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An Analysis of the Retention Fund: Parliament Budget Office

PARLIAMENT BUDGET OFFICE

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STATUTORY AND RETENTION FUNDS: WHAT IS THE WAY FOWARD

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1.      Introduction and Background

Zimbabwe could be losing millions of dollars through misuse of retained funds by various Government Departments who are retaining 100% of the funds they are collecting. The Auditor General has raised a red flag over lack of transparency and accountability with regards to most of these statutory and retention funds. This compromise in Public Finance Management Systems is a wakeup call for the country to revert back to the old system where all revenues were deposited into the Consolidated Revenue Fund (CRF) (except in special cases, according to Section 302 (b) of the Constitution), and all allocations and disbursements were made from these subject to the permission of Parliament through the budget process.

Section 302 of the Constitution of Zimbabwe compels government institutions to remit all funds to treasury. The section reads:

There is a Consolidated Revenue Fund into which must be paid all fees, taxes and borrowings and all other revenues of the Government, whatever their source, unless an Act of Parliament—

(a) requires or permits them to be paid into some other fund established for a specific purpose; or

(b) permits the authority that received them to retain them, or part of them, in order to meet the authority’s expenses.”

 

It is clearly evident from this section that all retentions which are not backed by an Act of Parliament are unconstitutional.  Most of these funds were created before the adoption of the new constitution in 2013 and have no specific enabling legislation. They obtained retention authority from the Minister of Finance and Economic Development through Section 18 of the Public Finance Management Act (PFMA) (Chapter 22:19).

 

 

2.      Rationale for revenue consolidation and retention

Consolidated Revenue Fund is a term used in many countries which derived their political systems from the Westminster model to describe the main bank account of the government. All tax and non-tax revenue is paid into the fund unless Parliament has specifically provided otherwise by law. Any money received by the government which is not taxation, and is not to be retained by the receiving department (for example, fines), is classed as a Consolidated Fund extra receipt (CFER). These funds are to be paid into the Consolidated Fund as soon as they are received in order to ensure transparency and accountability. Parliament gives statutory authority for the Government to draw funds from the Consolidated Fund by Acts of Parliament known as the Appropriation Act and Consolidated Fund Act. This ensures transparency and accountability in the use of such funds.

There are two types of funds in Zimbabwe, statutory funds established by a specific Act for a specific purpose and the PFMA funds established on the authority of Section 18 of the PFMA for administrative convenience. Most of the PFMA retention funds in Zimbabwe were created as a survival tactic during the peak of Government fiscal challenges. This was to allow government departments to retain part of their revenue to fund critical operations during the hyperinflationary era where a slightest lag in releasing funds from the CRF would significantly compromise government operations and service delivery due to the rapid loss of value for money. Treasury authorized, albeit without legal backing (before promulgation of the PFMA), certain departments to retain all collected funds to finance critical areas like capitalisation. The proliferation of these funds and reports of lack of transparency in the use of the funds is now a matter of concern. Treasury has since directed all government departments who collect statutory funds or retain other funds to open accounts with the Central Bank with effect from 31 January 2016 to enhance transparency and accountability, failure of which they threatened to revoke the retention authority. All the concerned departments have complied with this directive. However, it should be noted that this has not addressed the issue of abuse of funds and the constitutional requirements provided for in Section 302. Moreover, Treasury has halted the creation of additional funds since June 2016 after noting a suspicious increase in applications for retention authority by line Ministries and Departments.

It is reported that the combined revenues collected by government institutions or departments outside the budget could have well reached over $1 billion in 2016[1], had they been properly and accurately accounted for. This includes revenues from fines and user charges collected by the Zimbabwe Republic Police, Zinara, Environmental Management Agency, Judicial Services Commission and the Registrar General’s Office, among many other government agencies. This comes at a time when Zimbabwe’s budget has remained static at US$4 billion annually as fiscal revenues continue to dwindle. This situation has eroded the stimulus power of the budget to propel the economy and move the country to middle income status.

The increase in cases of abuse of public funds justify calls for Treasury to be the only department entrusted with the responsibility to manage public resources. It has also been noted that a lot of money is spent on non-essential goods and services at the expense of critical issues. This is the highest level of disservice to the citizens and taxpayers when privileged departments splash on luxuries like cars whilst critical service provision like health delivery are underfunded to the extent of failing to provide basic painkillers.  It defeats the whole purpose and is illogical for the same institutions with retention funds to then look up to treasury for financial support especially for salaries. Universities are a clear case in point.

