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NATIONAL ASSEMBLY HANSARD 09 MAY 2018 VOL 44 NO 56

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PARLIAMENT OF ZIMBABWE

Wednesday, 9th May, 2018

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

PRAYERS

(THE ACTING SPEAKER in the Chair)

ANNOUNCEMENTS BY THE ACTING SPEAKER

VISITORS IN THE SPEAKER’S GALLERY

THE ACTING SPEAKER (HON. MARUMAHOKO): I have to acknowledge the presence in the Speaker’s Gallery, of students from the Salvation Army Training College with their staff members. You are most welcome  - [HON. MEMBERS: Hear, hear.]  -

ERROR ON THE ORDER PAPER

THE ACTING SPEAKER: I have to inform the House that we have noted an omission of Consideration of Clause 8 of the Shop Licences Amendment Bill [H. B. 10, 2016]. The Bill will therefore be recommended to the Committee of the House as Order of the Day, Number 1 on today’s Order Paper and the rest of the Orders to be re-numbered accordingly.

CONSTITUENCY DEVELOPMENT FUND

THE ACTING SPEAKER:  All Members are hereby reminded that the cut-off date for the CDF applications was 31st March, 2018.  The verification exercise of the CDF project by the CDF Management Committee commenced on 23rd April, 2018, to this end no new CDF applications will be considered to allow the verification exercise to be completed before the end of July 2018.  The CDF Committee is only finalising on those applications submitted on or before the 31st of March, 2018.  This is to enable all Hon. Members to account for monies allocated for their constituencies before the dissolution of the Eighth Parliament.

To date, the Parliament CDF Management Committee has verified CDF projects in two provinces namely, Masvingo and Mashonaland East.  The following is the itinerary of the verification exercise:

1.    Midlands  Province - 13 to 23 May, 2018;

2.    Bulawayo, Matebeleland North and Matebeleland South  Provinces – 27th May to 7th June, 2018;

3.    Mashonaland Central Province – 11th to 15th June, 2018;

4.    Mashonaland West Province – 17th to 22nd June, 2018;

5.    Manicaland Province – 24th to 30th June, 2018; and

6.    Harare Province – 2nd to 6th July, 2018.

This exercise must be completed by the 6th of July, 2018 and a comprehensive report shall be submitted to the Committee on Standing Rules and Orders (CSRO) for its consideration and tabled in Parliament thereafter. 

All Hon. Members are advised to comply with Article 5.2.4. of the Accounting Officer’s Instructions which provides for submission of returns monthly for CDF and avail all necessary documentation to the CDF Management Committee as it visits your respective constituencies.  For those provinces already visited, please submit your returns as well as your progress reports before close of business on the 31st of May, 2018.  This does not preclude those not yet visited but have already finilised projects or have their documentation and reports ready to submit the same to the secretariat.  In the event that you are not available in the constituency, please make sure that someone knowledgeable about the CDF projects is present to assist the verification team.  I therefore, urge you all to cooperate with the CDF Management Committee in this important and noble exercise.

ORAL ANSWERS TO QUESTIONS WITHOUT NOTICE

          HON. CROSS: Mr. Speaker Sir, I asked the Minister of Transport and Infrastructural Development a few weeks ago the position regarding vehicles on the road without licence plates.  He told me in this august House that it was illegal.  I want to tell the Minister that daily there are vehicles parked here at Parliament in the official parking lot without licence plates.  I see vehicles on the roads without licence plates frequently.  Why on earth is action not being taken by the police?  If a vehicle is running around without a licence plate, you know what they are, sigebengas.  I think this matter should be attended to as a matter of urgently.

          THE MINISTER OF TRANSPORT AND INFRASTRUCTURAL DEVELOPMENT (HON. DR. GUMBO): Thank you Mr. Speaker Sir. I would like to thank Hon. Cross for that question.  The Hon. Member is correct that he once asked the question and I did respond to it.  The answer is that the Minister of Transport and Infrastructural Development and the Ministry of Home Affairs are not the same.  The issue is now about enforcement by the Ministry of Home Affairs.  They are the ones that should not allow the cars to ply our roads without identification or number plates.  The Ministry of Transport and Infrastructural Development only provides number plates, but the enforcement is done by the Ministry of Home Affairs.  I implore the Minister of Home Affairs to take action because he is not here. I will tell him that he should actually reign on his officials to enforce that regulation.  I thank you.

HON. MARIDADI:  Supplementary question.

THE ACTING SPEAKER:  Order, Hon. Maridadi.  Where does your supplementary arise from because he is saying he will liaise with the Minister?

HON. MARIDADI:  The supplementary question, Hon. Speaker, is that we know - especially now that it is time for elections and some of us that come from the opposition have cars without number plates following us all over the place and we know that these cars are from State Security.  It is not a secret and I think those that are parked in our car park here, are either Isuzu or Nissan Vehicles that do not have numbers and they are owned by State Security, CIO, and we know that. 

THE ACTING SPEAKER:  Hon. Maridadi, that question is supposed to be posed to the Minister of Home Affairs.

HON. MARIDADI:  I am just telling him so that when he sees the Minister of Home Affairs he tells him that there are CIO vehicles...

THE ACTING SPEAKER:  No, take your seat please.

HON. HOLDER:  Thank you Mr. Speaker Sir.  My question is directed to the Minister of Transport and Infrastructural Development.  Could the Minister please update this House on the developments about the Masvingo-Harare-Beitbridge highway since there was a launch to say that they had started the process of dualisation.  I have been on that road several times and I have not seen anything yet.  If the Minister could update us on what is happening there.  I thank you.

THE MINISTER OF TRANSPORT AND INFRASTRUCTURAL DEVELOPMENT (HON. DR. GUMBO):  Thank you Mr. Speaker.  A request was made by Hon. Maridadi in this House that I should make a statement on the Beitbridge-Harare-Chirundu road and I am ready with that statement. I will be making that statement tomorrow.  Thank you.

HON. MISIHAIRABWI-MUSHONGA:  Thank you very much.  I will direct this question to Hon. Chinamasa.  Through you Mr. Speaker Sir, we have had the situation of the Hwange women who have been demonstrating at the Hwange Colliery and today is their 101 day.  We know that Government has 42% in Hwange Colliery and we need to have a response from Government.  Also because today we just met those women and they are indicating to us that they are being threatened that the tent that they are in is going to be taken away.  These women are sitting there and have babies.  Can Government indicate what they are going to be doing about that situation because it has become a national disaster?

THE MINISTER OF FINANCE AND ECONOMIC PLANNING (HON. CHINAMASA):  I think the question is misdirected to me.  The responsibility for the Hwange Colliery is the responsibility of the Ministry of Mines and Mining Development.  I am not even privy to the events that are being referred to.  I thank you.

HON. MISIHAIRABWI-MUSHONGA:  The Leader of the House is here, Mr. Speaker.  This issue has been going on in this House for a very long time and what we have been having is the Minister of Public Service, Labour and Social Welfare coming in and saying no and this one coming in and saying no.  We have women and babies, it is winter, there is a problem.  Can the Leader of the House at least try and give us an answer.

THE ACTING SPEAKER:  Appreciated, but why do we not give the Minister of Public Service, Labour and Social Welfare to come and make a statement in this House.  We will make sure that she comes here.

HON. MARIDADI:  On a point of order, Mr. Speaker.  This problem has been there for 101 days.  That is more than three months and if Hon. Chinamasa, the Minister of Finance and Economic Planning who sits in Cabinet every Tuesday professes ignorance, Mr. Speaker, that is dereliction of duty on the part of Government.  We need a response on this question.  We cannot have a Government that abdicates its responsibility.

THE ACTING SPEAKER:  Order please.  You cannot have a response in the absence of the Minister who is in charge of that portfolio – [HON. MEMBERS:  Inaudible interjections.]-

THE ACTING SPEAKER:  Order, order please.

HON. HOLDER:  My next question is to the Minister of Finance and Economic Planning.  Could the Minister please update this House on the issue of cash flow problems, especially in the country, in the banks.  What is Government doing to ease the cash flow process? -[HON. MEMBERS:  Inaudible interjections.]-

THE ACTING SPEAKER:  Order Hon. Members.  I thought this was a very important question.

THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA):  Mr. Speaker Sir, Government recognises that there is a problem and also is fully aware as to the causes of that problem and these problems cannot be addressed overnight.  One of the problems – [HON. MEMBERS:  How many nights?]- 

THE ACTING SPEAKER:  Order, order please.

HON. CHINAMASA:  Hon. Members need to be aware that when we pay their salaries through RTGs that is not represented by physical cash.  That they should know and the system will work perfectly for as long as all of us accept to transact business through electronic transfers.  As a matter of fact, Mr. Speaker Sir, because of this challenge we have now overtaken Kenya in terms of the number of transactions that are transacted electronically, through RTGs and through mobile.

