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Tuesday, 28 February 2017 16:48

PARLIAMENT OF ZIMBABWE: “MAKING A DIFFERENCE IN THE 2017 BUDGET FORMULATION PROCESS”

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PARLIAMENT OF ZIMBABWE: “MAKING A DIFFERENCE IN THE 2017 BUDGET FORMULATION PROCESS”

 

Preamble

Greetings fellow bloggers, I hope I find you well!

Parliament has just concluded the 2017 National Budget debate and I must say it was a joy to watch the brutally frank and yet mutually respectful give and take between the Minister of Finance, Hon. Chinamasa, and your elected representatives. Indeed, Members of Parliament were pulling no punches during budget debate, they were calling a spade a spade based on the input that you, the public, had given them during stakeholder consultations by Parliamentary Committees. Let me take this opportunity to express my sincere appreciation to all of you who made the time to give their input on the 2017 National Budget through the various Portfolio Committees. This multiplicity of views can only serve to strengthen our democracy.

Let me also hasten to add that your contribution was not in vain as I will endeavour to demonstrate in this article. In fact, I was on Spot FM last night as one of the panellists on their highly subscribed programme “Point of Order.” Some of the contributions from those who managed to phone in and pose questions appeared to highlight the perception that neither Parliament nor the Executive takes the input from members of the public seriously, either in law making or in crafting the national budget. As a result some members of the public deem it a futile exercise to attend public hearings or stakeholder consultative meetings to give their input. As this article will show, in crafting the 2017 National Budget the Minister of Finance did, indeed, take into account the recommendations made by Portfolio Committees based on consultations with you, their stakeholders.

Introduction

In terms of section 141 of the Constitution of Zimbabwe, Parliament is mandated to engage the general public in its legislative and other processes of its committees and ensure that the interested parties are consulted about Bills being considered by Parliament. In addition to that, section 28(5) of the Public Finance Management Act [Chapter 22:19] provides that:

“The Minister may through the appropriate portfolio committee of Parliament seek the views of Parliament in the preparation and formulation of the annual budget, for which purpose the appropriate portfolio committee shall conduct public hearings to elicit the opinions of as many stakeholders in the national budget as possible”

This section, therefore, mandates the Finance and Economic Development Portfolio Committee to conduct public hearings to elicit the views of as many stakeholders as is possible in the crafting of the national budget. This has become the tradition since Parliament embarked on Parliamentary Reforms in 2000 and this was further reinforced by the enactment of the PFMA and the Constitution Amendment No. 20. The Constitution in Section 141 (2) now makes it mandatory that Parliament should consult the electorate about issues before Parliament including the ensuing year’s national budget.

2017 budget consultations

Driven by the desire to capture sector specific views on the 2017 budget priorities, Parliament took it upon itself to carry out sector specific budget consultations in different parts of the country. This is a movement away from the tradition where budget consultations outside Harare were the preserve and sole prerogative of the Portfolio Committee on Finance and Economic Development. As such, three more Portfolio Committees namely, the Portfolio Committees on Mines and Energy; Agriculture, Lands, Mechanisation and Irrigation; as well as Women’s Affairs, Gender and Community Development successfully conducted sector specific consultations in different parts of the country in September 2016. These public consultations were conducted across the country’s 10 provinces. The rest of the Portfolio Committees were restricted to consultations in Harare and solicited for the public’s views on sector specific priorities for consideration in the budget through invitations for submissions to the respective committees, either individually or through business, labour, civil society and residents’ associations.

The diverse views and submissions received from citizens were presented to the Minister of Finance and Economic Development by the respective Committee Chairpersons at the Pre-Budget Seminar held from 2 to 6 November 2016 in Bulawayo. In another departure from the past the Minister of Finance and Economic Development requested for a further meeting with Chairpersons of Committees and Members of the Portfolio Committee on Finance and Economic Development to discuss and build consensus on priorities for the 2017 National Budget. The meeting was held on 22 November 2016 and the discussions were based on the submissions made by Portfolio Committees and Members at the Pre-Budget Seminar.