3.      Supreme Court ruling on a case involving remission of revenue to the Consolidated Revenue Fund

Reference can be made to the supreme Court of Zimbabwe ruling on a case involving Reserve Bank of Zimbabwe (RBZ) vs Zimbabwe Revenue Authority (ZIMRA), case number S-44-13. The judgment was delivered on 20 September 2013 by Deputy Chief Justice Luke Malaba with Justice Vernanda Ziyambi and Justice Yunus Omerjee concurring. RBZ had issued a directive to the banks to transfer the money from accounts held with them by ZIMRA. The directive was issued through a monetary policy statement announcement made by the RBZ Governor, and was purportedly made in terms of Section 6(1)(d) of the Reserve Bank of Zimbabwe Act (the paragraph was later repealed), which imposed on RBZ the duty to advance the general economic policies of the Government by doing those things which are permitted by the law.

As a result of this directive, RBZ received into its own account from two commercial banks money held by those banks on behalf of the ZIMRA. ZIMRA demanded the refund of the money, to which RBZ did not respond. Legal proceedings were therefore instituted by ZIMRA to recover the money. RBZ opposed the claim, on three grounds namely:

        i.      That it had a right under Section 6(1)(d) and 8(1) of the Act, to issue the directive;

      ii.      That ZIMRA should have sued the commercial banks, as opposed to itself, for the recovery of the money, there being no privity of contract between the two; and

    iii.      That Section 18 of the Act granted it immunity from proceedings of this nature.

 

The Court ruled that the obligation imposed by the Constitution applies to all concerned, including ZIMRA, the commercial banks, and the RBZ. The obligation prohibits, in absolute terms, any transfer of revenue collected by the respondent to any other recipient except the Consolidated Revenue Fund. Any act which has the effect of transferring the money to any other recipient, prior to it getting into the Consolidated Revenue Fund, would be unlawful under the Constitution, regardless of who authorized that transfer. The court also ruled that it would not be a valid defence to say that the money was used by government or that the directive came from Government because the Constitution is binding on the Government.

 

 

4.      Analysis of Audit Opinions for Fund Accounts for the Year Ended December 31, 2015

 

A cross section of audit opinions was expressed by the Auditor-General on the various Fund Accounts that were audited for the financial year ended December 31, 2015. An explanation of audit opinions as defined by International Auditing and Assurance Standards Board (IAASB) is given below and followed by the analysis of audit opinions that were actually expressed for the audited fund accounts.

 

4.1        Modified Audit Opinions

International Standard on Auditing (ISA) 705 establishes three types of modified opinions, namely, a qualified opinion, an adverse opinion, and a disclaimer of opinion. The decision regarding which type of modified opinion is appropriate depends upon:

 

(a)        The nature of the matter giving rise to the modification, that is, whether the financial statements are materially misstated or, in the case of an inability to obtain sufficient appropriate audit evidence, may be materially misstated; and

 

(b)        The auditor’s judgment about the pervasiveness of the effects or possible effects of the matter on the financial statements. (Ref: Para. A1)

 

4.2        Determining the Type of Modification to the Auditor’s Opinion

 

4.2.1        Qualified Opinion

The auditor shall express a qualified opinion when:

(a) The auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are material, but not pervasive, to the financial statements; or

(b) The auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, but the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive.

4.2.2        Adverse Opinion

The auditor shall express an adverse opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements.

4.2.3        Disclaimer of Opinion

The auditor shall disclaim an opinion when the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, and the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive.

The auditor shall disclaim an opinion when, in extremely rare circumstances involving multiple uncertainties, the auditor concludes that, notwithstanding having obtained sufficient appropriate audit evidence regarding each of the individual uncertainties, it is not possible to form an opinion on the financial statements due to the potential interaction of the uncertainties and their possible cumulative effect on the financial statements.

4.3        Summary of Audit Opinions

The table below illustrates how the auditor’s judgment about the nature of the matter giving rise to the modification, and the pervasiveness of its effects or possible effects on the financial statements, affects the type of opinion to be expressed.

