vulnerable citizens. Increasing allocations to these budget items will significantly change the lives of the vulnerable citizens. Increasing allocations to these budget items will also go a long way in making the pro-poor budget initiative a reality. The budget should reflect honesty in addressing poverty as enshrined in the Zim Asset blue print.

· The Treasury should consider funding critical budget items suggested for funding in the 2014 budget. These are Establishment of collective bargaining council; Attending SADC, AU and ILO labour commission meetings; Monitoring public service association staff; Re-alignment of legislation to new constitution provisions; Training of trainers in RBM and the provisions of the new constitution; Child welfare and probation services; Elangeni staff houses and borehole; Chinhoyi hostel refurbishment, Vehicles and computerisation of the registry. These budget items are critical labour administration, social protection and operational efficiency.

· The government should prioritise budget items that ensure the minimum basic standard of living by vulnerable citizens such as food, basic education, health and shelter. These are basic rights enshrined in the new constitution of Zimbabwe and the Zim Asset policy document. This is in light of poor rains received in the previous season, low industrial capacity utilisation and dwindling humanitarian assistance from development cooperating partners thus increasing the number of poor and vulnerable citizens. Such people include those who cannot afford to pay school fees for their children, children in difficult circumstances (orphans or those whose parents/guardians are deemed unable to support them), elderly persons, street children and pronounced poor households.

· While some budget items are partly supported by donors, the global picture is that donor funding is currently under strain and the situation is likely to worsen. Thus the Government should focus on internally generated resource mobilisation to fund its expenditure.

· The Government also needs to disburse funding on budget items supported on a dollar for dollar by donors. The traditional situation of the Government waiting for donors to put their monies first and in some case ending up not providing any support to such budget items appears to have no place in this current budget.

· There is need for labour law reform to align to the fundamental rights in the world of work as enshrined in the new constitution.

· There is also need to restore the social dialogue between Government, Business and Labour for economic development as advocated by the ILO.

· Our labour standards should be coordinated to be in line with international best practices. This requires our labour officers linking up with regional and international labour organisations.

· The National Employment Service, using the Model Employment Office, should be able to register all job seekers and match them to employers.

MR. MIDZI: Thank you Madam Speaker. I would like to present a report on the Portfolio Committee on Transport and Infrastructure Development.

As hon. members are aware, the Ministry of Transport and Infrastructure Development is mandated to provide and manage transport and transport related infrastructure and services throughout the development of this country. Its key result areas include transport infrastructure development and management, State enterprises and parastatals viability, safety management, among others. To successfully deliver on its mandate, the ministry depends on the fiscus.

2013 Budget performance review.

  • The ministry was allocated US$69.3 million in the 2013 financial year. However, as has become the norm, this figure was later revised downwards to US$62.5 million. Furthermore, out of the revised allocation only 61% was actually disbursed to the ministry. Despite the fact that the initial allocation was way below the bids submitted not mentioning the actual disbursement. The ministry managed to achieve the following within a very tight fiscal space:

a) Commissioning of the J. M. Nkomo Airport,

b) Completion of Phase 1 Harare Airport runway rehabilitation,

c) Completion and opening to traffic of 8,8 km of the Harare Mutare Road dualisation,

d) Completion and official opening of Manyame bridge,

e) Distribution of 80 motorised graders to rural authorities through ZINARA and the re-grading of 844km of gravel road among others.

While some of these projects have been completed and commissioned, the ministry still owes some contractors some money. A case in point is the J. M. Nkomo Airport; it is important to note that the entire costs of some of these activities were not borne by the ministry alone. For example, in the re-grading of rural gravel roads; local authorities, some Members of Parliament and well wishers assisted with fuel for the graders and other activities.

Ministry Key Objectives

The ministry's major priorities for the period 2013-2018 are:

1. Implementation of programmes in line with ZIM ASSET.

a) Parastatal reform and

b) Restructuring NRZ into three separate entities. That is the Regulatory Authority, Infrastructure Management Agency and Operations.

2. Restructuring of the Civil Aviation Authority of Zimbabwe (CAAZ) into two arms. A regulatory authority and operations, airports, air traffic control.

3. Rejuvenation of state enterprises and then,

4. Integrating governance and risk control.

Overview of 2014 Budget

The budget estimate for 2014 stands at US$4,12 billion which is a 6% increase from the 2013 revised estimate of US$3, 86 billion. In line with the trend in recent years, the greatest percentage, that is 72.7% goes towards employment costs. Then capital expenditure only 11, 9%, operations 15% and interest is 0, 4%. US$69 million was allocated to transport and infrastructural development representing a 10% increase from the 2013 revised estimate. This allocation is a way below the ministry's initial bid of US$1, 3 billion.

Given that only 61% of the allocation was disbursed in the previous period, the discrepancy between the bid and the accessed funds can only get bigger. Madam Speaker, the challenge that the ministry faces is that, despite the fact that it can be allocated certain figures, at the end of the day, the level of disbursement has always been low and that is the major challenge. There is an appeal here from the committee to the Minister of Finance to ensure that disbursement becomes timeous so that it does not delay the implementation of projects.

