You are here:Home>Senate Hansard>SENATE HANSARD 16 JUNE 2016 VOL 25 NO 58

SENATE HANSARD 16 JUNE 2016 VOL 25 NO 58

Download attachments:

PARLIAMENT OF ZIMBABWE

Thursday, 16th June, 2016

The Senate met at Half-past Two O’clock p.m.

PRAYERS

(THE HON. DEPUTY PRESIDENT OF THE SENATE in the Chair)

ANNOUNCEMENT BY THE HON. DEPUTY PRESIDENT OF THE SENATE

ESTABLISHMENT OF A MULTI-PARTY CONSERVATION CAUCUS

THE HON. DEPUTY PRESIDENT OF THE SENATE:  I wish to inform the Senate that Parliament of Zimbabwe would like to establish a Multi-Party Conservation Caucus to champion the realisation of the ideals of sustainable development conservation as well as ecological preservation and management.  This is in line with our zeal to meaningfully take part in various international programmes that promote sustainable development of our heritage and natural resources base.    Therefore, all Members of Parliament who wish to join the Zimbabwe Parliamentary Conservation Caucus should approach Hon. Wonder Mashange, who together with the secretariat of Parliament is coordinating this initiative.

ORAL ANSWERS TO QUESTIONS WITHOUT NOTICE

HON. SEN. B. SIBANDA:  Could I find out from the Minister of Finance and Economic Development how correct it is, that we have to wait until October for the bond notes to be in circulation and what are the reasons for that wait?

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA):  Thank you Mr. President Sir and I want to thank the Hon. Senator for asking that question.  Yes, it is correct that we should expect issuance of bond notes towards end of September-beginning of October.  This is so because, to get bond notes printed, it goes through various stages which include designing, origination and then printing.  The firm authorised or contracted to produce the bond notes advised us that it would take that long.  My apology of cause is that I have admitted on other forums and I think it is a mistake.  The mistake was that we made pronouncement on the issuance of bond notes prematurely.  I would have much preferred, with the benefit of the hindsight that we had done so to almost about the time we were issuing.  Thank you Mr. President Sir. 

HON. SEN. MUMVURI:  Thank you Mr. President.  I want to thank the Minister for that answer.  Now that there is time before the bond notes issuance, is there anything which Government is doing to mount awareness campaigns, especially to the rural areas, so that by the time you introduce this, everybody is in the know and we are able to support this including the Members of Parliament here. 

HON. CHINAMASA:  I want to thank you Hon. Senator for that advice and it will be taken to heart.  We will certainly take the opportunity to mount awareness campaigns in the rural and in the urban areas, as well as amongst Members of Parliament.  I must add Mr. President that we have had a very robust debate on the bond notes.  This is something that I treasure because it has helped us basically, to refine and clarify our own thoughts on the matter, so I am very delighted that we have had this kind of debate over this issue.  I want to assure the Hon. Senator that efforts will be made to raise awareness amongst the stakeholders.  I thank you. 

HON. SEN. MAKORE:  With regard to transactions of companies, within the liquidity that they will be having within their company, bond notes could be more than the US$ that we are using.  Is it transactable that at least those people can buy commodities from outside using those bonds?  Perhaps I can find clarity from the Minister. 

HON. CHINAMASA:  Firstly, I think I need to clarify to this august House that we have adopted a multi-pronged approach to addressing the cash shortage.  One of the approaches is to encourage the use of plastic money.  As I speak, over the past four or five weeks, we have seen a quantum leap in the usage of plastic money – an increase of more than 400 percent.  We are encouraging Hon. Senators here to resort to the use of plastic money because this will reduce the demand on the US dollar which as you all know, we do not print.  With respect to the specific question about transactions, the Hon. Senator needs to be advised again that, we are encouraging corporations and the greater portion of the plastic money usage has been popularised amongst corporates.  We hope that this multi-pronged approach will go a long way to assisting and reducing the demand on the US dollars. 

Additionally, we have a multicurrency system which became dysfunctional largely because the appreciating US dollar came to dominate the situation here; exacerbated by the fact that it was not circulating, people just come to withdraw, they do not come to deposit.  For an economy to run, you must have a currency which is circulating.  A unique challenge for Zimbabwe – by the way we are only one or three countries which use the US dollar for funding, both imports and domestic transactions but the trick always is, the money should circulate.  We use the US dollar both, as a store value, as a medium of exchange and to fund our imports.  Increasingly, people are taking money out of the financial service sector and storing it for value.  That is what has created the problem, hence the promotion of plastic money.  Thank you Mr. President. 

HON. SEN. TIMVEOS:  My question to the Minister of Finance and Economic Development is I am worried about bond coins and bond notes that want to be introduced in this country.  I am sure every Zimbabwean is worried.  I want to seek clarity on this issue, how are you going to make sure that when you have introduced these notes, you make sure that they stay with the value they have, to begin with. This is in view of the fact that I am looking at a country whereby US$15 billion can just disappear just like that.  Maybe the bond notes will be okay at first but because we do not have a solution on corruption, it will then end up without value. 

          My question might appear to others like…

          THE HON. DEPUTY PRESIDENT: Order! Can you go direct to your question?

          HON. SEN. TIMVEOS: I think the Minister has understood where I am coming from, so I want assurance from the Minister and more understanding on these notes.  I am sure the whole of Zimbabwe wants to know.  I thank you

          HON. CHINAMASA: I want to thank the Hon. Senator for asking this question because it is affording me an opportunity to clarify and clear a lot of misconceptions that have arisen through the announcement by the Central Bank Governor.

I am sure the public and a lot of Hon. Senators here, have missed the major thrust of the measures that were announced.  We do not print the United States dollar in this country.  When it started appreciating, it created problems for us and it appreciated when the currency of our largest trading partner South Africa, had a precipitous fall.  So we were caught between a rock and a hard place.  In order to address that issue, we realised that our foreign currency market was over-liberalised.  So the major thrust of the measures that we announced is to start a process of managing our foreign currency and prioritising its usage. Our foreign currency earnings come from primarily five commodities, tobacco, gold, platinum, ferrochrome and diamonds.  In other words, what we earn is hard earned; that foreign currency is hard earned. 

          However, as it was in an over-liberalised economy and market, we found that we were just being used as a fishing pond by other countries, unscrupulous traders and also that the currency was being used as a store value like I mentioned in answer to an earlier question.  It was not being used as a medium of exchange.  We use the United States dollar here to fund domestic transactions including kutenga mazhanje, ipwa, magaka, which no other country does.  Other countries build volts to keep and store United States dollars as a reserve currency.  In this country we were just open and therefore, open to any abuse.  So, the measures we are taking are to correct that situation.

          Coming to your specific question Hon. Senator; I am not worried and you should not be worried about the issuance of bond notes.  To start with, they will not lose their value - when they are introduced, they will be just like the bond coins.  When you asked, you also said you are worried about bond coins and I thought that was a slip of the tongue, I think you meant bond notes.  Yes, initially, when we introduced bond coins, there was a lot of concern and resistance.  Eventually, people came to demand issuance of bond coins, so the reaction that we are receiving, including the concerns you expressed, the worry; these were anticipated.  Whenever new things are coming in, we expect people generally to be averse to change even where change is in their interest.