Adopted recommendations

 

The following table summarises the stakeholder submissions to the Minister of Finance and Economic Development through the Portfolio Committees of Parliament which were adopted and incorporated into the 2017 national budget:

Submission

Responsible Committee

2017 Budget Proposal

Scrapping duty on sanitary ware

Women Affairs, Gender and Community Development

The 2017 budget allows for duty free importation of raw materials for sanitary wear manufacturing, which include pulp, glue and virgin tissue, under manufacturers’ rebate, with effect from 1 January 2017 in order to enhance competitiveness of locally produced sanitary wear products (Paragraph 400)

Provision of adequate funding for health (drugs, equipment, etc) for the fundamental basic human right of health

Portfolio Committee on Health and Child care

Treasury introduced a health fund levy of 5 cents for every dollar of airtime and mobile data, under the theme, ‘Talk-Surf and Save a Life’. The resources raised will be ring-fenced for the purchase of drugs and equipment for public hospitals and clinics (Paragraph 448)

Disbursement of the proposed $5 million seed capital of Women's Bank in the 2017 fiscal year

Portfolio Committee On Women’s Affairs, Gender & Community Development

Treasury undertook to avail US$10 million capitalisation of the Women’s Micro-Finance

Bank (Paragraph 350)

Review and standardisation of mining fees and other ancillary charges e.g. Environmental Impact Assessment and Rural District Council fees

Portfolio Committee on Finance and Economic Development/Mines and Energy

Government is engaging with the mining industry with regards to consideration and adoption of supportive interventions to ensure viability (Paragraph 34)

Crafting and implementing a minerals Value Addition and Beneficiation Strategy and other policies that support such measures.

Portfolio Committee on Finance and Economic Development

Treasury extended deferment of export tax on un-beneficiated platinum to 1 January 2018 (Paragraph 36);

Treasury to honour its obligation of US$1.5 million in the form of accommodation and upkeep of the Indian experts for the period of operationalizing the Indo-Zim Project

Portfolio Committee on Small & Medium Enterprises and Cooperative Development

Treasury provided US$0.5 million in support of MSMEs as counterpart funding for the establishment of Common Facility Centres in conjunction with the Indian Government (Paragraph 349)

Capacitation of the Small and Medium Enterprises Development Corporation (SMEDCO)

Portfolio Committee on SMEs and Cooperative Development

Treasury allocated US$2 million for capitalisation and transformation of SMEDCO into a microfinance Bank ( Paragraph 349)

Conducive environment to encourage SMEs to pay taxes and formalise through reduction or revision of compliance requirements across the board in order to enhance voluntary compliance to harness more tax revenue

Portfolio Committee on SMEs and Cooperative Development/ Finance and Economic Development

§ Waiver of the requirement to account for output tax from the deemed date of qualification for registration of the SMEs in order to facilitate VAT registration for SMEs that qualify on account of their gross turnover exceeding the threshold of US$60 000 per annum.(Paragraph 465)

§ Accounting for provisional tax during the first year of registration, when the Fourth Quarterly Payment Date falls due by SMEs that voluntarily register with the Zimbabwe Revenue Authority with effect from 1 January 2017. Alternatively, qualifying SMEs may account for provisional tax on a monthly basis (Paragraph 469)

§ Reviewing downwards, presumptive taxes and the payment period from quarterly to monthly basis, with effect from 1 January 2017 in order to enhance the capture the revenue inflows from the informal sector. Revenue generated from presumptive taxes will be ring fenced towards capitalisation of the Small and Medium Enterprises Development Corporation (SMEDCO) for on-lending to SMEs (Paragraph 477)

§ Treasury eliminated double taxation on presumptive taxes payable under informal traders’ tax (Paragraph 545)

Addressing corruption

Cuts across Portfolio Committees

§ Government implemented the CCTV systems at Beitbridge Border Post (paragraph 545)

§ Treasury proposed fixing the tenure of office for the ZIMRA Commissioner General to a maximum of two, five year terms (Paragraph 541)

§ Pursuing anti-corruption thrust through public procurement reform, corporate governance and Anti-Money Laundering (Paragraph 616-620)

Punitive penalties to offenders to deter corruption and smuggling complemented by continuous upgrading of ZIMRA tracking systems –current system tracks vehicles and not goods

Portfolio Committee on Finance and Economic Development

§ Treasury put in place Electronic Cargo Tracking System for tracking of transit cargo from point of entry to point of exit (Paragraph 542)

Transparent issuance of duty free certificates to state agencies

Portfolio Committee on Finance and Economic Development

Treasury proposed to introduce Electronic Duty Free Certificates in order to enhance compliance and also secure an effective audit trail. This will curb abuse of the facility as Duty Free Certificates issued by Accounting Officers will be lodged into the ZIMRA ASYCUDA system (Paragraph 512)