 

 

 

 

Nature of Matter Giving Rise to the Modification

Auditor’s Judgement about the Pervasiveness of the Effects or Possible Effects on the Financial Statements

 

Material but Not Pervasive

Material and Pervasive

 

Financial statements are materially misstated

 

 

Qualified opinion

 

 

 

 

Adverse opinion

 

Inability to obtain sufficient appropriate audit evidence

 

 

Qualified opinion

 

 

 

 

Disclaimer of opinion

 

4.4        Audit Opinions for Fund Accounts (FYE December 31, 2015)

Vote

Fund Account

Unqualified

Qualified

Disclaimer

Adverse

1

District Development Fund 2013 and 2014

 

 

 

 

3

National Heroes Dependants Assistance Fund 2014

 

 

 

 

 

Public Service Training Centres Amenities Fund 2014

 

 

 

 

 

Public Service Training Loan Fund

 

 

 

 

 

Yvonne Eustasie Parfitt Homes for the Aged

 

 

 

 

4

Defence Procurement Fund 2014

 

 

 

 

5

State Asset Disposal Fund 2009-13

 

 

 

 

 

Schedule of Outstanding Revenue 2013

 

 

 

 

 

Schedule of Revenue Received 2013

 

 

 

 

 

Statement of Contingent Liabilities 2013

 

 

 

 

 

Statement of Public Debt 2013

 

 

 

 

 

Summary of Transaction on the Exchequer Account 2013

 

 

 

 

 

Summary of Transaction on the CRF 2013

 

 

 

 

7

Standards Development Fund 2014

 

 

 

 

 

Trade Measures Fund 2010-13

 

 

 

 

8

Agricultural Revolving Fund 2013

 

 

 

 

9

Special Gold Unit Fund 2014

 

 

 

 

 

Mines Industrial Loan Fund 2014

 

 

 

 

 

Mines and Mining Development Fund 2014

 

 

 

 

10

Lake Kariba Fisheries Research Institute 2015

 

 

 

 

 

Rhodes Matopos Estate Fund 2015

 

 

 

 

 

Rhodes Nyanga Estate Fund 2015

 

 

 

 

 

Meteorological Services Fund 2013 and 2014

 

 

 

 

 

National Coordinating Unit Fund 2014

 

 

 

 

 

Secretary’s Fund 2014

 

 

 

 

 

Water Fund 2014

 

 

 

 

11

New Limpopo Bridge Fund 2014

 

 

 

 

 

New Vehicle Security Registration Number Plate Revolving Fund 2013 and 2014

 

 

 

 

13

Civil Service Housing Loan Fund 2013

 

 

 

 

 

Housing and Guarantee Fund 2014

 

 

 

 

 

National Civil Protection Fund 2013 and 2014

 

 

 

 

 

National Housing Fund 2012 and 2013

 

 

 

 

 

Stadia Revolving Fund 2014

 

 

 

 

 

Rural Social Amenities Development Fund

 

 

 

 

14

Health Services Fund 2013 and 2014

 

 

 

 

 

Medical Research Council of Zimbabwe

 

 

 

 

15

School Service Fund 2014

 

 

 

 

16

Amenities Fund 2009 and 2010

 

 

 

 

 

National Education and Training Fund 2013

 

 

 

 

 

Tertiary Education and Training Development Fund 2009 and 2010

 

 

 

 

17

Youth Development and Employment Creation Fund 2014

 

 

 

 

18

National Archives Publications and Production Trust Fund 2014

 

 

 

 

 

Registrar General Retention Fund 2014

 

 

 

 

 

Immigration Services Fund 2014

 

 

 

 

 

ZRP Revolving Fund 2014

 

 

 

 

 

Courts Administration 2014

 

 

 

 

19

Attorney-General’s Office Administration Fund 2014

 

 

 

 

 

Deeds and Companies Office Fund 2014

 

 

 

 

 

ZPS Retention Fund 2014

 

 

 

 

 

Legal Aid Fund 2014

 

 

 

 

21

Indo-Zimbabwe Fund 2015

 

 

 

 

 

Small and Medium Scale Enterprises Revolving Fund 2015

 

 

 

 

22

NOCZIM Debt Redemption Fund 2014-15

 

 

 

 

 

Pipeline and Rail Fund 2015

 

 

 

 

 

Strategic Fuel Reserve Fund 2014

 

 

 

 

23

Women’s Development Fund 2014

 

 

 

 

 

Zimbabwe Community Development Fund 2014

 

 

 

 

26

Lands and Resettlement Fund 2014

 