          So, we do appreciate your concern and generally it is arising from what happened in the past, 2007/8, but I would like to say to the Hon. Senator and to this august House, we should never be a prisoner of the past.  The past should give us lessons and we should be able to use those lessons not repeat the mistakes which were made yester year.

 So, the value will not change, when the bond notes are issued, they are only issued as an incentive to exports.   The source of our foreign currency, of our United States dollars comes currently from two sources, exports and Diaspora remittances.  Diaspora remittances are not coming in a structured manner, the only foreign currency that comes in a structured manner is export because these are supervised and regulated by the Reserve Bank of Zimbabwe.  So, we want to give incentives to exporters so that they can increase their production and exports.  When we issue the bond notes, they are only going to be relative to the volume of exports that are being generated.   If Hon. Senator, you export US$100 worth of goods, we will give you US$5 on top so that your balance in the bank will reflect US$105 in order to incentivise you to produce more for exports so that we increase the stock of United States dollars.

*HON. SEN. MALULEKE: Thank you Mr. President.  My question is directed to the Minister of Finance and Economic Development, Hon. Chinamasa.  We have a complaint against our bank called Agri-Bank which does not have cash.  It is failing to pay wages, it is now requiring that our contract workers should open accounts with it. My Constituency is renowned for contract workers that work in the sugar cane industry.  I am appealing for your assistance in that regard.  I thank you. 

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA): We have discussed these limits because there were limits put on withdrawals.  In our discussion, we have been very clear that employers should be allowed to withdraw money sufficient to pay wages.  In this particular case, I am aware that this is the rule being followed by the RBZ.  However, I will refer your concern to the Central Bank so that the necessary directive can be given to afford sugar plantation owners that privilege also.

HON. SEN. MARAVA: I want to thank you very much Mr. President. My question is directed to the Minister of Finance and Economic Development, with the rate at which corruption has risen in this country and the loss the country has suffered, for example, Chiadzwa talk of the US$15 billion, the PSMAS issue and many more such instances where the loss has been incurred and the culprit is going scot free; do you foresee the country coming out of this quagmire and become financially competitive again on the world market?

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA): Very much, I foresee, I do.  In fact what makes me happy and sleep well is that I have great optimism that we have an opportunity to turn around the fortunes of this country.  I am fully conversant and aware of the challenges that we are facing because first and foremost, it is important to understand scientifically what the challenges are because unless you understand the correct and true nature of your problem, you cannot come up with strategies to overcome and sort out that problem. 

I think Government is fully aware of the challenges facing this economy and has adopted strategies.  It is adopting and implementing strategies and these strategies are at various stages of implementation.  Where I differ with a lot of people is that, all of us have a very short term view of solutions.  We all think that all solutions should come tomorrow.  I do not share that optimism.  What I believe needs to be done is, once you analyse a problem such as corruption, you take steps to rid this society of that menace.  To expect that overnight, when in fact corruption may already be embedded in the blood of our people, including maybe in the blood of even these distinguished Hon. Members, I think is to expect too much.

Government is taking steps and I can just to mention one or two.  We have taken steps, for instance, to fight corruption in ZIMRA because generally, importation at the border post is a source of corruption.  We  have taken steps basically, to introduce measures to fight that corruption which includes introducing CCTV at the border post, introducing a cargo tracking system for cargo that is declared at the border and destined say for Malawi, Zambia and DRC, which currently, we suspect is being dumped in Zimbabwe.  We have also taken many steps to help improve the systems. 

Next week, before a committee chaired by the Hon. Vice President here, we are also going to present our Public Corporate Governance Bill which will help sort out a lot of the challenges that we are facing in the parastatals, the State owned companies.  There, we want to ensure that systems are put in place to prevent corruption. 

I want to repeat what I have said elsewhere, Mr. President Sir, that corruption is a very complex crime.  It is not like murder and theft.  Corruption is different in that the briber and the person who has been bribed have both benefited and they are most unlikely to report each other to the authorities.  When they do so, it is because one of them has been short-changed.  So, what is critical in fighting corruption is to put in place systems that are transparent, that make management accountable to the shareholders.  Thank you.

*HON. SEN. KOMICHI:  How much cash is a person allowed to go to South Africa with?

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA):  I cannot give you that answer.  This is a detail that as Minister I should not worry about.  This is a detail that is fixed through the Central Bank in consultation with us and I cannot give you a figure right now.  I have no direct figure right now.  I am sorry.

*HON. SEN. MACHINGAIFA:  Thank you Mr. President.  My question is directed to the Minister of Finance and Economic Development.  Hon. Minister, when we were growing up, we used to enjoy banking our money and if you left your money without being withdrawn, you would get an interest.  If you deposit cash these days in a bank and leave it there, you find that the savings will dwindle.  Who is taking our money?

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA):  I agree with the Hon. Sen. Machingaifa that the current practice where a deposit depletes or reduces over time to come to a point where you actually owe the bank some money.  It is a matter that we are discussing with the commercial banks.  It is to do with the bank charges. 

They also argue that if you put your money in a demand deposit, which means you just put it and you can withdraw it the following day, it adds a cost to them in terms of putting the book entries and so on.  So, they advise customers to open what they call savings accounts which they can pay you interest because at least they know the money is going to be there for some time because banks use your deposits to on-lend to customers.  Banks do not have their own money which they on-lend to customers, they use depositors money.  Now, if depositors do not keep their money in the bank for a sufficiently long time, it means banks have no money to on-lend.  So, they encourage you to put the money in the savings.

We have also come up with incentives for six months and one year deposits.  We are encouraging that any income you earn from depositing on six months and one year accounts, we do not charge any tax.  This is because our savings threshold level in this country is very low.  We are probably something like 2% to 5% when in other countries it is normally 25%.  So, we need to encourage savings, but I take your point.  Put your money into the savings account and not in a current account because then, they charge you bank charges and so on.  Thank you.   

*HON. SEN. CHABUKA:  Thank you Mr. President.  My question is directed to the Deputy Minister of Industry and Commerce, Minister Mabuwa.  Are there any steps that you are taking as the overseers of the countries industries, about the issue of the Cold Storage Commission which has now been closed?  We are missing the meat that they used to produce.  Are there any steps you are taking to ensure that it bounces back?

THE DEPUTY MINISTER OF INDUSTRY AND COMMERCE (HON. MABUWA):  I thank the Hon, Senator for such a pertinent question.  Yes there are ways and means that we are taking to ensure that the Cold Storage Commission is revamped.  We are working in conjunction with the Ministry of Agriculture, Mechanisation and Irrigation Development.  There is a position paper which we have submitted to Cabinet, on how to restart the Cold Storage.  We have put a strategy in place which includes the sale of non-core assets of the Cold Storage Commission.

This is going to ensure that the national head is grown so that the viability of the Cold Storage Commission can be started.  I thank you.

                                                                                                                            

HON. SEN. MAKONE: Hon. Minister I want to go

back to the issue of the $200 million that is going to secure the $200 million bond notes equivalent. This money is going to be printed somewhere and theoretically, it is supposed to be one to one with the US$. How are we going to be sure that no more than $200 million worth of bond notes are going to be printed? How transparent is the process? What stops the printer from printing a billion dollars worth of bond notes and then there will be enough going around but only supported by $200 million worth? If we have got this $200 million that is going to be advanced to us which is going to be supported by the bond notes, why do we not use that money rather than the notes because if the equivalent is one to one, it means they are the same. Why not use them as US$200 million paper?