Policy Consistency and addressing competitiveness through fast tracking ease of doing business reforms

Portfolio Committee on Finance and Economic Development

§ Office of the President and Cabinet will be, coordinating policy pronouncement as well as any required clarifications to avoid conflicting interpretations of policies by different Government Ministries and Departments (Paragraph 573)

§ Announcement that President and Cabinet, under the Ease of Doing Business Framework will lead the rationalisation, streamlining and harmonisation of business licencing, fees and charges, on a lower level scale, sector by sector, business by business, with effect from 2017 (Paragraph 569)

Prioritise irrigation development and rehabilitation to make full use of Zimbabwe’s endowment in abundant water bodies and mitigate against climate change

Portfolio Committee On Lands, Agriculture, Mechanization & Irrigation Development.

The 2017 Budget proposed to mobilise US$24.8 million for irrigation, prioritising rehabilitation and construction of smallholder irrigation schemes ( Paragraph 218 and 219)

Prioritising livestock development and rebuilding of national herd

Portfolio Committee On Lands, Agriculture, Mechanization & Irrigation Development.

§ Treasury undertook to support rebuilding of the national herd, comprising beef cattle and other smaller domestic animals (Paragraph 197)

§ The budget set aside US$3.385 million for extension services, and US$2.684 million for the Veterinary Department for purposes of enhancing monitoring of livestock movement for disease control (Paragraph 200)

Security of tenure, regularisation of land holdings and transformation of 99 year leases into bankable lease, as recommended by the bankers

Portfolio Committee On Finance and Economic Development/ Lands, Agriculture, Mechanization & Irrigation Development.

§ The 2017 Budget advocated for farmer certainty with respect to access to and security of tenure over farming land (Paragraph 210)

§ Allocated $US1.5 million to Land Commission (Annexure 7)

§ Directed responsible Ministries and such respective institutions like CSC to institute measures towards full utilisation of the available land (Paragraph 214)

Prioritisation of agriculture funding to ensure food security and adequate feedstock’s for manufacturing industry

Need to recapitalise the Department of Extension Services (AGRITEX) and District Development Fund (DDF) to provide vital technical support services to farmers

Portfolio Committee On Lands, Agriculture, Mechanization & Irrigation Development.

§ The 2017 National Budget prioritised agriculture with a total allocation of US$291.6 million proposed, covering key activities including: strategic grain reserve, US$112.5 million; input schemes, US$102 million; irrigation development, US$6.1 million; extension services, US$3.385 million; and veterinary services, US$2.68 million, among others (Paragraph 177)

§ Government, through the Vulnerable Households Inputs Scheme availed US$42 million worth of cotton inputs in support of 400 000 communal cotton farmers to boost cotton production during the 2016/17 season (Paragraph 189)

Rationalisation of the Civil Service to ensure efficient service delivery.

Portfolio Committee on Public Service, Labour & Social Welfare

Treasury undertook Public Service Wage Bill rationalisation measures which is anticipated to lead to savings of an estimated US$140 million (Paragraph 119)

Provision of adequate funding for social protection programmes, such as BEAM, Harmonised Cash Transfers, Health Assistance through allocation of adequate resources, to inspire funding partners

Portfolio Committee on Public Service, Labour & Social Welfare

The 2017 Budget allocated US$193.8 million for social welfare programmes broken down as:

§ US$10 million to fund the BEAM programme

§ US$7 million for the Harmonised Social Cash Transfer programmes

§ US$1.1 million for the drought mitigation programme

§ US$1 million to facilitate access to basic health services by poor and vulnerable households under the Health Assistance programme;

§ US$1.35 million for child protection services; and

§ US$800 000 in support of the elderly and people living with disabilities (Paragraphs 340-343)

Reduction of duty on importation of luxury coaches ( cross border and intercity coaches)

Portfolio Committee on Transport & Infrastructural Development

Treasury Ring-fenced importation of 30 luxury buses at a reduced rate of 5% for the period of twelve months beginning 1 January 2017. Value Added Tax, however, remains due and payable and beneficiaries will be limited to a maximum of two units in order to ensure equity in the management of the facility (Paragraph 496)

Procurement of state-of-the art Radar equipment for Air Traffic Controllers

Portfolio Committee on Transport & Infrastructural Development

Treasury appropriated US$5 million for procurement and installation of two weather radars at the Meteorological stations in Harare and Bulawayo (Paragraph 230)

Trunk roads maintenance and dualisation construction

Portfolio Committee on Finance and Economic Development

Appropriation of funds for road construction and maintenance including conclusion of the Beitbridge-Chirundu Highway road dualisation deal (Paragraph 259-269)

Resuscitation of Constituency Development Fund to ensure that the Hon. Members of Parliament are able to undertake their mandate effectively and consistently with the Constitution.