The way to go, Mr. Speaker Sir, for all countries, developed or undeveloped, is that we are moving towards a cashless society and the challenges we have met through cash shortages has actually inspired our population to move expeditiously to a position where we are soon going to be a cashless society.  For instance, Mr. Speaker Sir, of the 97 billion transactions that have been transacted in this country, about 96% of those now are electronic.  All businesses in our retail shops is now electronic.  We have now been able to step up production and supply of point of sale machines from 45 000 and to the current 70 000.  Now, essentially I want Hon. Members to understand where we are going as an economy which is the case for all economies, whether it is India, China or the United States.  We are all going towards a cashless economy, but notwithstanding, Mr. Speaker Sir, His Excellency the President has directed both my Ministry and the Reserve Bank to find measures that can ameliorate this problem. I hope that some of the measures that we are considering, which we have not yet concluded will be able to be put into motion and produce a satisfactory outcome. I thank you.

HON. HOLDER: My supplementary question to the Minister is to say, irrespective of the effort that he has done, what mechanism has Government put in place in order for the banks to have credibility to ensure that the depositors know that their money is safe because right now what I am seeing out there is a nightmare. People are sleeping in the streets and 100 days have passed. Now, we are saying where are we going? Zimbabwe is open for business – [HON. MEMBERS: Hear, hear].

HON. CHINAMASA: I want to assure Hon. Holder and this august House that people’s money in the banks is very safe but you only need and I want to repeat and urge this august House to be more modern, and go along the path towards a cashless society. When you look at the number of cars using fuel, those cars are not buying cash. It is done electronically. Just see the hive of activity on our roads and shops, those shops are transacting – [HON. MARIDADI: On a point order, Mr. Speaker! The …] – electronically …

THE ACTING SPEAKER: Order, order Hon. Maridadi – [HON. MARIDADI: On a point order, Mr. Speaker. No, the Minister is going off tangent.] – Hon. Maridadi, you wait until you are recognised – [HON. MARIDADI: Yah, it is painful when the Minister is misinforming the nation.] – Order, please take your seat. You wait until I have recognised you. You do not just shoot. No, no you do not behave like that.

HON. MARIDADI: On a point of order. I wish the Hon. Minister could listen very carefully to me and to himself when he speaks. He says 96% of transactions are done electronically, that is cashless. The more reason why we must have cash, it means most of the transactions are now cashless. It means for the few transactions that require cash we must be able to have the cash. He gave Kenya as an example, Kenya does not have a cash crisis like Zimbabwe. In his admission, the Minister says we have actually overtaken Kenya in using other platforms which are not cash, more the reason why we must have cash Minister. Listen to yourself carefully when you speak.

THE ACTING SPEAKER: Hon. Maridadi, that is unparliamentary language that you are using – [HON. MARIDADI: I think when the Hon. Minister speaks, he must also listen to himself.] – Be respectful.

HON. MARIDADI: Okay, respectfully Hon. Minister, listen to yourself when you speak.

HON. CHINAMASA: Mr. Speaker Sir, I have been listening but the Hon. Member prefers also not to listen to what I said. What I said was - all our salaries in Government, $300 million of it every month is not represented by physical cash. Please get that clear. So, when you get money into a bank account you must not have the expectation that it would be paid out to you in physical cash. What I am urging Hon. Members here is that we should embrace the new culture to transact business electronically. That new culture is also good because it is a very good tool to fight corruption unlike where there are cash-based transactions.  The question Mr. Speaker Sir that I was asked …

THE ACTING SPEAKER: Order, order people to my left – [HON. MUNENGAMI: Hon. Speaker, I never spoke.] – Did I mention your name? [HON. MEMBERS: Inaudible interjections.] – Take your seat. Do not force me to ask one of you to go out please. This is a very important question and you continue making noise, that is not fair.

HON. CHINAMASA: Mr. Speaker, thank you very much to those who have raised this issue. It is very important so that we understand the cause of the shortage. The causes of the shortage is that all our payments, certainly from Government and even from the private sector, are RTGs deposits into their bank accounts. Those deposits are not represented by physical cash - US$ or bond notes but as always, we embrace the electronic form of transfers  and business will move smoothly with minimum disruption to the economy which currently is the case.

Hon. Holder asked me a question - are people’s money in the banks safe and I said I can guarantee that those deposits are safe. The only problem is that you cannot withdraw $8 billion. Currently, the total deposits are $8, 7 billion. Now, there cannot be any expectation to withdraw $8, 7 billion in cash because that cash is not there. We do not have a currency of our own. We have to import US$ and we pay for importation of US$ in the same way that we pay for importing a car. We have to pay to the Federal Reserve of the United States of America.

The point I want to emphasise, I understand there is a problem but it is not to the extent that in fact people would want us to believe. True, whether people want to withdraw amounts and those are the people who are on the queues, yes there are challenges because the banks do not have the cash and these are issues that we are seeking to address. I hope that in the course of time, we should be able to find a solution but clearly, all the economies are now running on the basis of a cashless society and I do not think anyone of us here has been unable to transact for as long as you want to transact electronically. I thank you.

HON. HOLDER: My supplementary is that the Minister has explained eloquently but my question is - in the mining sector there is chrome, diamonds, gold and all sorts of minerals that have not been paid cash. What is happening to that money and why can we not have our own reserves of gold? Where is it going to? That is where my question is because you are being paid 70%. Of that 70%, 30% is going into transactions. So, the 70% is bond and some US$. So, I want to know. At the end of the day you are saying we cannot withdraw but we are mining and exporting, so where is that money going to?

HON. CHINAMASA: Mr. Speaker, I am very grateful to Hon. Holder for his question because it affords me an opportunity to explain very basic economics. As the august House will be aware,  we have been growing production of our gold from 12 metric tonnes in 2013 to 24.5 metric tonnes last year.  This year, we are anticipating or projecting to reach 30 metric tonnes.  Now, the question is - where is that money? 

We are exporting gold and where is that money going? I can answer it in two ways.  First, he acknowledges and admits that the artisanal miners, not the primary producers; the artisanal miners are being paid for the gold that they deliver - 70% in US dollars.  In other words, 70% of the gold that we have exported and paid for in US dollars – we are paying the artisanal miners.  Some of the foreign currency that is earned through gold, gold is one of our major export earning items and a lot of that foreign currency goes to the importation of fuel, electricity and essential things that are necessary to drive this economy.  And, for the Hon. Member to try to say we should not have fuel and electricity because we are producing gold is I think very unreasonable.  I thank you Mr. Speaker.

          HON. MAONDERA:  Thank you Hon. Speaker.  My supplementary question to the Hon. Minister is that, whilst he is saying we should go electronic in transacting as a way of alleviating cash shortages; surprisingly most Government departments are not electronic.  They are refusing swiping, they are refusing RTGS but are insisting on cash.  So, is it not hypocrisy that the Minister is saying we should be electronic yet the very same Government departments that he superintends on are refusing – [AN HON. MEMBER:  VID for example.] – So, how can that be operated?

          HON. CHINAMASA:  Mr. Speaker Sir, I am again grateful for the question.  Not everyone whom we want to transact business with electronically has been able to do so and not through their own fault.  This has been an issue about the supply of point of sale machines which like I pointed out in my answer, we have now upped the supply from 45 000 to 70 000 and that should improve the extent to which we can transact electronically.  We are gunning to increase the supply to 120 000 point of sale machines; which means that anyone doing meaningful business will be required by law to transact their business electronically, which currently is not the case.

HON. NDUNA:  Thank you Mr. Speaker.  Each month there are about 1 000 vehicles that are bought at US$4 000 each and there is US$4 million going out in cash in US dollars either to Tanzania, South Africa, Durban or otherwise outside the borders of Zimbabwe.  Would it not be prudent for the Hon. Minister to make sure that those vehicles are warehoused somewhere and bought in cash here in Zimbabwe and then 10% of that money is put into the banking sector in cash.  We are losing US$4 million monthly to mushikashika, on the Honda Fits and otherwise.  So, would it not be prudent for those people who are selling those vehicles to be warehoused here and then the Minister of Finance and Economic Development can get his pound of flesh arising from the sales and 10% goes into the banking sector?

HON. CHINAMASA:  To the extent that I understood the question, what I think the Hon. Member needs to know is that mushikashika are paid for in foreign currency.  So, as we import them, we are paying foreign currency – they are not produced here locally as far as I am aware.  So, the question as I understood it is that we should be able to charge a commission on the sale of mushikashika.  Currently, the law provides that anyone doing business and anyone selling any goods is required to charge VAT.  If it is not happening, it is because of lack of competent enforcement but the law is very clear and so on.  What I think I want to urge Hon. Members to understand is that we are a unique country.  We do not have currency of our own, we are using hard currency as a medium of exchange and also, because the hard currency is being used as a medium of exchange, the people are not circulating that hard currency when it comes into their possession.  They use it as a store of value and withdraw it from circulation.  That is part of the problem of cash shortages - it does not matter how much US dollars we put into the market, people who get hold of it will withdraw it and put it under the pillow. 