The third part concerning the same question, I know that the President might have been given an exaggerated figure of $15 billion but we take it that when he says $15 billion has been stolen from Chiadzwa, it is true. Assuming that even 10% is what was taken, which would mean $1, 5 billion that is 750% more than what we are borrowing to support the $200 million bond notes that are going to be here. Why do we not …

THE HON. DEPUTY PRESIDENT: Hon. Senator, you are not supposed to explain your question but just pose a direct question, otherwise you will be giving a speech.

HON. SEN. MAKONE: Thank you Mr. President. Why do we not use part of that money to support the $200 million bond notes in order to avoid having to borrow money which we will have to pay back even if we were to recover just a fraction of that money? Thank you.

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA): I thank the Hon. Sen. Makone for her question. I think there are a couple of them not related. I take it the procedures permit – [Laughter.] – but I will answer all the questions. First, you say the bond notes are theoretical. The reality is that the bond notes are interchangeable to the US$, which is why they are backed by a $200 million facility from Afrexim Bank. So, in value they are interchangeable, which takes me to your next question.

If that is so, you ask, why we are not just using the $200 million instead of printing $200 million worth of bond notes. The short answer is to fight leakages. Bond notes will not be used outside the country. Whereas, the $200 million - if we put it in today, tomorrow it will have disappeared. We are just like a sieve when it comes to our foreign currency which is why we are saying we issue in bond notes because bond notes circulation is limited to the territory of Zimbabwe.

I have said also on other platforms, given the fact that we are a porous market, we are over liberalised. If we brought in $2 billion today, tomorrow it will have disappeared. There are already sharks waiting for it. So, the measure is, apart from trying to support the incentive scheme to exporters, the measure is also to reduce the import bill because we are introducing a priority listing of what commodities can be bought using our foreign currency. We are hoping through the issuance of the bond notes which are relative to the volume of exports, that the leakages of our US$ will come to an end or will be reduced substantially.

THE HON. DEPUTY PRESIDENT: We have 12 people who are listed here to ask questions. Let us ask one question at a time and if a Senator asks several questions, just choose one and ignore the rest.

HON. SEN. CHIMHINI: My question is directed to the Minister of Finance. Minister, you have explained quite a lot about the cash crisis which we are experiencing but you have not indicated how soon we are going to get out of this mess because it is a pity to see people in bank queues and not getting their money. How soon are we going to get out of this mess?

HON. CHINAMASA: Matanga  zvinhu zvenyu zvekuti zvese zvinofanira kuita mangwana – [Laughter.] – At this point, all I can say is it is not easy to say clearly within what timeframe but I want to encourage Hon. Members. You see, it is a process and I am confident that when we follow the measures that we have taken; this problem will be behind us, but clearly we have until September/October for the issuance of bond notes which will go quite a long way to assist this problem.

You also need to know, like I mentioned earlier in answer to a question, that we are encouraging the use of plastic money. As I pointed out, within the past four weeks we have seen a 400% increase in the usage of plastic money, something that is very good. If a country has no banking system, meaning that all of us are not keeping our money in the bank, we have no economy. So, the measure we are taking is to encourage all of us to bank our money so that the financial system can operate efficiently and function. Circulation of money is the life-blood of an economy and what has caused us the problems is that the US$, which should be a medium of exchange is not circulating.

People are getting paid - whether it was through tobacco and can you imagine, last year tobacco sales by tobacco farmers fetched $600 million. Let us say of that, $400 million was produced by small scale farmers, all insisting to be paid in cash and in fact they were paid in cash. Having been paid in cash, we do not know where they put the money. So sometimes our success in the tobacco sector becomes the cause of our challenges, which is why we are now coming with the encouragement that they open bank accounts.

The same thing is happening with respect to gold production. We picked gold production from 13 metric tonnes in 2013 because of the fiscal measures that we adopted to 21,1 metric tonnes last year and artisanal miners whose activities we decriminalise are now contributing 40% of that and all of them demanding to be paid in cash. All we have been doing is withdrawing from the financial institutions but not depositing. So as long as you have a system where people are withdrawing and not depositing, it spells disaster to the economy and the measures we have adopted are to correct just that. I thank you.

HON. SEN. KHUMALO: Thank you Mr. President for giving me this opportunity to ask my question. My question is also going to the Minister of Finance and Economic Development.  Previously before 2008, people could open foreign accounts as well as domestic accounts.  The monies in the foreign accounts were used by anybody because people were encouraged to deposit their monies in those accounts.  Government also borrowed the money because these accounts were long term savings accounts.  The diaspora people at the present moment send United States dollars but people are afraid that it is going to lose value if they deposit it in the bank because of the likelihood of the introduction of bond notes. 

          THE DEPUTY PRESIDENT OF THE SENATE Order, are you asking a question?

HON. SEN. KHUMALO: Yes, is it going to be the same or profitable to have two accounts so that it can be money that people know they will not use, like the foreign accounts which were there before and people would send money knowing that the money would be in these foreign accounts?

          THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA):  I thank the Hon. Senator for the question and I can see that she is hacking back to the years 2007/8 raising concerns about confidence.  I am fully aware when there is this resistance, reaction; I fully understand where it is coming from.  Like I said earlier, let us not be prisoners of the past; otherwise we will never craft a way out of our economic challenges.  We have to learn lessons and we have learnt lessons to ensure that there is sound management of our economy. 

          On the question you asked - currently the United States dollar is a medium of exchange in our economy, which means our accounts are in US dollars. In fact, we do not have accounts in Rands, Pounds or Euros and in the other currencies that you find in the multi-currency basket which is why there are measures we announced last week to try to bolster and restore the functionality of the multi-currency basket.  We want to encourage usage, not just of the US dollar but of the other currencies as well. We have sent out a directive to all Government departments, Ministries, divisions, parastatals, to say you must accept payment of services and goods that you offer in any of the currencies which are in the basket. If you have accepted it will be on the basis of any exchange rate that will be publicized by the Central Bank from time to time. 

          When they do receive these currencies whether they are Rands, British Pounds or Euros, they must sell those currencies to the Central Bank.  So, that is the arrangement and I think that for now this arrangement will work very well for us because we are not contemplating in the foreseeable feature to bring back the Zimbabwean dollar.  We only do so when the macro-economic fundamentals are right, which is why the measures we are taking about the structure of our budget, parastatals reform of the State-owned enterprises, ease of doing business.  When we think that all those things are in place then we start talking about the return of the Zimbabwean dollar.  Right now, the Zimbabwean dollar in the foreseeable future is not coming.  Thank you Mr. President.

          THE DEPUTY PRESIDENT OF THE SENATE: At this time, may I welcome new Ministers who have joined us, Minister Matangaidze from Public Service, Labour and Social Services and Minister of State for Midlands Province, Hon. Machaya.  

          HON. SEN. MAKORE: Thank you Mr. President.  My question is directed to the Minister of Industry and Commerce.  Minister, regarding the current industries we have in our country, how far do you see us in terms of their performances achieving the ZIM ASSET objective in terms of value addition?  I want you to tell the Senate the exact status.

          THE DEPUTY MINISTER OF INDUSTRY AND COMMERCE (HON. MABUWA):  Thank you Mr. President, I would like to thank Senator Makore for the question.  I really wish that this question was put in writing because I would like to provide statistics and evidence based information on what I am going to say.  The ZIM ASSET is talking much about value addition and beneficiation and as you recall, we were at the average of 30% capacity utilisation in general in all industries.  You will be happy to know and I can provide evidence that in some sectors we are operating at 100%. In other sectors we are as high as 80%.  Yes, we still have challenges in some sectors.