Portfolio Committee on Justice, Legal and Parliamentary Affairs (JLPA), Finance and Economic Development

Treasury allocated US$10 million for CDF (Paragraph 65 Budget Speech)

Provide separate votes for ZEC, NPA and ZHRC and NPRC as per sec 305(3) Constitution

Portfolio Committee on JLPA

Separate votes were provided as indicated annexure 7 in the budget. This submission was initially made by Parliament for the 2016 Budget and the Minister subsequently effected the changes in that year’s budget.

Provision of raw water to agriculture and industries through completing critical dam projects as well as increasing access to potable water for rural and urban populations,

Portfolio Committee On Environment, Water, Tourism & Hospitality Industry./Finance and Economic Development

§ Appropriation ofUS$25.8 million earmarked for the construction and maintenance of several dams (Paragraph 250)

§ Appropriation of US$16.4 million towards water and sanitation programmes (Paragraph 254)

Prioritisation of education

Portfolio Committee on Education, Sport, Arts and Culture

§ Education got the biggest budget of US$803 771 000 (19.6%). The total education budget is 24% of total budget and is above the minimum threshold in the Dakar Framework of 2000 for Action on Education for All, which requires that the Education Budget must be 12% of total expenditure

§ The 2017 Budget prioritised provision of teaching and learning materials, investment in Early Childhood Development, developing education facilities, including infrastructure, strengthening the education curricula, as well as reducing the skills and competency gaps and allocated US$803.8 million towards primary and secondary education. (Paragraph 87)

Strengthen the school feeding programme.

Portfolio Committee on Education, Sport, Arts and Culture

Treasury allocated US$0.12 million for the school

feeding programme to mitigate against learners dropping out of school on account of hunger (Paragraph 331)

Promotion of ICT and E-Governance rollout

Portfolio Committee on ICT

Appropriation of US$6.9 million to set up the National Data Centre to support the rollout and use of E-Government services by citizens (Paragraph 293)

Prioritisation of provision of water and sewer disposal and solid waste management

Portfolio Committee On Local Government, Rural & Urban Development

§ Undertaking to mobilise a total of US$100.3 million, comprising of US$45.3 million from the Budget and US$55 million from development partners towards investment in water supply and sanitation projects in 2017 (paragraph 249)

§ Appropriation of US$16.4 million towards water and sanitation programmes (Paragraph 254)

Provision of financial support to youth initiatives through the establishment of National Youth Fund (NYF) meant to support youth to create sustainable employment opportunities

Portfolio Committee, on Youth, Indigenisation & Economic Empowerment,

Treasury appropriated US$1 million towards the Youth Development Fund in support of community outreach training services and establishment of agricultural, manufacturing and service production hubs (Paragraph 349)

Conclusion

Parliament commends the Minister of Finance and Economic Development for incorporating several measures proposed by Parliament and other stakeholders in the 2017 Budget and in prior Budget Statements. These include the upward review of the Ministry of Higher Education budget, inclusion of US$10 million for Women’s Bank capacitation in the blue book and removal of VAT from previously zero rated products just to mention but a few. This, therefore, goes a long way in changing the widely held perception that Parliament is a rubber stamping institution in as far as budgetary issues are concerned. While some of the proposals may not have been included in this year’s budget Parliament is hopeful that the Minister will continue to consider these proposals and some of them will be adopted in the future.

It is my hope that I have ably demonstrated that your hopes and aspirations are not taken for granted, either by Parliament or the Executive. Our democracy is alive and well. So the next time the Parliament juggernaut rolls into your town, growth point, resettlement area or communal area for a public hearing, please find time to give your input in the knowledge that it will be considered on its own merits. In future instalments I will look at the positive impact that the public input has had in influencing legislation before Parliament.

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