Those are problems of trust and confidence, which it is something that we are working over and cannot be redressed or addressed over night.  It is a process and already I think we have begun building that confidence and trust to a point where even in terms of availability of that cash, it is going to improve as we go along.  I thank you Mr. Speaker.

HON. GONESE:  On a point of order Mr. Speaker.  From the Hon. Minister’s answers, it is clear to me that probably he needs to do some more research so that he can adequately respond to the questions asked by the Hon. Members.  Mr. Speaker Sir, we started using a multi-currency regime in 2009.  I am just putting it as a point of order because his answers, he is simply reciting the problems and to me what we need Mr. Speaker are cogent policy measures which can alleviate the problems which are being faced by Zimbabweans.

All I am saying is that the Minister’s responses clearly indicate that he does not have a clue as to how we can resolve the crisis.  I am saying so arising from the fact that when we started using the multi-currency regime in 2009 and up to about 2016, we did not have cash shortages.  So the reason for cash shortage is not the use of the US dollar because we had been using it for about five or six years without cash shortage.  In short, it means that the reasons for the shortages of cash are other than the simple use of the US dollar and this is why I am saying that he is doing a disservice to the Hon. Members in this august House and the people that we represent.  We require him and his Government to actually go back to the drawing board and try to find out the root causes of the problem so that they can address the symptoms.  He is simply telling us about the symptoms here.  In other countries Mr. Speaker, they also use electronic means of transactions but they do not have shortages of cash.  So, the answer is not necessarily that we use the US dollar or any other multi-currency under our regime.

So I am saying Mr. Speaker, he is not doing a service to us as Hon. Members, to the nation and probably he and his colleagues must go back to the drawing board and find real solutions which we require.  Otherwise, if he comes here and simply tells us the problems that we are already aware of, it does not resolve anything.

HON. CHINAMASA:  I think he deserves to be responded to because first, he raised it as a point of order but he went into a tirade against what I had said.  I want to respond Mr. Speaker Sir, that we know the problems of this economy, low production across all sectors of the economy, low exports, and low reserves and to add on to that no currency of our own.  The totality of all those causes the challenges that we are facing and we have policy measures to address each and every one of those issues.  So for instance on production, this is why we came up with command agriculture to address the issue of food security and production.  This is why we are coming up with numerous policies to address production either in fisheries, in wild life, in livestock, soya beans and so on. 

Some of those policies are beginning to yield fruit but it will not be overnight, that is the issue.  I want the Hon. Member and this august House to appreciate that we are taking all measures necessary to recover this economy.  Do not look at cash shortages in an isolated manner, look at it globally, holistically; it is a problem of low production, low exports, low reserves and sanctions on top of that.

HON. NDUNA: My question clearly from the response that I got from the Minister, he misconstrued it.  I will try and be accurate and get him to understand.  Mr. Speaker, my question is asking him to seal the borders and open the two avenues to the warehouses for those that are selling those vehicles in United States dollars.  Those people that are doing it from outside the country must come and do it from within our borders and people be allowed to buy from those places in cash.  He must ask the sellers of those vehicles to bank 10% of their money into our system because he is losing US$4m monthly. He is not getting even 10% of that in US dollars.  This is what I think might alleviate his current condition.   Mr. Speaker, I am hoping this time I have been heard because this is in sync with special economic zones and it is in sync with all other development initiatives.  This is how I wanted you to understand...

THE ACTING SPEAKER: Order that requires a special arrangement or may be the Hon. Minister would want to answer it right now.

HON. CHINAMASA: I would like to invite the Hon. Member to my office so that I can fully understand the import of his question.  What I know Mr. Speaker is that dealers import cars and when they do, they use foreign currency and when they bring those vehicles in the country, we charge them customs duty.  That is where we levy our revenue and it is  a very important source of our revenue to support the budget.  Now these other ways of making money or bringing money into the fiscus, I need to be educated and I will be quite happy to give him audience Mr. Speaker Sir.

*HON. MATANGIRA: Thank you Mr. Speaker and I acknowledge visitors in the Speakers’ gallery of Salvation Army Church, can they ensure in their prayers that the Holy Spirit comes amongst us.  My question is directed to the Leader of the House.  What is Government’s policy as regards a person who steals a goat and is sentenced to 9 years as compared to unlicenced drivers or touts who kill people whilst driving and are fined US$20?  Can you clarify that disparity, I thank you.

*THE MINISTER OF JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS (HON. ZIYAMBI): Thank you Mr. Speaker, I want to thank Hon. Matangira. This august House came up with a new law where the House wanted to give deterrent sentences so that would be livestock offenders will send out warning to others.  It is incumbent upon this House to come up with a law that will give detrimental penalties to unlicensed drivers who are committing culpable homicide.  I thank you.

*HON. MATANGIRA: Thank you Mr. Speaker, I receive wholeheartedly what has been said by the Minister.  I am suggesting that all unlicenced drivers who are involved in accidents should be jailed for 20 years, I thank you – [HON. MEMBERS: Inaudible interjections.] –

*THE ACTING SPEAKER: Order please.  Hon. Matangira that is what the Leader of the House said, he said this august House should come up with a law so that we can debate it.

HON. MISIHAIRABWI-MUSHONGA: Thank you Mr. Speaker, for allowing me to raise my question again.  My question is directed to the Minister of Labour and Social Welfare.  Minister, you may know that the women at Hwange Colliery have been demonstrating and today is their 101th  day.  My question to you - because we understand you went there and gave some promises and they are saying that you never came back.  Those women are sitting there, it is winter they have babies and they are in a tent as we speak right now.  A tent that is being threatened to be pulled down any minute by a soldier; we have not been given any name. What is it that you are doing both in your capacity as Minister of Labour around the issues that the women are raising but most importantly as you follow through Section 27 of the Constitution which mandates you as the State to protect the families particularly children and mothers.  They are here today as we speak and they are giving us ranging stories about what is going on at Hwange Colliery.  I thank you Mr. Speaker Sir.    

THE MINISTER OF LABOUR AND SOCIAL WELFARE (HON. KAGONYE): Thank you Mr. Speaker, I thank you Hon. Misihairabwi-Mushonga for that question. It is true I went to Hwange Colliery.  Initially we could not understand whether it was a labour issue or it was something else. From the presentation that was send to my office, it indicated that it was indeed a labour issue.  When I attended, we held meetings together with senior managers in our Ministry.  We held meetings with the management and employees then eventually we went and we addressed the spouses that are demonstrating.

From what we established, it is not a labour issue, labour issues we managed to resolve.  I think the employees raised about 26 issues which they wanted to address and of all those 26, we then met on behalf of Government together with senior managers and also representatives of the employees.  We managed to agree on all the 26, we came up with an agreement which was signed by both parties.  Up to date, the managers of Hwange Colliery are actually living up to what they promised.  For the spouses, it is more of a political issue, they are political persons who came and addressed the spouses during our presence and they had entirely nothing to do with the strike. We discussed with the employees and we asked them whether the spouses demonstrating were theirs or something else and all employees there refused. They were actually surprised why those women were out there. When we discussed with the women who were outside, they indicated that there were certain people who were actually sponsoring that demonstration. Those are the ones who are paying for the tents and supplying one beast per week according to them. They are also supplying about US$500 to the leaders of the spouses.

          HON. MUNENGAMI: Those are lies Hon. Speaker because we were there…

          THE ACTING SPEAKER: Order, take your seat.

          HON. MUNENGAMI: We were there, the Hon. Minister is misinforming this House. We were there as the Committee on Mines and Energy and she must not lie to us.

          THE ACTING SPEAKER: Order, can you take your seat. Order Hon. Member. Hon. Member, I may ask you to go out right now, if you continue.

          HON. KAGONYE: Over and above that, when we had deliberations with the spouses, they also indicated that they were in dire need of food. They wanted maize and as a Ministry we went ahead and provided about 3000 bags of maize, cooking oil and soap for the women. We spoke to them and they promised us that they were going to leave the tent the following day but when we checked about two weeks later, the numbers continued to decrease until there was no one at the tents. However, those same people who were sponsoring them came back again and incited them that right now as I am talking to you Mr. Speaker Sir …

          HON. MUNENGAMI: Mr. Speaker, she must tell the truth…

THE ACTING SPEAKER: Why are you emotional about it? Order Hon. Members. Why are you emotional about that? Please do not do that.

          HON. KAGONYE: If I can just give you an example just to add on. I spoke to their leaders; the six women who are leading those women outside there and they told me their source of finance and everything including trade unions they are not even members to.