I am also happy to say that we have now identified, through the Confederation of Zimbabwe Industries Study, 12 value chains that we are going to be chasing and making sure that before the next reporting of the ZIM ASSET implementation, we will be reporting on them to show how far we have moved.  So far, we do not have any arrows that are indicating backward in so far as meeting the deadlines of what is stipulated in the ZIM ASSET document.  As I said, if you could please put it in writing, then we can give evidence based information. I thank you.

          HON. SEN. CHIEF NTABENI: Thank you Mr. President.  My question goes to the Minister of Industry and Commerce.  Minister, this Senate wants to know the status of the sleeping giant ZISCO Steel. When is this sleeping giant going to operate in full swing?  People of ZISCO Steel are suffering Minister, shame!  I thank you.

          THE DEPUTY MINISTER OF INDUSTRY AND COMMERCE (HON. MABUWA):  Thank you Mr. President.  I agree that the sleeping has been sleeping giant for too long and that is a cause of concern of Government as well as the people of Zimbabwe.  We are not resting on the issue of ZISCO Steel.  As you know once we had a deal that we were chasing with ESSAR which at the end of the day, fell apart because of the depressed prices in the market for the product. 

Now, we did not sleep; what we have done now is that we have a Committee that is currently looking at the way forward and I am happy to say that we have identified other suitors.  We are also looking at other strategies of not necessarily perhaps giving the possible suitors the whole outfit or the whole portfolio of the giant, but perhaps compartmentalising it or selling or attracting investors in special SBUs (Strategic Business Units) that are within ZISCO Steel.  We are thinking that in that way, we are able to peacefully recover the ZISCO Steel.  I cannot say at the moment how far we have gone with those suitors, but once the information is good for public consumption then we are going to be informing the nation.  I thank you.

          HON. SEN. CHIEF CHARUMBIRA:  Mr. President, only last year around February, I was sitting next to the Deputy Minister to my left. This particular issue was raised and she promised, but I was very surprised the way she handled the issue.  She said that all the deals in ZISCO Steel had gone through and that by March last year, it would be fully operational. We raised supplementary questions as to the authenticity of what she was saying. She said in fact, you do not know that something was not happening at ZISCO but things are now in order. Now, I am surprised; she seems to be saying the contract which subsisted last year somehow something has changed in that contract. What do you do with a Minister who says, by March things will work and then come this year and says no I am coming with another explanation? Thank you. – [HON. SENATORS: Hear, hear.]-

          HON. MABUWA: Thank you Mr. President Sir. The Chief has spoken what – should be done to me. The Vice President, may give the direction as to what should be done – [Laughter.] –  but what I am going to say is that Chief, as a woman I do not lose hope even if I go through a miscarriage. – [HON. SENATORS: Hear, hear.]- I will do the needful and work on conceiving and producing a child but it is up to the husband.

          HON. SEN. TAWENGWA: Thank you. My question is directed to the Minister of Finance and Economic Development. The pending introduction of the bond notes, we have witnessed and have heard the levels of the misconception and misinformation. The levels are actually alarming. What more can we do to allay the general concerns, the dread, the fear over the perceived untimely re-introduction of what you referred to earlier on the ZIM dollar hence these panic withdrawals. What more can we do as a nation in order to allay the fears?

          THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA): We have done our best and when I say ‘we’, it is between the RBZ and Treasury. We have done our best to allay the fears of individuals and stakeholders. We have been meeting a lot of professional groups.  On my part and also on the part of the Governor of the RBZ, we have been able to meet CZI, BAZ, ZNCC, Chamber of Mines, Retailers Association, Lawyers Association and Accounts Association.  We have been able to meet any group that wanted clarification and explanations. After we have explained, the key issue which emerges is that they all understand that we are in a unique position and that the US$ appreciating as it is, is not sustainable. 

That we have to come with measures to ameliorate that situation, which is why the issuance of the bond notes and other measures that I have articulated including management of the foreign currency, prioritising the use of the foreign currency, stopping the leakages that have been happening, putting the limits on withdrawals and so on. When this crisis occurred and we were comparing ourselves with other countries, in particular the United States of America. We found that even the bank withdrawals even in the USA, you are not allowed to withdraw more than five hundred and yet they print money, but we do not. In our case, people demand that they should withdraw US$1 000.00, US$10 000.00  and yet we do not print the US$. I am saying that we are taking steps to allay the fears of everybody with respect to the issue of bond notes.

Even in our discussions with the multilateral institutions such as the IMF, World Bank and African Development Bank, we have explained to them that we want this process to be as transparent as it can be.  We do not want to abuse this two hundred million dollar facility from Afreximbank and that we are prepared to talk about any mechanism to monitor, whether or not the issuance of those bond notes is relative to the volume of exports that are being generated. So, we have nothing to hide. Thank you Mr. President Sir. – [HON. SENATORS: Hear, hear.]-

          HON. SEN. NCUBE: Thank you Mr. President. My question is directed to the Minister of Finance and Economic Development. Doctors are refusing to treat patients on medical aid, especially the PSMAS. When are you going to pay them so that people can treated? I thank you.

          THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA): Thank you very much. I have no straight answer for Madam Senator. All I can say is that there is a background to it. There was a time when what we paid to PSMAS was abused and mismanaged and it created a big hole in its finances. It is not easy to fill that hole.  So, I would not want to give any specific indications but we have the capacity to fill that gap.

We continue to do our best to support PSMAS because all the civil servants basically are members of the PSMAS. We have also urged them to ensure that the orgainisation is properly managed. Those salaries that we read about cannot be sustained from the premiums that we are being paid and that basically is what has happened to PSMAS. We had a CEO or Chairman earning half a million, others forty thousand US dollar and so on.  It was not sustainable, but I want us to understand that, that mismanagement and abuse of office created a huge hole in the finances of PSMAS and no matter what we give, it is like putting water into a bottomless pit. – [HON. SENATORS: Hear, hear.] -

          HON. SEN. MARAVA: Hon. Minister, we know that the law does not operate in retrospect and we also agree that you are saying that we must not arrest ourselves and lock ourselves in the past. As for loses that would have been incurred, they live with you for the whole life. How are you going to recoup the losses that you have incurred so far?

          HON. CHINAMASA: First, let me explain that PSMAS comes under the direct jurisdiction of the Minister of Health and Child Care. We are only providers of the resources but in terms of management, it comes under the Ministry of Health and Child Care. What I can only assure this august House is that we will leave no stone unturned to bring PSMAS back to life because we consider the welfare of civil servants paramount and we have to attend and ensure that their welfare is not prejudiced.

HON. SEN. MOHADI: Thank you Mr. President, I propose that we extend Questions without Notice for fifteen minutes.

HON. SEN. MAKONE: I second.

Motion put and agreed to.

HON. SEN. CHIPANGA: Thank you Mr. President. My question is directed to the Minister of Primary and Secondary Education. The country is awash with rumour and information that young teachers and nurses are being recruited to go to South Sudan. Can you confirm and if so, how can we be sure that our people will be safe when they go to South Sudan? I thank you.