 

 

 

27

Courts Administration Fund 2014

 

 

 

 

 

Guardian’s Fund 2014

 

 

 

 

28

Skills Retention Fund 2014

 

 

 

 

 

Public Service Transport Management Fund 2012 and 2013

 

 

 

 

31

War Veterans Fund 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.5        Audit Opinions for Fund Accounts in Percentages

 

Forty-three percent of the audited fund accounts were issued with qualified audit opinions. On the worst side eleven percent had disclaimer audit opinions and an equal number had adverse audit opinions. The qualified, disclaimer and adverse audit opinions are red flags of possible abuse of public funds. This goes to show that there is urgent need for accountability and transparency on most of the fund accounts.

 

It is also important to note that thirty-one (31) fund accounts had not submitted their accounts for audit as at May 17, 2016 (Annexure 3 refers).

 

5.      Policy Options

The following are the policy options available to the Ministry of Finance with regards to retention of funds:

Option

Likely outcome

Revoke the retention authority and enforce the constitutional requirement that all funds must be remitted to the CRF and where appropriate, the concerned departments can be allowed to retain a small percentage, just like what ZIMRA does to meet fund administration expenses.

§  Enhances transparency and accountability as funds are allocated by the Ministry of Finance under the control of the National Budget system and the supervision of Parliament.

§  Ensures smooth allocation of the funds to various government departments according to priorities.

§  Ensures even distribution of resources and eliminate the current scenario were some government departments with retention funds are well off compared their poor cousins who rely entirely on treasury allocation.  (For example ZRP which has upgraded its fleet and spruced up police station using retained revenue yet the Zimbabwe Prison service on numerous occasions has failed to bring prisoners to the courts citing fuel and transport challenges)

§  Enhance transparency unlike the current scenario where money collected by certain departments is difficult to trace upholding the constitution and given the limited resources and the shoestring budget Government is working with.

§  Critical operations may be underfunded and this may compromise service delivery.

§  Funds may have borrowed against expected cash inflows and revoking may lead to government assumption of debt or litigation

 

Maintain the current scenario with at least  64 statutory and retention funds

§  The status quo remains

§  Transparency and accountability difficult to enforce

§  Abuse of resources and non-priority expenditure

§  Over-taxation and excessive revenue collection to meet revenue targets (e.g. on fines thrust will be to collect more rather than reduce crime)

§  Government departments with retention better funded and able to execute their duties timeously

§  Funds able to repay what they borrowed against expected cash inflows

 

It is critical, if the first option is selected, to put in place mechanisms to ensure timely exchequer releases, once all revenue is remitted to the CRF. This will enhance the smooth flow of government business and ensure that government operations are not crippled.

6.      Conclusion

It is our fervent hope, as the Budget Office that this matter will be given the consideration it deserves taking into account the merits and demerits of the 2 options. Value for money to the public is greatly emphasized. The ultimate aim should be to harness more resources into the system, improve service delivery and reduce revenue loopholes that have continued to drain public funds.

 

 

 

 

 

 

 

 

 

ANNEXURE 1:

SUMMARY OF SOME OF THE 64 STATUTORY AND RETENTION FUNDS IN ZIMBABWE

 

NAME OF FUND

RESPONSIBLE AUTHORITY

ESTABLISHING ACT

USE

RETENTION

ANNUAL COLLECTION (2017 EST)

District Development Fund

Office of the President and Cabinet

District Development Fund Act [Chapter 29:06]

Infrastructural development works in communal and resettlement areas.

100%

1 472 000

Public Service Training Centres Amenities Fund

Public Service, Labour and Social Services

Section 18 of the PFMA (Chapter 22:19)

Improve institutional capacity of training centres.

100%

1 132 000

Senior Officers Housing Fund

Finance and Economic Development

Section 18 of the PFMA (Chapter 22:19)

Land/house purchase, mortgage relief.

100%

1 650 000

Standards Development Fund

Industry and Commerce

Standards Development Fund Act

Develop and promote standardization of commodities.

100%

11 860 000

Trade Measures Fund

Industry and Commerce

Section 18 of the PFMA (Chapter 22:19)

Development and maintenance of legal and metrology services provided to the Ministry.

30%

150 300

Agriculture Revolving Fund

Agriculture, Mechanisation and Irrigation Development

Section 18 of the PFMA (Chapter 22:19)

Additional resources to the Agricultural Research, National Botanic Garden, Animal Management.