          THE ACTING SPEAKER:  I will ask the Minister to sit down and then you will not have proper answers and if you continue, I will ask her to sit down and forget about it.

HON. KAGONYE: All I can say is the Hwange Colliery spouses’ demonstration is no longer a labour issue but a political issue. Therefore on behalf of Government, as the Minister of Labour, we have done what we are expected to do in terms of the Labour Act and what is outstanding now remains to be resolved politically. Thank you.

HON. MISIHAIRABWI-MUSHONGA: Hon. Minister, thank you very much for your response. Today in my capacity as the Chairperson of the Women and Youth Affairs Committee together with the Committee on Mines and Hon. Mpariwa who is the Deputy Chairperson of the Women’s Caucus, we met the women that were coming from the Hwange Colliery. We were invited and please, can I be protected.

THE ACTING SPEAKER:  Order hon. members and you may continue Hon. Member.

HON. MISIHAIRABWI-MUSHONGA: My question was from two points of view and the other one you have responded. The second one is really about Section 25 of the Constitution which mandates you as the Minister to protect women and children and all I am asking right now is we have women and children that are in the tent, what is it that you are doing as the Minister? Are you as Minister prepared to facilitate a conversation between us who are Portfolio members, yourself and the women so that we can get to the bottom of this story?  It is sad that they are sitting there abusing children and putting them in the cold and if that is the case, then they should not be allowed to do that and therefore you as the Minister, need to take a position. However, what I think is more important is for you to make a commitment to us and say we will meet them because from my point of view, it is an issue around women and children and we cannot look at it and simply say it is a political issue. Whether it is political or not, there are children sitting in the cold as we speak right now and they can die of pneumonia any day. That is why I am saying are you prepared to do that, so we can facilitate the conversation and see what the conversation can achieve? - [HON. CHINAMASA: Vauya nemabhazi aani? Vauya neyi?] -

HON. MISIHAIRABWI-MUSHONGA: Order, you are male and you do not know how to look after children.

THE ACTING SPEAKER: Order Hon. Misihairabwi. Order please.

HON. MUPFUMI: Order, can she withdraw her statement to Minister Chinamasa.

THE ACTING SPEAKER: Order Hon. Misihairabwi.

HON. KAGONYE:): Thank you Mr. Speaker and thank you Hon. Misihairabwi. I think in terms of issues of women and children relative to their protection, we are really committed to ensure their protection but what do I do when I speak to them and they tell me that for the love of money we are spending our day in the tent but during the night we are going home. This is exactly what they told me and we have gone further to provide them with the food that maybe they were so desperate to achieve. However in the event that she still insists that we meet with them, I am more than willing to meet with them. I am more than willing to meet with them because I am the one who spoke to them and I am the one they actually told that it is no longer a labour issue. Thank you.

THE ACTING SPEAKER: Order, resume your seats please I need to make a comment. Take your seats. Hon. Misihairabwi-Mushonga, I think the Hon. Minister has committed herself to accompany you. So go and resolve that issue. I need no other questions until after that time and I have closed debate on the same issue. Hon. Munengami, do you want to debate on the same issue?

HON. MUNENGAMI: It is not on the same issue Mr. Speaker. Thank you Hon. Speaker. When I am saying these things, I am being honest with you.

THE ACTING SPEAKER: Approach the Chair please.

          *HON. MANGAMI: Thank you Hon. Speaker. My question is directed to the Minister of Justice, Legal and Parliamentary Affairs.  We have got information that the Government is funding those who are growing Cannabis, especially for health purposes.  I want to find out what will happen to those people who were arrested and yet they were using it for medicinal purposes.  Will they be given an opportunity to get licences since it was for medical treatment?

          *THE MINISTER OF JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS (HON. ZIYAMBI): I want to thank you Mr. Speaker and also the Hon. Member for the question on Cannabis.  In this country we have the Dangerous Drugs Act.  In this legislation, Cannabis is classified as one of the dangerous drugs but it comes in many forms.  Firstly, there is one which can be taken for recreational purposes just for one to get high and there is Cannabis that is medicinal and the industrial cannabis.  So, they are in different forms, but all of them were not allowed and were banned because they are used as drugs. 

          However, there is a form of cannabis that is used in industries, that can be used in making suites or tables.  Other countries in South America are actually planting cannabis and are producing quite a lot of things from it.  The programme is not for people to grow the kind of cannabis that is a drug but the Minister of Health and Child Care will come up with regulations on how we can grow Cannabis and how we can grow that which can benefit our industries.  The permission to grow Cannabis that is used in drug abuse has not been granted and it is still under the banned drugs.  I thank you.

          HON. P. D. SIBANDA: My supplementary question to the Hon. Minister is: we saw that the regulations that were gazetted by the Hon. Minister of Health and Child Care show that a sum of $50 000 is required for one to get a permit to grow dagga, but we are aware Hon. Speaker that mbanje is traditionally grown in certain areas already, like in Binga for example.  Do you not see that instead of empowering our communities, proposing such a figure like $50 000, you are actually segregating and making the growing of dagga to be an elitist policy?  I thank you.

          HON. ZIYAMBI: Thank you Hon. Speaker. I want to start by thanking the Hon. Member for the question and state that what is being legislated to be grown is not dagga, but industrial hemp.  It is not the one that we use for recreation, the one that you use when you want to be high, that is still outlawed.  So, progressively, we will review but there is a pilot to see how we can grow that industrial Cannabis and overtime, we will see whether the fees can be reviewed.  This is a trial phase, that is the reason why this Cannabis was removed from the dangerous drugs and allowed on a pilot basis, with a fee being charged to be grown, but it is not the one that is grown in Binga that has been allowed to be grown.  I thank you.

          HON. MUDARIKWA: Thank you Mr. Speaker Sir.  I want to find out from the leader of the House, I am the one who proposed seven years ago, that we must go this route of producing Cannabis and everybody laughed at me.  Is the Ministry of Agriculture ready to train our farmers in the production of Cannabis?  If they are ready, do they have any literature now, which we can give our farmers?  In support of what Hon. P. D. Sibanda said, the fee of $50 000 is prohibitive.  If people are growing tobacco and do not pay anything, why should our people pay $50 000 to produce for the benefit of the nation.  We are creating employment, why should we pay $50 000 to create employment and produce something which is exported?  When you charge those fees, you are actually suppressing exports.  It must be free of charge because most of this Cannabis is going to be exported.  Thank you very much.

          HON. ZIYAMBI: Thank you very much Mr. Speaker.  I want to thank the Hon. Member for the question.  My understanding is that we are having a pilot project of growing this industrial hemp.  My understanding is that we are probably going to start with a few people doing it.  I know the prison farms will be used because of their security nature.  When we have enough data of how we can progressively do it – because what I said in the beginning is; Cannabis, all of it was classified as dangerous drugs but we are saying let us remove some of them, which I acknowledge, he said, seven years ago, which was a progressive thing.  We are now taking on board what he said and we want to pilot it and see the conditions that we can then open it up to be grown.  However, when it was gazetted, those were the fees that were prescribed by the Minister of Health and Child Care.

          THE ACTING SPEAKER: There is a vehicle, a Mercedes benz Number ES3021, it is blocking other cars, can the owner go and remove it if he/she is here.  Thank you.

          HON. ZINDI: Thank you Hon. Speaker.  My question is directed to the Minister of Finance and Economic Development – [Hon. Chinamasa having been conversing with other Hon. Members] – Minister of Finance can you pay attention, I am directing this question to you?

          THE ACTING SPEAKER: Order Hon. Zindi, go ahead, that is my responsibility to alert the Minister.

          HON. ZINDI: Thank you.  My question is; it actually boggles the mind looking at the laxity by the Government in terms of taking action against the money-changers who have flocked or are seen everywhere in town and in every city.  What is the action, or what policy decision does the Minister intend to take in order to curb money-changers.  Just this afternoon, I witnessed a gentleman who came next to Meikles and it looks like he is a regular money changer.  He just whispered that ‘I need US$2 000 by the end of the day so which means a lot of money is being exchanged on the streets.  What is the action being taken by the Ministry in order to curb money that is being exchanged and traded on the black market on the streets instead of being done in the banks?  Thank you.

THE MINISTER OF FINANCE AND ECONOMIC PLANNING (HON. CHINAMASA):  Thank you very much.  I thank the Hon. Member for her question.  Mr. Speaker Sir, the Reserve Bank is in the process of authorising money changers and other bureau de changes and that process will take time, but let me also say that for as long as hard currency is in great demand and is in short supply because of low exports, you cannot entirely wipe out that menace.  I thank you Mr. Speaker Sir.