THE MINISTER OF PRIMARY AND SECONDARY EDUCATION (HON. DR. DOKORA): Thank you Mr. President. I want to thank the Hon. Senator for asking the question. I am gratified that the question speaks of rumour and information. The rumour part of it, I am sure because it is not the business of the House to deal with rumours. As to information, the matter that I am aware of relating to possible collaboration with the Republic of South Sudan relates to capacitating them to develop their own national curriculum system, and also assisting them in strengthening their national examination system. That is what I am aware of.

We are also working with them to staff develop some of their school heads. Our proposal has yet to be material although it has gone through the relevant stages of approval in the Government system. We are at a stage where we have invited them to have a final look at the proposed MOU relating to those areas of cooperation. When that becomes operational, we would be making use of some of our retirees and for short stints, some of our expert inspectors and directors to ensure that we assist the sister Republic to set its own systems. They currently have a number of countries that have been collaborating with them in the region like Ethiopia, Sudan, Uganda, Kenya and so on. They are trying to carve a national system for themselves and they have made indications that they want to work with us to assist them. Thank you.

HON. SEN. CHIPANGA: Thank you Mr. President. Hon. Minister, is there no collaboration between yourselves and the Republic of South Sudan on the issue of nurses and teachers being deployed to Sudan? I thank you.

HON. DR. DOKORA: I will simplify the structure of the response. I said in relation to available information, what I can speak about with authority is information on the possible collaboration with the Republic of South Sudan in the areas that I have identified. Thank you.

HON. SEN. MABUGU: Thank you Mr. President. My question is directed to the Minister of Finance and Economic Development. Can you do something to help those who apply for loans because when their loans are approved, there is a problem in withdrawing their money? Can you do something so that they can withdraw a little bit more than withdrawing US$200.00? When a person applies for a loan, he/she wants to do something bigger or buy something which needs a lot of money, but when it comes to withdrawing, a person needs more time to withdraw and then go and buy that thing or do a project. So, I am saying can you help us so that we withdraw a little bit more? Thank you.

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA): I thank the Hon. Member for her question. If I understand her question, it is that she makes an application for a loan which is granted and the application is for a big sum. She wants to withdraw it to buy bigger things. That is precisely what I have been saying that when you want to withdraw bigger amounts to buy bigger things, use the point of sale. Use plastic money. This habit which is in us, that all of us here, if we count all the US$ in your pockets in this august Senate, we will find quite a substantial amount of money which is outside the banking system. That is what we are now fighting against.

So, when you receive a loan, be it US$10 000.00 and you want to buy machinery from down town, use plastic money. We are now insisting that we have point of sale machines in all the retail shops and all the businesses. We hope that we should be able to achieve an 80% by the end of July. I was encouraged to be informed that even at Siyaso, they now have point of sale machines. That is the direction and that is the way. – [HON. MEMBERS: Hear, hear.]-  

HON. SEN. NCUBE: Thank you Mr. President. Can the Minister explain what plastic money is because some people do not know what plastic money is? Even myself, I did not know and I think the Minister has to explain because a lot of people do not know if he just says ‘plastic money’. Thank you.

HON. CHINAMASA: Let me use plastic money in its generic sense. In order to pay, you must have money in the bank. When you have got money in the bank, you can apply for an ATM card. So, if you go into TM, Pick and Pay or OK to buy your groceries, they will have point of sale machines in these businesses. They will swipe that card and if there is no money in the bank, in your account, it will say so and then that is the end of the sale – [Laughter.]- If there is money enough to pay for what you have purchased, then there will be a print out which will show that a sale has been concluded.  So, that is what we call plastic money.

          However, I want to extend it to one other form of plastic money.  You can also transfer through Real Time Gross Settlement (RTGS).  You go to your bank; fill a form and the money will be transferred.  If you are buying 10 000 bricks from Beta Bricks, you just fill in a form and the money will be transferred to the account of Beta Bricks.  So, those are the forms which we call plastic money, it does not involve cash.  Even in the United States, the amount of deposits, for instance they print US$35 trillion dollars but the only amount which will be circulating in cash will be just about 10% of that.  They print the quantum to allow for just circulation and to buy petty things.  So, I hope that I have satisfactorily explained what plastic money is.  Thank you.

          HON. SEN. MAPUNGWANA: Thank you Mr. President.  My question is directed to the Vice President and Minister of Justice, Legal and Parliamentary Affairs, Hon. Mnangagwa.  It is now 36 months after the draft Constitution was signed into law, which relates to 3 years.  My question is, what is the time limit or deadline for all outstanding provisions of the Constitution to be implemented, taking into account that we are left with less than 18 months to go for another General Election? I thank you.

          THE VICE PRESIDENT AND MINISTER OF JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS (HON. MNANGAGWA): Thank you Mr. President.  There is no deadline.  Out of the 299 Statutes in our books, we have so far aligned 159.  We have identified about 200 Statutes requiring alignment and out of that number, 159 have been completed and processed through this House, through the General Laws Amendment Bill and other Independent Statutes.  The ones that have not been processed are from line Ministries where Ministers have not been able to process in time the areas of their concern or mandate.  However, with regards to such alignment relating to Ministry of Justice, Legal and Parliamentary Affairs, the Government or the Executive directly, that has been completed. I thank you.

          HON. SEN. MUTSVANGWA: Thank you Mr. President.  My question is directed to the Minister of Finance and Economic Development, Hon. Chinamasa.  In view of the fact that any United States Dollar which may be brought into the country, gets mopped out because our neighbours need the United States Dollar as a store value;  is it therefore, a prudent idea to continue housing regional trading giants who are continuously siphoning that United States Dollar out of the country, for example, Pick n’ Pay and many others? Thank you.

          THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMSA): Thank you Mr. President. I want to thank Hon. Sen. Mutsvangwa for her question.  The regional trading giants whom you mentioned are welcome in our country but we started engaging them in discussion with respect to what they sell in their shops and where these goods are procured from.  The strategy is basically to encourage that even if they are retailers coming from outside the country, they source a substantial amount of their goods locally, especially those goods which can be locally produced.  So, through measures such as tariffs and tariff bans or goods that we ban, we are going to get to a situation where they will have no option but to buy locally.  That is the discussion engaged in, with the likes of companies that you mentioned.  We are also engaging them, for instance with respect to Pick n’ Pay, to say they must support out-growers especially in agriculture.  Currently, the country is now in a position to produce sufficiently, a host of vegetables, carrots, cabbages, Irish potatoes, sweet potatoes, tomatoes and onions.  We now have capacity through the measures that we took with respect to the tariff structure, to sufficiently produce those goods for domestic consumption and demand.

          So, we are encouraging the likes of Ok Bazaars, TM and Pick n Pay to support out-growers so that they have got a regular and reliable consistent supply of those goods and services.  The issues that they raised of course are also pertinent and valid.  They need supply which is regular, consistent, in the volumes as agreed in the contracts.  So, that capacity needs to be build first and we are encouraging all of us here, to encourage the formation of associations which will make it possible for a group of farmers to dedicate themselves to producing say, onions and be able to supply on a consistent basis to the local retailers.  We will not ban until we are clear that in fact those procedures and mechanisms are in place, otherwise we will also end up with shortages.  There are also goods which we know we are not producing locally like grapes; clearly, we will continue to allow imports.  We also do not sufficiently produce milk, so until we get to a position where we produce milk in sufficient quantities, we will continue to allow for import, in fact we have been allowing those imports. 