100%

 

Special Gold Unit Fund

Mines and Mining Development

Section 18 of the PFMA (Chapter 22:19)

 

100%

695 400

Mines and Mining Development Fund

Mines and Mining Development

Section 18 of the PFMA (Chapter 22:19)

Computerised mining titles system and development of mining industry.

25%

6 625 000

Mining Industry Loan Fund

Mines and Mining Development

Section 18 of the PFMA (Chapter 22:19)

 

100%

926 500

Water Fund

Environment, Water and Climate

ZINWA [Chapter 22:19]

Development of water resources.

100%

400 200

Environment Fund

Environment, Water and Climate

Environmental Management Act [Chapter 20:27]

Standardisation of environmental services.

100%

12 000 000

Meteorological Services Fund

Environment, Water and Climate

Meteorological Services Act [Chapter 13:21]

Financial resources for Met. Dept.

100%

 

Rhodes Matopos Fund

Environment, Water and Climate

Rhodes Estate Act [Chapter 20:17]

Development and maintenance of Matopos Estates.

100%

898 200

Rhodes Nyanga Fund

Environment, Water and Climate

Rhodes Estate Act [Chapter 20:17]

Development and maintenance of Nyanga Estates.

100%

1 176 000

Traffic and Legislation Fund

Transport and Infrastructural Development

Section 18 of the PFMA (Chapter 22:19)

Registration, licencing, inspection, weighing of motor vehicles, suervey of vessels, and certification.

5%

5 957 800

New Vehicle Security Registration Number Plate Revolving Fund

Transport and Infrastructural Development

Section 18 of the PFMA (Chapter 22:19)

Cost of producing and distributing number plates.

100%

12 000 000

Department of Roads Fund

Transport and Infrastructural Development

Section 25 Roads Act [Chapter 13:18]

Road maintenance works.

100%

42 511 900

Road Fund - ZINARA

Transport and Infrastructural Development

Section 13 Roads Act [Chapter 13:18]

Maintenance works.

100%

204 602 300

New Limpopo Bridge Fund

Transport and Infrastructural Development

Section 18 of the PFMA (Chapter 22:19)

Maintenance and rehabilitation of the Old and New Limpopo Bridges.

100%

12 605 300

Aviation Infrastructure Development Fund

Transport and Infrastructural Development

Section 18 of the PFMA (Chapter 22:19)

 

100%

9 420 300

Stadia Revolving Fund

Local Government, Public Works and National Housing

Section 18 of the PFMA (Chapter 22:19)

Maintenance of all Government-owned stadia.

100%

289 000

Government Pool Properties Fund

Local Government, Public Works and National Housing

Section 18 of the PFMA (Chapter 22:19)

Maintenance of Government Pool House.

50%

4 000 000

Civil Service Housing Fund

Local Government, Public Works and National Housing

Section 18 of the PFMA (Chapter 22:19)

Funding to civil servants towards land/house purchase and mortgage relief.

100%

2 310 000

Housing and Guarantee Fund

Local Government, Public Works and National Housing

Section 14 Housing and Building Act and Section 18 Public Finance Management Act

 

100%

2 740 000

National Housing Fund

Local Government, Public Works and National Housing

Section 14 Housing and Building Act and Section 18 Public Finance Management Act

Constructing and servicing housing properties and cost of research.

100%

1 840 000

Health Services Fund

Health and Child Care

Section 18 of the PFMA (Chapter 22:19)

Supplementing the Health Budget.

100%

 

School Services Fund

Primary and Secondary Education

Section 18 of the PFMA (Chapter 22:19)

Learning and teaching materials in the school systems.

100%

31 494 700

Independent Colleges Guarantee Fund

Primary and Secondary Education

Section 46 Education Act [Chapter 25:04]

Defray expenses in ensuring acceptable standards in registered independent colleges and refunds to students in the event of insolvency of these colleges.

100%

334 400

Education Materials Disbursement Fund

Primary and Secondary Education

 

Design and production of Curricula Material.

100%

90 000

Colleges Amenities Fund

Higher and Tertiary Education, Science Technology

Section 18 of the PFMA (Chapter 22:19)

Facilities for sporting, social, and cultural activities.