HON. MARIDADI:  Mr. Speaker, Hon. Zindi’s question still stands.  It still boggles the mind that you go to Eastgate, the black market will be there.  The black market is there in America and in the United Kingdom, but here it is no longer black market.  If you go Eastgate there, you will see the number of people that are waving wads of money in the air, who are exchanging in broad daylight.  Minister, you cannot talk about a process by the Reserve Bank of Zimbabwe.  All you need to do is deploy police at Eastgate and arrest hundreds of women that are trading in foreign currency now.  You do not live in South Africa, you live in Harare, Minister.  You can take a stroll to Eastgate and you will see what I am talking about.

HON. CHINAMASA:  Mr. Speaker, I am aware of the problem, but I think the Hon. Members must know, and I gave that answer in my earlier reply to another question, the problem about this country’s economy is low production, low exports.  The foreign currency is received from exports.  For as long as the demand for exports is more than the supply, the problem will not go away.  We can wish it to go away, but you cannot send a policeman into every nook and crevice to look for money changers.  The problem can only be resolved by an oversupply of foreign currency which will come through more exports which is why, as Government, we are driving exports right across the board in terms of mining, agriculture and tourism.  That is what will eventually kill the problem which is being referred to.  I thank you Mr. Speaker Sir.

HON. MARIDADI:  It is a clear admission that it is Government which is fuelling the black market.  It is a clear admission.

THE ACTING SPEAKER:  Hon. Maridadi, what else would Hon. Members need?

HON. ENG. MUDZURI:  Mr. Speaker Sir, the Hon. Minister has just said he is buying time to allow the Reserve Bank to establish bureau de changes.  Is he implying that the present method of exchange is the mini bureau de changes on the streets?

HON. CHINAMASA:  Mr. Speaker Sir, the issue here is bureau de change are more accessible to the public, but again for them to transact business, they must have the currencies in which they are trading.  For as long as there is a shortage, in this case, of United States dollars, we may even set them up and find that they have no business to transact and it goes back to the point I keep making.  It is a matter of supply and demand, which is why it is imperative that as an economy, we must drive exports; we must drive and ramp up production so that we have a reasonable supply of that hard currency.  For as long as we are in short supply, these problems will keep popping up and there will be no resolution which is final.

HON. CHAPFIKA:  On a point of order.

THE ACTING SPEAKER:  Point of order not relating to this issue?  I will allow it.

HON. CHAPFIKA:  When we are discussing technical issues and fundamental issues which are important to this economy the Hon. Minister must not hide behind a finger and become technical, because the issues of demand and supply apply across all sectors of the economy.  It does not only apply on foreign currency.  In other words, the Hon. Minister is condoning that practice on a technicality, on the basis of supply and demand.  What it means is that if there is a short supply of  a commodity, people can go and break shops and steal from the shops because it is in short supply.  That is not the issue. 

I think the issue is, this House is calling upon the Minister to take appropriate measures to minimise, to make it illegal to do that and to ensure that at least the practice is not wholesome, because there have been allegations that there are certain institutions in this country which are fuelling that practice.  It takes us back to the days of the Gono era where foreign currency was being sold everywhere.  So, I think the Minister needs to be more serious on this issue as opposed to being technical.  It is not a technical issue, it is a policy issue.  What policy is he putting in place?  The police can actually deal with that to minimise it.  Thank you, Mr. Speaker Sir.

HON. CHINAMASA:  Mr. Speaker Sir, I have already responded, but people prefer the answer they are comfortable with.  They are not comfortable with the hard facts of life.  They are not comfortable with the basics of economics.  They prefer to be pedestrian in that regard. 

My point, Mr. Speaker Sir, is still valid.  The point I am making is, we need to increase the supply of foreign currency in order to address the problem, to minimise the problem and already, with the measures that we are taking to stop...

HON. CHAPFIKA:  On a point of order, Mr. Speaker Sir.  I think the Minister is becoming abusive...

HON. CHINAMASA:  No, I did not stop you when you were speaking – [HON. MEMBERS:  Inaudible interjections.]-  You know very well that we are taking measures...

HON. CHAPFIKA:  I did not insult you, Hon. Minister.

THE ACTING SPEAKER:  Order, Hon. Chapfika.

HON. CHINAMASA:  We are taking measures to increase production and we are taking measures to increase exports.  Those are the measures that we are taking to minimise the problem.  So, you cannot say that Government is not taking measures.  We are taking measures.

THE ACTING SPEAKER:  If Hon. Members feel they have got some solution to this, I suggest you go and visit the Minister – [HON. MEMBERS:  Inaudible interjections.] - 

HON. MARIDADI:  No, I personally do not want to visit you Minister.  We must deal with it here.

THE ACTING SPEAKER:  Order, order Hon. Maridadi switch off your microphone.

HON. ENG. MUDZURI:  On a point of order, Mr. Speaker Sir.  The Minister cannot start being harsh in this Parliament.  The Minister must come here calm, cool and collected.  The problem of finance is affecting everyone. The street money is costing 50 – 60% and why we are confirming this, it is alleged that the Reserve Bank is the one collecting money in the streets. He must come out clearly that it is not the Reserve Bank which is bringing money changers in the streets, which means they are creating employment by exchanging money at a different rate. This is what we are asking for Minister, and you must come out clear in this Parliament so that the public knows. We are consumers of this problem of currency which we argued during the time when you were introducing the currency …

          THE ACTING SPEAKER: Order, order! I suggest Hon. Minister that you make a comprehensive response on this issue and bring it to the nation. You can respond now, okay. Thank you.

          HON. CHINAMASA: Mr. Speaker Sir, I want to dismiss categorically that the Reserve Bank has anything to do with fueling the parallel market and I will explain. All exports, foreign currency earnings from exports accrue to the Reserve Bank and almost a big chunk of that foreign currency is retained by the Reserve Bank for importation of essentials such as fuel, electricity and raw materials for the private sector. A small percentage is left with the banks for use by the exporters. So, there is no foreign currency which is not explained or accountable to the public; the figures are there to show. I thank you Mr. Speaker.

          THE ACTING SPEAKER: Hon. Minister, I think it would be better if you can come with a policy statement to this House so that we do not have the same supplementary questions being repeated.

          HON. CHINAMASA: I am quite happy to do so.

          HON. GONESE: On a matter of privilege, if you can give me the indulgence Mr. Speaker. Whilst I appreciate the Chair’s ruling, my concern Mr. Speaker is that the Minister is really prevaricating. He is well seized with these matters and I think the short answer that Hon. Members simply required was that there is some reluctance to deal with the rampant illegal exchange of money on the streets. The Minister is not coming out and it does not really need him to go and do any research. The short answer is that he is prevaricating. I think this is where Hon. Members deserve answers because as the Minister responsible for that portfolio, he can inform this august House and the nation at large as to why Government which has got law enforcement agencies is not dealing with the rampant illegal exchange of money on the streets. It does not need a Ministerial Statement. He can easily answer that question. He can come with a Ministerial Statement to deal with other issues but on this one, we just want him to give us honest answers. Why is the Government reluctant to deal with the scourge?

          THE ACTING SPEAKER: The Chair has made a ruling that the Minister brings in a statement in this House.

          *HON. P. D. SIBANDA: Hon. Speaker, my question is directed to the Leader of Government Business, Hon. Ziyambi Ziyambi. Hon. Minister, in Zimbabwe we have 10% of people living with disabilities, which is more than 1,4 million. Zimbabwe is facing the forthcoming elections which the Head of State has said should be free and fair. My question is - what measures have you put in place to ensure that people living with disabilities are able to cast their votes in a free and fair manner as said by the Head of State and Government?

          *THE MINISTER OF JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS (HON. ZIYAMBI): I want to thank the Hon. Member for the question which I expect that all the political parties who were invited by ZEC should explain to them as to what measures have been put in place to ensure that people living with disabilities vote in a free and fair manner. The Chief Whips and the Chiefs in Parliament, I believe also attended this meeting which looked at how people living with disabilities will be able to vote.

*HON. P. D. SIBANDA: My supplementary question is - yes, we have political parties that are being called to talk to ZEC but does the Minister know that we have others who are living with disabilities who do not belong to any political party and would want to cast their votes? On that issue Minister Ziyambi, during the voter registration exercise, I asked that question and requested for a Ministerial Statement to enlighten us as to how those people living with disabilities can cast their votes in a free and fair manner but now he is talking of political parties. It shows that Government does not at all value the vulnerable groups especially those living with disabilities because they are not doing anything to help. Ten percent is a large population considering our population that is more than 1.4 million. That is why I have posed the question to the Minister to say what measures have been put in place because some do not belong to political parties. Let us put aside the issue of political parties.

*HON. ZIYAMBI: Thank you Mr. Speaker. I also want to thank the Hon. Member for the question that he has posed. I said that political parties were engaged by the electoral body. I said so because he is a member of a political party. The political parties were engaged so that they could get an understanding. That is why I had said he could be enlightened by the members of his party who were there, but I responded before that to say measures are already in place. That is why the political parties were engaged to be enlightened as to how people living with disabilities will be able to cast their votes in a free and fair manner. The ZEC people will also carry out voter education and that is also on the cards. I said parties were also engaged but when voter education is being rolled out, that will look at the measures on how voting will take place. All this will be explained.