          So, Mr. President Sir, I thank the Hon. Member for her question and the answer basically is that the regional trader or retailers, who are here, are welcome but we encourage them and we are going to continue encouraging them to source their goods from local producers.

          Questions Without Notice were interrupted by THE DPUTY PRESIDENT OF THE SENATE in terms of Standing Order Number 62.

ORAL ANSWERS TO QUESTIONS WITH NOTICE

PAYMENT PLAN THE MINISTRY HAS TO CLEAR ITS DEBTS

  1. HON. SEN. CHIMHINI asked the Minister of Finance and Economic Development to explain the payment plan the Ministry has to clear its debts for services rendered by Local Authorities to Government Ministries to enable them to improve service delivery and pay staff salaries.

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA):  I want to thank Hon. Senator Chimhini for his question.  As at 31 March, 2016, Government owed local authorities US$36. 8 million for rates and water services as per the attached Annexure ‘A’.  I hope that the Hon. Senator and the august House can follow.  I have attached an annexure setting out the amounts that are owed to each Municipality.

The major creditors are:

  • City of Masvingo – US$16 671 786;
  • City of Harare – US$16 499 618
  • City of Bulawayo – US$1 940 044.

The Government Ministries’ debt to Local Authorities was   US$18 504 639, US$17 420 281 and US$18 432 464 for 2013, 2014 and 2015 respectively.

Major debtor Ministries and departments are as follows:

  • Zimbabwe National Army and Air Force of Zimbabwe;
  • Zimbabwe Republic Police;
  • Zimbabwe Prisons and Correctional Services;
  • Government health institutions; and
  • Local Government, Public Works and National Housing.

Arrears to Local Authorities are mainly on account of the mismatch between consumption and our ability to pay, given our limited budget capacity.  Members can refer to Annexure ‘B’ of my written response which illustrates this mismatch.

Treasury has and will however, continue to progressively reduce line Ministries and department’s arrears to Local Authorities by knocking off outstanding statutory tax obligations against these arrears.

Furthermore, Treasury is collaborating with both Government Ministries and department and Local Authorities on mechanisms of managing the consumption of water services, cognisant of structural infrastructural leakages and institutional wastage.  We are also encouraging, for instance, that they put in place prepaid metres.

Mr. President Sir, cognisant of the core mandate of Local Authorities in term of service delivery to communities, Treasury will continue prioritising payment to Local Authorities within the available Budget capacity.  I thank you.

Annexure ‘A’:  Local Authorities Outstanding Bills as at 31 March 2016

Local Authority

Amount

City of Masvingo

16,671,786

City of Harare

16,499,618

City of Bulawayo

1,940,044

City of Mutare

347,140

Bindura Municipality

247,605

Victoria Falls Town Council

226,136

Chitungwiza Municipality

189,521

Kwekwe City Council

146,696

Chegutu Municipality

137,322

Kariba Town Council

100,426

Municipality of Redcliff

96,053

Hwange Local Board

62,321

Lupane Town Council

57,360

Rusape Town Council

49,099

Mvurwi Town Council

21,205

Total

36,792,333

 

 

Annexure ‘B’:  Mismatch between Consumption and Ability to Pay

Year

Annual Billing

Budget Provision

Payments

2013

25,067,024

13,063,400

39,546,711

2014

22,750,260

11,763,000

35,843,519

2015

19,504,482

13,370,000

13,448,584

 

JOBS CREATED SINCE 2013

  1. HON. SEN. CHIMHINI asked the Minister of Finance and Economic Development;
  2. a) How many jobs have been created since 2013, towards the target of 2 million jobs;
  3. b) Which sectors have performed well in the creation of the said jobs.

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA):  Thank you Mr. President Sir.  The ZIM ASSET prioritises job creation as a key source for sustained economic growth and development, as well as poverty reduction and eradication.

Since 2013, support to all productive sectors inclusive of SMEs, were at the centre of our policy interventions, meant to grow the economy and hence create employment.

Results could not be to our expectations owing to limited domestic capacity, coupled with external restriction on Foreign Direct Investment (FDI) and other supportive inflow which other countries currently enjoy.

As a result, employment in the formal sector declined from 1.1 million in 2010 to just under 1 million by the end of 2014, with many employees having, at one time or another, being retrenched.

While formal employment was declining, reflecting economic challenges, the informal sector was growing by leaps and bounds and has been able to absorb the majority of the retrenches.

According to the 2012 Finscope Survey, there were a total of 3.5 million businesses in the informal sector employing more than 5.7 million people.  Breakdowns for annual average employment under the informal sector are unfortunately not readily available and we now have to wait for another Finscope Survey to tell us how many people are earning their livelihoods from the informal sector.  I thank you.

REASONS FOR THE ABANDONMENT OF THE CHINAKA BORDER POST IN HONDE VALLEY

  1. HON. SEN. CHIMHINI asked the Minister of Finance and Economic Development to;
  2. a) Explain the reason for the abandonment of the Chinaka Border Post in Honde Valley which was constructed in 2002 and since then has been deteriorating;
  3. b) Give the total cost of the infrastructure at the border post and how Government intends to recoup the funds spent on the project.

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA):  I thank the Hon. Member for his question.  Mr. President Sir, Hon. Members may be aware that the Chinaka Border Post in the Honde Valley in Manicaland province was constructed in 2002 as an immigration crossing point that only facilitates movement of people.  In terms of the Ports of Entry and Route Order, it is not designated as a Customs Border Post and as such ZIMRA has never been present at the Chinaka Border Post.

Mr. President, you must also be aware that the Ministry of Local Government and Public Works was responsible for mobilising the resources for the construction of the facility.  ZIMRA had no resource input towards the construction of the border post.  Any questions regarding the cost of construction of the border post should thus be directed to the relevant Ministry, which is the Ministry of Local Government and Public Works.  I thank you.

POLICY REGARDING COMPENSATION TO PEOPLE AND LIVESTOCK THAT ARE ELECTROCUTED BY ELECTRICITY CABLES

  1. HON. SEN. B. SIBANDA asked the Minister of Energy and Power Development to explain the Government policy regarding compensation to people and livestock that are electrocuted by electricity cables that would have fallen to the ground.

Let me register my gross discontent that this question has been on the Order Paper from October last year and it was quite an urgent question.  I feel that the Minister responsible has been bunking responsibility.

THE DEPUTY MINISTER OF MEDIA, INFORMATION AND BROADCASTING SERVICES (HON. SEN. MATHUTHU) on behalf of THE DEPUTY MINISTER OF ENERGY AND POWER DEVELOPMENT (HON. T. MUZENDA):  ZESA has a public liability insurance policy that compensates for losses incurred by members of the public where such losses are occasioned by faulty or malfunctioning of ZESA network equipment.  All such losses are submitted to the insurer who administers the policy for payment of such claims.  I thank you.

PENSIONABLE AGE FOR WORKERS IN THE PUBLIC AND PRIVATE SECTORS

  1. HON. SEN. CHIEF MUSARURWA asked the Minister of

Public Service, Labour and Social Services to:

  • Inform the House on the actual pensionable age for all workers both in the public and private sector.
  • State the benefits that government has on offer for the workers to enjoy before pensionable age.