100%

40 040 000

Industrial Training and Trade Testing Fund

Higher and Tertiary Education, Science Technology

Section 18 of the PFMA (Chapter 22:19)

Development and maintenance of services, programs, and related activities for industrial training and trade testing.

100%

1 282 600

National Education and Training Fund

Higher and Tertiary Education, Science Technology

Section 18 of the PFMA (Chapter 22:19)

Development and maintenance of services at tertiary education institutions.

100%

 

Vocational and Technical Examinations Fund

Higher and Tertiary Education, Science Technology

Section 18 of the PFMA (Chapter 22:19)

Development of services and programmes relating to National Examinations, Curriculum Research and Development activities.

100%

5 000 000

Tertiary Education and Training Fund

Higher and Tertiary Education, Science Technology

Section 18 of the PFMA (Chapter 22:19)

Development and maintenance of services, programmes and related activities at tertiary education institutions.

100%

60 060 000

Zimbabwe Manpower Development Fund

Higher and Tertiary Education, Science Technology

Section 47 Zimbabwe Manpower Development Act [Chapter 28:02]

Development of skilled manpower.

100%

36 307 000

Youth Development and Employment Creation Fund

Youth, Indigenisation and Economic Empowerment

Section 18 of the PFMA (Chapter 22:19)

Loans to youth income generating projects and businesses.

100%

776 000

National Indigenisation and Economic Empowerment Fund

Youth, Indigenisation and Economic Empowerment

Section 12 National Indigenisation and Economic Empowerment Act

Share acquisitions, finance for start-ups, market research and capacity building projects.

100%

694 700

Immigration Services Fund

Home Affairs

Section 18 of the PFMA (Chapter 22:19)

Effective execution of immigration duties.

100%

1 200 000

Registrar General Retention Fund

Home Affairs

Section 18 of the PFMA (Chapter 22:19)

All registration exercises, staff development and information dissemination activities.

100%

27 000 000

ZRP Revolving Fund

Home Affairs

Section 18 of the PFMA (Chapter 22:19)

Enable the Police to discharge its mandate in an efficient manner.

100%

59 391 300

Attorney General’s Fund

Justice, Legal and Parliamentary Affairs

Section 18 of the PFMA (Chapter 22:19)

Effectiveness and efficiency of administration of justice.

8%

408 100

Deeds, Companies and Intellectual Property Fund

Justice, Legal and Parliamentary Affairs

Section 18 of the PFMA (Chapter 22:19)

Registering, protecting and facilitating easy access to information.

5%

1 179 100

Legal Aid Directorate Fund

Justice, Legal and Parliamentary Affairs

Section 18 of the PFMA (Chapter 22:19)

Meeting any fees and expenses arising from the engagement of legal practitioners.

100%

41 900

Zimbabwe Prisons and Correctional Services Fund

Justice, Legal and Parliamentary Affairs

Section 18 of the PFMA (Chapter 22:19)

Effective and efficient administration of the ZPCS.

100%

815 400

Broadcasting Fund

Information, Media and Broadcasting Services

Section 29 Broadcasting Services Act  [Chapter 12:06]

 

100%

746 360

Indo-Zimbabwe Fund

Small and Medium Enterprises and Co-operative Development

Section 18 of the PFMA (Chapter 22:19)

Training and development in Micro, Small and Medium Enterprises.

100%

 

Small and Medium Enterprises Revolving Fund

Small and Medium Enterprises and Co-operative Development

Section 18 of the PFMA (Chapter 22:19)

Provide interest-bearing loans to SMEs.

100%

 

Central Cooperative Fund

Small and Medium Enterprises and Co-operative Development

Section 18 of the PFMA (Chapter 22:19)

Finance the education and training of members and prospective members of co-operatives.

100%

 

Pipeline and Rail Fund

Energy and Power Development

Section 18 of the PFMA (Chapter 22:19)

Payment of CPMZ and BBR obligations.

100%

2 160 000

Debt Redemption Fund

Energy and Power Development

Section 18 of the PFMA (Chapter 22:19)

Amortization of debts owed by NOCZIM.

100%

38 400 000

Strategic Reserves Fund

Energy and Power Development

Section 18 of the PFMA (Chapter 22:19)

Mitigate the impact of fuel shortages in the country.