*HON. P. D. SIBANDA: I understand what the Minister is saying that political parties were called but there are people who are not members of any political party who do not even want to attend rallies. If they are people like that who do not want to listen to politicians, is it not possible for the Minister to bring a Ministerial Statement so that those who do not want to be part of political parties understand what is taking place? We have those people living with disabilities who are not members of any political party. We need that Ministerial Statement as soon as yesterday and that is why I am saying probably the Government does not care at all for people living with disabilities. The people living with disabilities also need to get this information and vote in a free and fair manner.  They are Zimbabweans and it is their right to get the information.  So, the Minister should bring the Statement to ensure that the whole of Zimbabwe knows and we want to know when he can bring that Statement because time is moving.  I thank you.

          HON. ZIYAMBI:  Thank you Mr. Speaker, the Hon. Member does not understand what I am saying.  I said that there are measures in place.  As we are approaching the elections, ZEC officials will embark on voter education to educate people on how they are going to vote and even those people living with disabilities will also be told how they will vote.  His problem is that he wants to be seen asking questions that I have already explained.  That is his challenge.  He does not want to understand that there is voter education that is conducted by the Zimbabwe Electoral Commission who will explain how voting will be conducted.

          *THE ACTING SPEAKER:  Hon. Minister, an Hon. Member who represents a constituency is known as an Hon. Member.  So, I think you need to address that.  Hon. Minister, may you correct that statement?

          *HON. ZIYAMBI:  This Hon. Member.

          *HON. CHIKOMBA:  Thank you Hon. Speaker.  I wanted to ask a question on people in the streets selling money at a parallel rate but that question has already been asked by Hon. Zindi.  I thank you.

          Questions Without Notice were interrupted by THE ACTING SPEAKER in terms of Standing Order No. 64.

          HON. TOFFA: On a point of order Mr. Speaker.  I propose that time for Questions without Notice be extended by ten minutes.

          HON. SARUWAKA:  I second.

          Motion put and negatived.

ORAL ANSWERS TO QUESTIONS WITH NOTICE

PUBLISHING OF THE JUSTICE GEORGE SMITH COMMISSION REPORT ON INSURANCE AND PENSIONS FUND

7.  HON. MANGAM asked the Minister of Finance and Economic Development to state when the Justice George Smith Report on Insurance and Pension Funds will be published and to advise on its findings on insurance and pensions pay out.

          THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA): Mr. Speaker Sir, on today’s Order Paper, there is Order of the Day, Number 10 which will respond to all the questions which have been asked in connection with the Commission of Inquiry into Pensions and Insurance Funds.           Questions with Notice were interrupted by THE ACTING SPEAKER in terms of Standing Order No. 64.

COMMITTEE STAGE

SHOP LICENCES AMENDMENT BILL [H.B. 10, 2016]

          THE MINISTER OF JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS (HON. ZIYAMBI): Thank you Hon. Chair, I put the amendment in my name.  Repeal and substitution of Clause 8, amendment of Clause 14 [Chapter 14:17] by the Minister of Local Government, Public Works and National Housing. On page 2 of the Bill, repeal Clause 8 and substitute with the following new Clause 8.  Repeal Section 15 of [Chapter 14:17].  Section 15 of the principal Act is repealed. I thank you.

          House resumed.

          Bill reported with amendments.

          Bill refereed to the Parliamentary Legal Committee.        

MOTION

BUSINESS OF THE HOUSE

          THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA): With the leave of the House, Mr. Speaker, I move that Orders of the day numbers 1 to 9 and 11 to 12 be stood over until Orders of the Day numbers 10 and 13 have been disposed of.

          Motion put and agreed to.

MOTION

           REPORT OF THE COMMISSION OF INQUIRY INTO THE CONVERSION OF INSURANCE AND PENSION VALUES FROM THE ZIMBABWE DOLLAR TO THE UNITED STATES DOLLAR

THE MINISTER OF FINANCE AND ECONIMIC DEVELOPMENT (HON. CHINAMASA): I move the motion standing in my name that:

WHEREAS in terms of Section 2 of the Commission of Inquiry Act [Chapter 10:07], on 24th July, 2015, the President through Proclamation No. 8 of 2015 (Statutory Instrument No. 80 of 2015), established a Commission of Inquiry in the Conversion Process used in the Conversion of Pensions and Insurance Benefits from Zimbabwean dollars to United States dollars to provide the Insurance and Pensions Industry a transparent process for addressing the afore-said conversion;

WHEREAS further to the said Proclamation, the Commission chaired by Justice (Rtd) L. G. Smith produced a Report of the Commission of Inquiry into the Conversion of Insurance and Pension Values from the Zimbabwe dollar to the United States dollar dated March 2017;

WHEREAS the Commission of Inquiry was, in the opinion of the President, for the public welfare;

Now therefore, The House is requested to take note of the Report of the Commission of Inquiry into the Conversion of Insurance and Pension Values from the Zimbabwe dollar to the United States dollar dated March 2017; as tabled by the Minister of Finance and Economic Development.

          The inquiry was conducted over an 18 month period from September 2015 to March 2017 and covered a 20 year period from 1996 to 2014. A nine member Commission comprised Mr. Justice L. G. Smith as Chairman, Ms. V. Mutandwa, Mr. I. Chirume, Dr. G. Kanyenze, Mr. A. Daka and Mr. T. Maswera, Mr. B. Muchemwa, Mr. M. Tarusenga and Mr. G. Dikinya who is now deceased and, may his soul rest in peace.

This was appointed by the former President of Zimbabwe and it conducted the inquiry. With reference to terms of reference of the commission Mr. Speaker Sir, the Commission was mandated to investigate the following issues among others:

·       To establish the total value, nature and type of assets owned by insurance companies and pension funds;

·       To determine the causes of loss of value of insurance and pension benefits;

·       To assess the conversion methods and processes of insurance and pension assets and liabilities to Unites States dollars;

·       To establish the extend of prejudice if any to policy holders and pensioners;

·       To recommend compensation where prejudice has been established and;

·       To examine instances of regulatory failures and finally;

·       To assess the soundness of the industry and the role of the insurance and pension sector in the economy.

Mr. Speaker Sir, with respect to the methodology used by the Commission, the Commission in order to unpack the terms of reference conducted its investigations through public hearings, meetings and workshops across the country and also collected data through various means such as interviews, questionnaires and audio recorded oral evidence among others. The institutions investigated included all licenced life companies, pension fund administrators, pension funds, funeral assurance companies, the guardians’ fund, the Government pension system and the National Social Security Authority (NSSA). I am glad Mr. Speaker Sir, to advise that the report of the Commission of Inquiry was gazzeted on 5th March 2018 through General Notice Number 149 of 2018, hence is now available for public consumption.

In brief Madam Speaker, let me give some highlights of the report. There were concerns raised by the public, numerous complaints were raised by the public over a number of pensions and insurance issues and I summarize these below.

With respect to commutations of the full pension Madam Speaker, upon dollarisation, a number of occupational pension schemes and NSSA paid once-off pension benefit to pensioners upon dollarization, arguing that the amounts were too small to warrant monthly payments. Pensioners were thus paid commutations as small as a few hundred dollars or one or two thousand in rare cases although life-time pensions were expected.

Madam Speaker, with respect to pension contribution arrears, a number of pensioners raised concern that although their employers deducted monthly pension contributions from their salaries for all their years of service, the contributions were not remitted to their respective pension funds. That included the Mining Industry Pension Fund, the Local Authorities Pension Fund, the National Railways of Zimbabwe Pension Fund, the Unified Council Pension Fund, the ZUPCO Pension Fund, the Cold Storage Company Pension Fund and the Fidelity Printers Pension Fund and some other insurance companies.

Consequently, upon retirement, pensioners could not receive their pension benefits from the pension funds. As at December 2015, cumulative contribution arrears for the post-dollarization period amounted to about US$328, 5 million. It is however sad to note that some of the sponsoring employers who had outstanding contributions to pension funds have since been liquidated whilst others are no longer viable. Madam Speaker, with respect to value lost during hyper inflation, pensioners across all sectors who retired between 2007 and February 2009 lost their pension lump-sums largely due to the adverse impact of hyperinflation which whipped off their balances in banks. Upon demonetization of the Zimbabwe dollar, pensioners only received as little as US$5 as their one third lump-sum benefit.