THE DEPUTY MINISTER OF PUBLIC SERVICE, LABOUR AND SOCIAL SERVICES (HON. ENG. MATANGAIDZE): Mr. President, I thank the Hon. Sen. Chief Musarurwa for his question. Pensionable ages for members of the Public Service are as follows:-

  1. Members appointed before the 1st May, 1992 have a pensionable age of sixty-five years; and
  2. Those appointed on or after the 1st May, 1992 have a pensionable age of sixty years.

However, the Public Service Commission may, when it is in the

interest of the Public Service to do so, permit a member whose pensionable age is sixty to continue to serve beyond the age of sixty for periods not exceeding one year at a time, provided that such member shall retire at the age of sixty-five years.

          Our response to the second part of his question is:

Salary and allowances

Upon appointment into the Public Service, a member is entitled to

a monthly basic salary that is paid in accordance to the grade the member has been appointed to. On top of the basic monthly salary, members are paid transport and housing allowances that assist members to be able to pay for their transport to and from work and also payment of their accommodation or rentals.

          Representation allowance

          The allowance is paid to members promoted to the posts of Deputy Director and above. This is to ensure that the members present themselves with dignity all the time as they conduct Public Service business, including dress code.

          Manpower Development Leave (MDL)

          Upon serving the Public Service for more than two years, members are eligible for consideration to go on study leave. Where it is on the initiative of the employer, members may proceed on paid MDL but when it is the member’s own initiative, he/she should proceed on MDL without pay in terms of the Commission Circular No.2 of 2015 as read with Section 40 of the Public Service Regulations, 2000.

          Medical Aid

          Members of the Public Service may join the Premier Medical Aid Society (PSMAS) upon appointment into the Public Service.  This assists members to get treatment from medical practitioners including PSMAS subsidiary medical institutions.

          Funeral Assistance

          When a member of the Public Service dies, the family members are paid funeral assistance which is currently pegged at $700.

          Housing Loan Schemes

          There are two housing loan schemes that are available for members in the Public Service. The schemes are administered through a revolving fund in order to ensure continuity. The schemes are as follows:

  1. General Scheme – for grades below Deputy Director grade. The

Scheme is administered by the Ministry of Local Government, Public Works and National Housing.

  1. Senior Officers Scheme – for Deputy Director grades and above.

The scheme is administered by the Ministry of Finance and Economic Development.

          Vehicle Loan Schemes

  1. Transport Purchase Fund for members below Deputy Director

grade: administered through CMED (Pvt) Ltd with funding from Treasury. However, currently due to lack of funding, members have not been benefitting.

  1. Transport Purchase Fund for members in the Deputy Director

grade: also administered through CMED (Pvt) Ltd.

  • Personal Vehicle Scheme for Directors- members are issued

with vehicles for personal and official business.

  1. Senior Officers Vehicle Purchase scheme for grades above the

 Director, members are issued with vehicles for personal and official business.

Questions with Notice were interrupted by THE TEMPORARY PRESIDENT (HON. SEN. CHIEF CHARUMBIRA) in terms of Standing Order No. 62.

MOTION

BUSINESS OF THE HOUSE

          THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA): With leave of the House, I move that Orders of the Day Numbers 1 to 11, be stood over until Order Number 12 has been disposed of.

          Motion put and agreed to.

SECOND READING

SPECIAL ECONOMIC ZONES BILL [H.B. 15A, 2015]

          Twelfth Order read: Special Economic Zones Bill [H.B.15A, 2015]

THE MINISTER OF FINANCE AND ECONOMIC

DEVELOPMENT (HON. CHINAMASA): Mr. President, the Special Economic Zones are an important pillar of Zimbabwe’s development strategy as enunciated in the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZIM ASSET). The successful development of Special Economic Zones will contribute to Zimbabwe’s development goals while facilitating the utilisation of resources in the most efficient and cost-effective way.

          Mr. President, the Special Economic Zones Bill seeks to create an enabling environment for the development of all aspects of Special Economic Zones including:

  1. development of infrastructural facilities;
  2. creation of incentives for economic and business activities in

Special Economic Zones;

  • removal of barriers that negatively affect operations in areas

designated as Special Economic Zones;

  1. the regulation and administration of activities within the Special

Economic Zones; and

  1. Transparency and compliance with regulatory requirements.

Mr. President, I now outline the aspects of the Special Economic

Zones Bill as follows: on the Institutional Framework

  • Clause 3 creates an institutional framework in terms of which the
  • Zimbabwe Special Economic Zones Authority is established whose operations shall be controlled and managed by a Board consisting of men and women with diverse skills and experience from both the private and public sector in line with Clause 5.
  • Clauses 6 – 17 deal with various procedural matters relating to Board members, including vacation of office by a member, meetings and procedures of meetings and disclosure of interest of members of the Board.
  • Clause 18 sets out the functions of the Authority which shall include:
  • The establishment of SEZs in which export-oriented industrial

activities will take place whether by way of manufacturing, processing or assembling of goods or providing services for the purpose of selling domestically or exporting such goods and services’

  • To attract foreign direct investment into SEZs;
  • To grant investment licences for investment in Special Economic Zones;
  • To grant permits to developers of Special Economic Zone areas for infrastructure development including road works, information and communication technology works, water and electricity works;
  • To create a single institution through which applications for the approval of investment in Special Economic Zones shall be made and through all necessary approvals, licences and permits may be granted or issued in respect of approved investments;
  • To monitor and evaluate the implementation of approved investments in Special Economic Zones.

Establishment of Special Economic Zones

In terms of Clause 20, the Authority may declare any area of premises to be a Special Economic Zone.

Application s for investment licences or developers permit.

Any person who wishes to obtain approval to invest in an SEZ, or

for his or her business to be approved as an activity in an SEZ shall submit an application to the Authority in accordance with Clause 23.

          Equally, any person who wishes to obtain approval to develop an area as an SEZ in which licenced investors will establish and conduct their operations, shall submit an application to the Authority in accordance with Clause 24.

          Consideration of Applications for Investments Licences.

          Clause 25 provides that in considering an application, the Authority shall, among other things, have regard to:

  • The extent to which the proposed investment will lead to creation of employment opportunities and the development of human resources;
  • The degree of export-orientation or import substitution of the project;
  • The impact of the proposed investment on the environment;
  • The extent to which the proposed investment will result in transfer of technology as well as managerial and other critical skills;
  • The extent to which the proposed investment will establish linkages within the domestic economy, value addition and beneficiation of local raw materials and industrialisation of the domestic economy.

The Authority shall, within 5 working days, approve or refuse to

approve any application for an investment licence in line with Clause 26.

          The Authority shall be required to keep a register of all investment licences according to Clause 29.

          Power to Visit Premises and Inspect Documents

          To ensure compliance, the Authority may, in terms of Clause 32, visit and inspect any premises having any connection with the investment or proposed investment referred to in the licence.

          Funds of the Authority

          The Authority should minimise dependency on budgetary support.  Therefore, the Bill in Clause 46, provides for the Authority to levy some fees that will help to finance its operations.

          Incentives Package

          The Bill provides for general fiscal and non-fiscal incentives to licenced investors operating in an SEZ to be prescribed in accordance with Clause 58.

          Regulations

          The Bill makes provision for the Minister, after consultation with the Authority, to make regulations under the Act.

          These regulations will include matters relating to the following, among others;

  • Fees payable for any application for a licence or permit or other service provided by the Authority, or charges levied by the Unit;
  • Special incentive packages.