100%

18 044 200

Zimbabwe Community Development Fund

Women Affairs, Gender and Community Development

Section 18 of the PFMA (Chapter 22:19)

 

100%

 

Women’s Development Fund

Women Affairs, Gender and Community Development

Section 18 of the PFMA (Chapter 22:19)

 

100%

 

Zimbabwe Tourism Fund

Tourism and Hospitality

Section 29 Tourism Act [Chapter 14:20]

To develop tourism.

100%

 

Universal Services Fund

Information Communication Technology, Postal and Courier Services

Postal and Telecommunication Act [Chapter 14:19]

Standardisation of postal and telecommunication services.

100%

14 054 900

Lands and Resettlement Fund

Lands Resettlement and Rural Resettlement

Section 18 of the PFMA (Chapter 22:19)

To provide resources for the Land Resettlement Programme.

60%

3 465 000

Lands Compensation Fund

Lands Resettlement and Rural Resettlement

Section 18 of the PFMA (Chapter 22:19)

Compensation of former farm owners.

100%

10 000 000

Courts and Administration Fund

Judicial Services Commission

Section 18 of the PFMA (Chapter 22:19)

Providing resources to Courts.

32%

13 724 800

Guardian Fund

Judicial Services Commission

Section 18 of the PFMA (Chapter 22:19)

 

100%

 

Salary Services Bureau Fund

Public Service Commission

Section 18 of the PFMA (Chapter 22:19)

To finance the development of services and programmes of the SSB.

100%

 

Pension Office Retention Fund

Public Service Commission

Section 18 of the PFMA (Chapter 22:19)

Pension reform initiatives.

60%

4 100 000

Public Service Transport Management Fund

Public Service Commission

Section 18 of the PFMA (Chapter 22:19)

Acquisition of buses for the transportation of Civil Servants to and from work.

100%

383 300

National Archives Retention Fund

Rural Development, Preservation and Promotion of National Culture and Heritage

Section 18 of the PFMA (Chapter 22:19)

 

100%

 

Broadcasting Fund

Media Commission

Section 29 Broadcasting Services Act [Chapter 12:06]

 

100%

1 133 000

 

 

 

 

 

 

 

** Section 32(9) of the NPA Act specifies that the JSC is supposed to retain 40% of revenue, while allocating 30% to the NPA, 20% to the AG’s Office and 10% to the Justice ministry. There are reports that the JSC is still retaining 80% and disbursing 20%, in contravention of the Act. Before the NPA Act came into force in January this 2015, the JSC retained 80% of the funds while 20% was disbursed to the AG’s Office.

 

 

ANNEXURE 2:

SECTION 18 OF THE PUBLIC FINANCE MANAGEMENT ACT

 Establishment of other public funds

(1) Whenever—

(a) money is appropriated by Act of Parliament for the establishment of a fund for a particular purpose; or

(b) in the opinion of the Minister, it is necessary or desirable for the purpose of facilitating the accounting for

public resources that a separate fund be established;

the Treasury shall establish a fund for that purpose.

 (2) On the establishment of a fund in terms of subsection (1), the Treasury shall draw up a constitution for the

regulation of the affairs of that fund, which constitution—

(a) shall specify the objects of the fund and the money which shall be payable into that fund; and

(b) shall provide for the payments which may be made out of that fund; and

(c) may provide for such other matters as are considered to be necessary or desirable.

(3) A constitution drawn up in terms of subsection (2) may be amended from time to time or replaced as the

Treasury thinks fit.

(4) Where a constitution has been drawn up in terms of subsection (2) or amended or replaced in terms of subsection

(3) the Minister shall lay a copy of that constitution or the amendment to or replacement of that constitution, as

the case may be, before the House of Assembly on one of the ten days on which the House of Assembly sits next after

that constitution was drawn up or after that amendment or replacement of the constitution was drawn up, as the case

may be.

(5) Where a fund has been established before the date of commencement of this Act, and is operating on that date

in accordance with a constitution drawn up by or with the approval of the Treasury—

(a) that fund shall be deemed to have been established in terms of subsection (1); and

(b) that constitution shall be deemed to be a constitution drawn up in terms of subsection (2) but it shall not be

necessary to lay a copy thereof before the House of Assembly in terms of subsection (4); and

(c) if that constitution purported to confer on the fund powers which may only be exercised by a corporate body

and the Minister has, by notice in the Gazette, declared that the fund concerned shall be a corporate body—

(i) that fund shall be regarded as a body corporate with such powers as may be conferred upon it by or

in terms of its constitution, and shall be deemed to have become a body corporate with effect from

the date on which the fund was established; and

(ii) any assets or liabilities of that fund shall not be regarded for any purposes as assets or liabilities of

the State; and

(iii) any employee of that fund shall not be regarded for any purposes as an employee of the State; and

(iv) the provisions of subsection (3), the proviso to subsection (9) and subsection (10) shall not apply in

relation to the constitution of that fund but that constitution shall not be amended without the approval

of the Treasury.