Madam Speaker, with respect to value lost through conversions on dollarization, lack of transparency on the conversion methods, processes and formulae used by insurance companies and pension funds on the dollarization of the economy in 2009 was cited as one of the causes of loss of value. Most complainants indicated that their pensions were reduced from several hundreds or thousands of dollars to a few United States dollar cents. One pensioner showed a pension cheque of US$0,8c send to him by a life insurance company in 2014 as settlement of a life policy and no explanation was offered on how such a figure was arrived at.

With respect to insurance policy holders, they were unhappy with the small benefits which were offered as the total value of the insurance policy paid as final settlement in lieu of education policies, endowment policies or retirement annuities which amounted to between US$10 and U$40.

Madam Speaker, with respect to major findings of the Commission, I will start with total industry assets and their breakdown. The inquiry established that total assets in the Insurance Pension Industry including NSSA worth about US$5, 13 billion in December 1996, US$3, 69 billion in December 2008 and US$5, 1 billion in December 2014, have been disposed of. Asset values for the period, 1996 to 2008 are however, understated due to the fact that big institutions such as Old Mutual, First Mutual, ZB Life, Fidelity Life and Comarton Consultants failed to provide accurate, consistent and reliable asset values for the period prior to dollarisation.  The assets were mainly invested in property and listed companies in order to hedge against inflation. 

Contrary to the general perception in some quarters of the industry that most assets were lost through investments in bonds and money market during the high inflation period, such investments were however, very negligible during the period 2003 to 2008. 

The reduction in asset values during the period prior to 2008 was largely attributed to misappropriation of assets and excessive expense structures as opposed to hyperinflation. 

Madam Speaker, of particular interest is the revelation that 85% of the existing assets in the insurance and pension industry were acquired prior to dollarisation in 2009, which implies that the majority of assets survived hyperinflation.

Causes of Loss of Value or Prejudice

The inquiry revealed that loss of value in insurance and pension benefits was mainly caused by macro-economic regulatory and institutional factors. 

Macro-economic causes of loss of value

With respect to macro-economic causes of loss of value, inflation, currency debasing and the exchange rate used during the demonetization of the ZW$ to US$ in 2015 were identified as major factors that caused pensioner and policy holder prejudice.  Inflation resulted in the loss of benefit values through the erosion of fixed premiums and pension contributions that were not indexed to inflation.

In addition, negative real investment returns on fixed income securities such as bonds, Treasury Bills and money market instruments resulted in loss of value, hence, insurance companies and pension funds divested from such investments during the period 2001 to 2008.

Madam Speaker, the removal of 25 zeros, that is currency debasing during the period, August, 2006 to February, 2009 resulted in insurance companies and pension funds technically extinguishing their obligations to policy holders and pensioners without any actual payments being made. The industry players duly removed zeros on promised sum-assured or pension benefits when the ZW$ currency was debased. 

This resulted in abnormally low ZW$ benefit values, which upon conversion to US$ were for some pensioners, as low as 5 cents and in most cases zero, despite several years of contributing to pension funds.

Meanwhile, assets that were supporting insurance and pension liabilities were transferred to shareholders of insurance companies or became surpluses in some defined contribution pension funds.  Madam Speaker, the exchange rate of US$1 to Z$35 quadrillion, which was used when the ZW$ currency was demonetized in 2015 prejudiced Insurance, Policy holders and pensioners as it reduced the already worthless ZW$ currency values that had been deposited in individual bank accounts to just a few US cents or at a maximum of US$5.

Regulatory causes of loss of value 

Madam Speaker, regulatory failure on the part of Government and the regulator for insurance and pensions was identified as having caused loss of value.  Government failed to guide the industry during the hyperinflation and currency debasing and during the conversion of insurance and pension values when the economy was dollarized.  Furthermore, the delayed demonetization of the ZW$ currency resulted in the various entities in the industry applying their own conversion methods which were prejudicial to policy holders and pensioners.

On the other hand, IPEC, that is the commission responsible for insurance and pensions, failed to conduct on site supervision and investigate its licensees, allowing arbitrary insurance product terminations by insurance companies, poor investment management practices, poor record keeping and failing to deal with predatory administration expenses among other issues.

Micro or institutional level causes of prejudice 

Madam Speaker, with respect to micro or institutional level causes of prejudice, loss of value is also attributable to micro or institutional level causes such as failure to index contributions, premiums and benefits to inflation.  Arbitrary and prejudicial conversion methods from ZW$ to US$, arbitrary terminations or products and closures, pension contribution arrears, failure to separate insurance, pension and shareholder assets, poor record keeping as most institutions could not account for assets, investment returns and individuals’ contribution records.  Poor corporate governance practices, unsustainable administration and other expenses of up to 300% of pension contributions.

Summary of Key Recommendations

Madam Speaker, let me now highlight the key recommendations.  With respect to compensation of prejudiced policy holders, the Commission recommends compensation of prejudiced policy holders and pensioners using assets that survived hyperinflation in order to ensure that prejudiced members of insurance schemes and pension funds get their rightful benefits whilst maintaining stability and confidence in the insurance and pension industry.  A compensation framework which takes into account, standardized conversion process, that ensures fairness among providers of insurance and pension services or products and consumers of such services and products, is recommended for implementation as part of the post-inquiry implementation reforms.  The framework should take into consideration the following;

1.     Financially unsound conversion methods and assumptions;

2.    Absence of standard guidance for conversion from ZW$ to US$ and;

3.    Quantification of prejudice to policy holders.

Madam Speaker, with respect to implementation of the post-inquiry reforms, the Commission recommends that IPEC spearheads the implementation of approved post inquiry reforms.  The reforms, include enforcing the recommended compensation framework, require full time and specialised skills; hence IPEC is being recommended on the basis that it is the industry regulator and therefore best placed to assume this responsibility.

With respect to the oversight over NSSA, medical aid schemes, legal aid schemes, the recommendation was that, this should come under IPEC.  Madam Speaker, currently, NSSA and medical aid society schemes are not prudentially supervised, hence may not be providing value to policy holders or their members.  The Ministry of Labour and Social Welfare will remain the parent Ministry for NSSA, whilst the Ministry of Health and Child Care will remain the parent Ministry for medical aid schemes and societies.  However, with respect to technical prudential supervision aspects of insurance and pension products, the recommendation is that Zimbabwe follows international best practice as exemplified by other jurisdictions such as Ghana, Kenya and Uganda - among others who have placed social security schemes under prudential supervision of their Insurance and Pension Regulators. 

          Furthermore, the recent mushrooming of unregulated legal aid schemes collecting monthly premiums from members of the public also calls for regulation.  To enhance accountability, transparency and the protection of policy holders and to consolidate the regulation of insurance and pension business under one statutory body, the Commission recommends that NSSA, medical aid schemes and legal aid schemes be regulated under IPEC.

          Operational Independence of IPEC

          Madam Speaker, in order to achieve objective decision making, accountability and transparency, as well as to remove regulatory capture, the Commission recommends enhancement of the operational independence of IPEC from undue political and industry influence through removal of conflicting board appointments.  Serving members, managers of Insurance and Pension Funds used to sit on the board of IPEC, hence were conflicted.  Currently, the Permanent Secretary in my Ministry sits on the IPEC board. 

          On record keeping Madam Speaker, the inquiry observed that entities in the industry do not maintain proper records, hence in most cases, the lack of data became a hindrance and some issues could not be concluded due to lack of data.  In order to ensure mandatory record keeping since the industry is data intensive and requires information to be kept over long periods of time, it is recommended to mandate through legislation the insurance and pension industry a minimum period of 100 years for the commencement of ICT supervision in the sector.

          Madam Speaker, in order to protect consumers of insurance and pension services, the regulator should further be obligated to maintain an independent register of the assets and the corresponding liabilities of insurance and pension funds on a product by product basis which is cumulatively adjusted on a year by year basis to take into account changes in the assets and liabilities that happen each year.  In order to safeguard the interests of the pensioners, the Commission recommends the repeal of the requirement in the Pension and Provident Funds Act for pension fund assets to be accounted for on a historical cost basis.  The recommended legislative amendment is that the accounting should be governed by the Audit Professions Act to ensure that the accounting practices are dynamic and in line with international standards.

          Madam Speaker, with respect to the appeal process, the International Organisation of Pension Supervisors to which IPEC is a member has standards which require that the regulator and regulatory processes be operationally independent from undue political influence.  In line with the international best practices and for the purposes of expediency in the handling of appeals, it is recommended that the current appeals process be amended to provide for the establishment of an Appeals Board headed by a retired judge or a legal practitioner who is qualified to be appointed as a judge.  The function of the Appeals Board will be to handle appeals against decisions of the regulator.  Its determination will be final and can only be reviewed by the High Court.