Mr. President, I now move that the Special Economic Zones Bill [H.B. 15, 2015] be now read a second time.

*HON. SEN. KOMICHI: I thank you Minister, but I did not hear

the area that talked on the rights of the workers that will be working in the Special Economic Zones and how the Labour Act will be applied.  What is so special about those zones?  Why should they not come and invest outside these zones?

          HON. SEN. B. SIBANDA:  I just have a few comments.  Firstly, can I stress the point made by Senator Komichi that the labour component me does not appear satisfactory and I suspect that the Minister deliberately left it out because it is going to generate debate.  Secondly tied with that, there is no tripartism in the legislation.  I am concerned that two of the parties in the tripartite arrangement are forgotten.  The Bill indicates that there will be no exchange controls.  From what we discussed in terms of where we are from a financial point of view, because of extreme laxity which we have experienced; why should we continue to exempt Special Economic Zones totally from some exchange supervision?  Minister, I would like to congratulate you on the timelines, I think you have set in very tight timelines for decision making.  I think that is a plus for the Bill.

          I am also worried maybe out of ignorance, why there are so many Government representatives on the board.  Last but not least, I thought today it would be the in-thing, particularly for something that looks like a parastatal to have to specifically and clearly have the CEO on a contract term of service rather than giving the board the leeway to make the decision. 

          THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA):  Thank you Mr. President.  The two Senators, Sen. Komichi and Sen. Sibanda raised, the issue about provisions of the Labour Act, with the insinuation that employees working in Special Economic Zones will not be fairly treated.  That is not so.  Read Clause 56 in its entirety and not what the lower House sought to do, only to read sub-Clause 1 and leaving out sub-Clause 2 and then having to spent the whole afternoon going into a division merely because some people decided deliberately or unwisely to misinterpret Clause 56.

Clause 56 is very clear, the Labour Act and the Indigenisation Act not to apply in relation to licenced investors operating in an Economic Zone.  Then, sub-Clause 2 says, ‘The authority must, in consultation with the Minister responsible for the administration of the Labour Act, provide for rules for conditions of service, termination of service, dismissal from service and disciplinary proceedings that apply within every Special Economic Zone.  In addressing why we have this provision, is basically, that we are going to the root, the core issue that is the ease of doing business. I will also be responding to the question that Sen. Sibanda raised. Why have a Special Economic Zone?

          The answer in short Mr. President Sir, is that the problem about this economy is, we are not producing. I was looking at comparable figures just to see in terms of exports from this country.  I was comparing it with Kenya, Zambia, Mozambique and so on. We are at the bottom and Kenya’s exports are US$20 billion, ours are around US$3 billion, Mozambique is around US$6 billion and Zambia is around US$11 billion, yet we are around US$3 billion.  So, we need to accept the reality of our situation and the reality is that we are not producing.

These Special Economic Zones is one of many measures that we have to take in order to encourage people to come and produce on our territory in our country. In doing so, we hope if successfully implemented these foreign investors will bring capital which we do not have. A lot of challenges that we are facing in the economy is that there are no lines of credit at affordable interest rates to the productive sectors. So we need to attract people who can bring capital into these Special Economic Zones. We need technology transfer; sometimes you can buy it but it is better to come through an investor who will come to employ our people and through that way, by osmosis, our people will gain and absorb that technology.

          We also need from the foreign investor managerial skills. So, this whole Bill is intended to attract and make it attractive to foreign investors. In order to make that attraction better, we should not make things difficult for them. In other words, I know for instance in terms of payment of salaries, the salaries there will be much higher but generally the problem is when the World Global Market is not doing well, there must be flexibility which by the way we have already introduced in the Labour Act. There must be flexibility to shed off or to increase. Otherwise, they will just fold their bags and go. So, I want us to understand that this is one of many measures to encourage foreign direct investment.

The issue about whether or not workers will be prejudiced, clearly the Minister responsible for Labour will not come up with regulations that will prejudice.  The law is there and very clear. She must come up with regulations which are peculiar to Special Economic Zones.

          Again, let me say the Authority when it is established, the Minister who is responsible for this Act must also come up with a package of incentives for foreign direct investments for investors to want to come into those zones. Some of the investments will include having to put in the necessary infrastructure first such as roads, electricity, ICT, water so that foreign investors are attracted to come into those zones. Some of the incentives will be obvious.  In fact, I will take it as a matter of taking it for granted that they can disinvest at any time and repatriate their capital, that we should allow them.

During the time of their operation, clearly the foreign currency is a benefit to the country. The records will show that the exports from the Special Economic Zones have boosted the country’s exports. What is also significant about the attraction of the foreign investors is that we are going to encourage to build linkages with the industries in the territory outside the Special Economic Zones. We want those linkages especially with respect to supply of raw materials, be it cotton, soya beans and what have you. So Mr. President, I want to say that I hope that my explanation is adequate for the Hon. Members not to withhold their support to the Bill.

Why so many Government representatives on the board?  Mr. President, in order for things to happen, we need representatives from line Ministries who are relevant to make things happen faster. It is almost like you are One-Stop-Shop at ZIA which draws representation from the key line Ministries who are relevant to the decisions that the Authority has to take. This helps to take faster and quicker decisions and we are applying the same principle to the Authority. So if decisions are necessary to be taken for immigration such as work permits and what have you, they can be taken quickly because a representative from the Ministry of Labour and Social Services will be there if the case arises, also from Passport Office and things like that.  So this is intended to hasten the decision making process.

To put the Chief Executive on performance contract, I agree with you.  I am going to be bringing to Cabinet, the Public State Enterprises Corporate Governance Bill. The Corporate Governance Bill is going to insist that Chief Executive officers are appointed in terms of a performance contract; that key issues are highlighted and targets and priorities which have to be achieved during the tenure of office of the Chief Executive officer. That Bill and its provisions will have cross cutting implications on all State enterprises and is going to be covered in that Bill. I thank you Mr. President Sir. –[HON. SENATORS: Hear, hear.]-

Motion put and agreed to.

Bill read a second time.

          Committee Stage:  With leave, forthwith.

COMMITTEE STAGE

SPECIAL ECONOMIC ZONES BILL [H.B. 15A, 2015]

          House in Committee.

          Clauses 1 to 45 put and agreed to.

On Clause 46:

HON. SEN. B. SIBANDA: Thank you Mr. Chairman. Could I have clarification under 46(b)? Under what circumstances would the Minister see the authority seeking further appropriations from Parliament except at the set up stage?

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA): Thank you for providing me the answer. At the inception stage, we have to and we do not know at what stage it will be independent, sufficiently viable and standing on its own resources. That may take some time. I do not know what the period is going to be, but we envisage setting it up until it is fully operational and when it can fund itself from its own fees and charges.

Clause 46, put and agreed to.

Clauses 47 to 58 and Schedule Section 19, put and agreed to.

House resumed.

          Bill reported without amendments.

          Third Reading: With leave, forthwith.

THIRD READING

SPECIAL ECONOMIC ZONES BILL [H.B. 15A, 2015]

          THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA): Mr. President Sir, I now move that the Bill be read the third time.

          Motion put and agreed to.

          Bill read the third time.

          On the motion of THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA), the Senate adjourned at Sixteen Minutes to Five o’clock p.m.

 

Senate Hansard SENATE HANSARD 16 JUNE 2016 VOL 25 NO 58