(6) Subject to subsection (1), no fund shall be established by an officer in the employment of the State for the deposit

of public moneys unless the establishment of that fund is authorised by or in terms of this Act or any other

enactment.

(7) Where a fund administered by an officer in the employment of the State has been established in terms of this

Act or any other enactment—

(a) there shall be paid into and credited to that fund any moneys which are—

(i) appropriated by Act of Parliament for the purposes of that fund; or

(ii) required by any enactment or, in the case of a fund established in terms of subsection (1), by the

constitution thereof, to be paid into that fund;

(b) there may, subject to the approval of the Treasury, be paid into and credited to that fund any money made

available from other sources for the purposes of that fund.

(8) The Minister may, on such terms and conditions as he or she may fix, make loans or advances for a period

not exceeding three hundred and sixty days to any statutory fund or fund referred to in this section to enable the functions

that should be carried out by means of the use of the money in that fund to be carried out:

Provided that money loaned or advanced in terms of this subsection shall not be used for capital expenditure unless

the Minister has approved such use.

(9) Notwithstanding anything to the contrary contained in this Act, the receipts, earnings or accruals of a statutory

fund or fund referred to in this section shall be paid into and form part of that fund:

Provided that, subject to any enactment by or in terms of which the fund is established or, in the case of a fund established

in terms of subsection (1), the provisions of the constitution thereof, the Treasury may at any time direct that

any moneys in such fund shall be paid into the Consolidated Revenue Fund.

(10) Subject to any enactment by or in terms of which a fund is established or, in the case of a fund established in

terms of subsection (1), the provisions of the constitution thereof, the Treasury may wind up that fund and shall transfer

any moneys in that fund to the Consolidated Revenue Fund.

(11) Any loan made in terms of subsection (8) shall be paid out of the Consolidated Revenue Fund which is hereby

appropriated to the purpose.

 

 

 

 

 

 

 

 

 

 

 

 

ANNEXURE 3:

FUND ACCOUNTS NOT SUBMITTED FOR AUDIT AS AT MAY 17, 2016

Ministry

Year

Finance and Economic Development

§  Consolidated Revenue Fund

§  Contingent Liabilities

§  Exchequer Account

§  National Development Fund

§  Outstanding Revenue

§  Public Debt

§  Public Financial Assets

§  Receipts and Disbursements

§  Revenue Received

§  Revenue Written-off

§  Schedule of Revenue Received

§  Senior Officers Housing Fund

§  State Assets Disposal Fund

§  Statement of Receipts and Disbursements

§  Summary Appropriations

 

2014-15

2015

2015

2015

2015

2015

2015

2015

2015

2015

2015

2015

2015

         2015

2015

Agriculture, Mechanisation and Irrigation

§  Agricultural Revolving Fund

 

2015

 

Environment, Water and Culture

§  Meteorological Services Fund

§  Secretary’s Fund

§  Small Scale Funding Account

 

 

2015

2015

2015

Transport and Infrastructural Development

§  Traffic and Legislation Fund

§  New Vehicle Security Registration Number Plate Revolving Fund

 

2015

2015

 

Local Government, Public Works and National Housing

§  Housing and Guarantee Fund

§  National Housing Fund

§  Public Service Housing Loan Fund

§  Rural Social Amenities Fund

 

2015

2014-15

2014-15

2015

 

Health and Child Care

§  Medical Research Council of Zimbabwe

§  Blair Research Trust Fund

§  Ingutsheni Hospital Occupational Therapy and Sheltered Employment Trust Fund

§  Ngomahuru Trust Fund

 

2014-15

2012-2015

 

2014-2015

2011-2015

Higher and Tertiary Education

§  Amenities Fund

§  Tertiary Education and Training Development Fund

 

2015

2015

 



[1] Daily news, 16 April 2017 (Online: Available at: https://www.dailynews.co.zw/articles/2017/04/16/retention-funds-cost-zim-millions)

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