Current Expenditure versus Capital Expenditure

The proportion of allocations towards current and capital expenditure have not changed much from last year and that is 15% is going to capital expenditure whilst 16% is committed to current expenditure. Though these figures may seem favourable, when it comes to disbursements, the story is different. On average, the proportion of disbursed funds as a percentage of allocations is higher for current expenditure. That is 99% for 2013 as opposed to capital expenditure, only 46% for 2013. This of course, may be explained by the fact that certain allocations and commitments are not avoidable like employment costs but we still appeal as a committee to the Minister of Finance to ensure again here that the commitment to disbursements must be complied with.

Your committee again, Madam Speaker, looked at the issues that are faced by the ministry in as far as its other institutions and parastatals are concerned.

Concerning CMED, the Permanent Secretary said that, out of a bid of US$36,42 million, only US$5,5 million was allocated. US$20 million was meant for the conditioning of service vehicles and no allocation was made for re-capitalisation of moving equipment and re-tooling. As such, the entity shall continue to resort to sub-contracting.

Your committee observed that in relation to the issue of condition of service vehicles, the Government is sitting on a potential litigation, hence the issue needs much and speedy attention. Furthermore, when such conditions are not met, silent courts related to employee morale are incurred.

The ministry officials also informed your committee that the Roads Motor Service (RMS) submitted a bid of US$2, 6 million for the development of a dry port at Walvis Bay, but only got US$1 million. This project is of strategic importance to the economy as it gives us access to the sea and presents revenue generation opportunities for Zimbabwe. For instance, Zambia and Botswana which were also given land for such by the President of Namibia are making speedier progress than us.

The Permanent Secretary impressed upon your committee that, since some countries are concessioning their ports, that is making it difficult for us to export our products. Projects of this nature need to be pursued in other countries in the region, especially in Mozambique on the Beira to Tete front.

A case in point is a difficulty faced in the export of coal through Maputo as such special consideration is needed on the RMF bid. Your committee also raised concerns over the level of corruption in the Vehicle Inspection Department. In response, the ministry officials said that they are building and upgrading complexes which ensure that at least 8% of the tests take place in full view of the public. However, enough budgetary support is needed to finish some of the complexes. Examples are Chitungwiza and Bindura which were allocated funds below their bids. They are also coming up with an email or e-licencing initiative which will be financing under a BOT arrangement. However, your committee felt that more still needs to be done to curtail corruption in such entities.

Your committee also looked at the issue of other parastatals and cases in point are Civil Aviation Authority of Zimbabwe. They got only US$1,6 million out of a bid of US$4,6 million for paying the outstanding amount for the J. M. Nkomo Airport. Furthermore, bids for on-going work on runways and mordenisation of the airspace management system got no allocation at all. Work on the runway cannot start without the full requirement of funds. Tenders have since been floated for the modernisation project since budget allocations have not been forthcoming.

Your committee was also apprised of 14 roads and one bridge which have been put up for Build-Operate and Transfer (BOT). The point here is that the ministry needs to be commended for resorting to the option of BOT because this, then will assist in the face of the difficulties that the ministry is facing because they are receiving lower allocations from the Ministry of Finance.

I will now move on to our recommendations as a committee.

Recommendations

Your committee is making the following recommendations. Efforts should be made to assist Air Zimbabwe for recapitalisation and debt repayment. However, it is imperative that the Airline first comes up with a credible turnaround strategy to ensure that funds are properly and effectively used. The road levy of two cents a litre and one cent a litre on petrol and diesel should be adopted as it will go a long way in improving our road infrastructure. Efforts should be made to ensure that the Walvis Bay Dry Port is funded to completion as a matter of priority. Government should provide funds for recapitalisation and debt payment turnaround for CAAZ and that CAAZ are given money to complete other projects. Enough budgetary support extended to the NRZ as a robust railway network is critical to the economic development of the country.

Nevertheless, satisfactory governance and risk control measures need to be put in place in the entity. VID be supported and their infrastructure development projects as they can and curtail the corruption scourge while at the same time aligning its operations with SADC standards.

Conclusion

Your committee observed that the discrepancy between allocations and disbursements remain an area of great concern. The ministry obviously needs to look for other avenues outside the fiscus to finance its operations, otherwise little will be achieved by the ministry. I thank you.

THE MINISTER OF FINANCE AND ECONOMIC PLANNING (MR. CHINAMASA): I move that the debate do now adjourn.

Motion put and agreed to.

Debate to resume: Wednesday, 22nd January, 2014.

On the motion of THE MINISTER OF FINANCE AND ECONOMIC PLANNING (MR. CHINAMASA), the House adjourned at Twelve Minutes to Seven O'clock p.m.

 



[2] The analysis does not include the Supplementary Vote of $150 000 000 since this allocation was specifically for the harmonized general elections.

[3] This will be further discussed later in the report

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National Assembly Hansard Vol. 40 NATIONAL ASSEMBLY HANSARD - 21 JANUARY 2014 VOL. 40 NO. 23