The Commission further recommends the setting up of the office of the Ombudsman of the insurance and pension industry in order to handle all complaints in the pensions and insurance industry coming from contributors, given that current pensioner representative bodies are exploitative.  Madam Speaker, the Commission noted that the financial sector has operated without a strategic direction over the medium to long term.  In order to guide the strategic direction and developmental role of the financial services industry in the economy, including insurance and pensions, banking, securities, micro-finance, it is recommended that a financial sector development plan which will spell out the role of the sector in mobilising long term capital for national development, confidence building measures and financial skills development and introduction of a skills development levy among others be crafted. 

The Financial Sector Development Strategy helps promote the emergence of a stable sound and market based financial system that supports the efficient mobilization and allocation of resources, in particular and with respect to the insurance and pension industry.  The strategy helps mobilise and promote the investment of long term funds, strengthen and deepen the insurance and pension industry and its regulation, supervision to develop and deepen the capital markets, their regulation and participation therein.

Madam Speaker, to address the industry-wide mischief of predatory administration expenses which have averaged 81% of pension contributions and insurance premiums during the period 2009 to 2014, it is recommended that pensions and insurance legislation be amended to empower the regulator to prescribe, through regulations, acceptable expense types and respective ratios.  Some pension funds are currently charging administration expenses of up to 300% of contributions.

Madam Speaker, in order to come up with an effective supervisory collective action, orderly exits from markets and policy holder protection on the winding up and liquidation of a pension fund or insurance company, it is recommended to legislate for the winding up and liquidation of insurance companies and pension funds in the insurance and pensions legislation.  Failed institutions are currently being wound up in terms of the Companies Act. 

Madam Speaker, non-remittance of pension contribution by pension funds dating as far back as 1990s has prejudiced pension fund members of their entitlements to pension pay outs.  Post dollarization contribution arrears amounted to $328 million as at December 2015 and currently standing at over $500 million.  Considering the adverse impact and industry-wide problem of contribution arrears, there is need to review the pension legislative framework to introduce punitive sanctions on the sponsoring employers and respective directors in their personal capacities for non-remittance of pension contributions.

Madam Speaker, in order to address poor corporate governance practices in the industry including conflicted board appointments, inadequately skilled boards, poor risk management and internal controls, irregular board meetings, owner-managed institutions and poor investment management practices.  It is recommended that key elements of the National Code of Cooperate Governance be codified in the Insurance and Pensions Statutes.

          ACTURIAL GUIDELINES

          Madam Speaker, the Actuarial Society of Zimbabwe does not regulate its members and the regulator, over the years, has not issued comprehensive actuarial guidelines on these matters.  It is therefore recommended that IPEC should work with the Actuarial Society of Zimbabwe to come up with actuarial uidelines and valuation methods for assets and liabilities as well as regulating the professional conduct of actuaries practising in Zimbabwe. 

          Revisiting the de-monetisation process to ensure fair compensation of insurance policy holders and pensioners

          Madam Speaker, the exchange rate used in 2015 for converting for demonetisation was prejudicial to pensioners and policy holders.  The maximum an individual could get was $5 and all insurance companies and pension funds received a combined total of less than $135 000.00.  The Commission therefore, recommends that the demonetisation process be revisited in order to ensure a fair compensation of insurance policy holders and pensioners.

          Additional Proposed legislative Amendments

          Madam Speaker, in order to address many other deficiencies identified during the investigation, the Commission recommended amendment of the Insurance Act, Chapter 24:07], the Pension and Provident Funds Act [Chapter 24:09], the Insurance and Pensions Commission Act [Chapter 24:21] and the NSSA Act [Chapter 17:04]as follows:-

          Proposed Amendments to the Insurance Act [Chapter 24:07]

          With respect to our proposed amendments to the Insurance Act Chapter 24;7, the Insurance Act provides for a maximum fine of level 14, or 5 years imprisonment for operating an unregistered institution, which level is not dissuasive enough for institutions that could abuse millions of dollars in public funds.  The Commission recommends amendment of the provision to provide for a maximum penalty to be prescribed by the Minister from time to time.

          Limitation of Certain shareholding in an Insurer Insurance Broker

          With respect to limitation of certain shareholding in an insurer or insurance broker, current legislation does not prescribe limitation of shareholding in an insurer or insurance broker, hence may result in poor corporate governance.  The Commission is therefore recommending that shareholding limits of 25% be placed on individuals or legal persons investing in an insurer or insurance broker.  A five year transitory period is recommended to allow time for these institutions to comply with the new requirement. It is therefore recommended that supervisory approval be required for proposals to acquire an interest of an insurer or broker. 

          Commencement of Business after Registration

          Madam Speaker, with respect to commencement of business after registration, in order to ensure that an institution is fit to underwrite business immediately after registration, it is recommended to oblige all newly registered entities (insurers and brokers) to commence business within 90 days , failure of which the regulator will cancel the licence.  This will also address the challenge of seeking a licence for speculative purposes.

          Application for Registration of Society as an Insurer

          Madam Speaker, currently, legislation prescribed a 90 day period within which a society should seek registration after its formation.  The effect of this provision is that a society is permitted to operate for three months without being registered.  It is recommended, Madam Speaker that this provision be repealed and replaced with a provision that requires IPEC to prescribe the licensing requirements from time to time.

          Restriction of Cross-Directorship

          Madam Speaker, Cross-Directorship among IPEC licensees is a recipe for incestuous relationships and prejudice of policy holders and pension contributors through interrelated party transactions or businesses.  In view of the challenges associated with cross-directorship, it is recommended that restrictions be placed on cross directorship among IPEC licensees in order to avoid conflict of interest.

          Cancellation of Registration of Insurers

          Madam Speaker, the current legislation provides that the Commissioner should notify a registered insurer in writing that he proposes to cancel its registration.  It is recommended that the word ‘proposes’ be replaced by ‘intend’ since the former has a connotation of begging or seeking concurrence.

          Prohibitions of Concerning Assets and Certain Liabilities

          Madam Speaker, safeguarding the assets of an insurer is critical for the maintenance of a solvent and stable institution that meets liabilities as they fall due.  In order to avoid instances where assets are abused by shareholders or management which may result in prejudice to policy holders, it is recommended that legislation provides for protection of assets through among other means, denying an insurer or broker to encumber policy holder assets, to cover the insurers or brokers business liabilities.

          Notification of Regulator of key Development in Licensed Entities

          Madam Speaker, the section requires registered insurers to notify the Commissioner of any changes in the organisation within 6 months of the year end.  As such, the regulator gets to know of changes of significant interest or any such material changes in the institution such as the resignation of a Chief Executive Officer well after the event.  It is being recommended by the Commission that the section provides that IPEC should be advised immediately of all key developments including the resignation of key functionaries.  Similarly, changes in key personnel such as the Chief Executive Officer, Compliance Officer and Finance Director should not take place without the approval of IPEC and the regulator who should do fitness and probity test before such appointments are made.

          Furthermore, Madam Speaker, the insurer should be required to notify all policy holders in writing of any changes of significant interest or the rebranding of the institution.  The complaints received from members of the public revealed that policy holders were also not aware of changes in the name of an institution, for example Southampton which changed to ZB.  Others were not aware that their insurers folded some years back.

          Recommended Amendments to the Pension and Provides Funds Act

          Madam Speaker, with respect to the fund’s communication with Pension Fund members, a number of public complaints relating to inadequate communication with respect to major changes in their pension funds such as conversion values from the Zimbabwean dollar to the United States dollar, amendment of rules, change of fund administrators, computation of benefits and contribution history were received. 

          Accordingly, the Commission recommended that a new section on communication with pension fund members be inserted in order to enhance disclosure and accountability to pension fund members.

          Objectives of the Act

          Madam Speaker, the core principles for Pension Fund Regulation as espoused by the International Organisation of Pension Supervisors require objectives of a pension primary legislation to be clearly stated.  The objectives of that are not clear, hence it is recommended by the Commission that they explicitly provide for the registration and deregistration of pension funds, provident funds and fund administrators; regulation of pension funds, provident funds and management of troubled pension funds, provident funds and fund administrators and dissolution; and to promote and protect pension contributors’ and the rights of pensioners.

          Account and Holding of Assets

 Currently, financial statements for the insurance and pension industry are not standardised and camouflage critical information such as unsustainable operational expenses through salaries and insider loans.

          It is recommended that every pension fund be required to maintain books of accounts for at least 100 years.  It is also recommended that the timeframe within which financial statements should be submitted to IPEC be reduced from the current six months to three months in line with practice in banking and securities sectors.

          In addition, the financial statements must be in a format prescribed by IPEC to ensure enhanced disclosure for transparency and accountability.  It is recommended that a new paragraph be inserted in subsection (4), which requires that all newly-acquired assets be transferred into the name of the pension fund within three months after payment of the full purchase price.  The mischief is that some pension fund assets are taking long to be transferred and some are not being transferred at all.

          It is recommended that current provisions that allow pension fund assets to be registered in a nominee name be repealed.  The basis is that the Financial Action Task Force Standards on Anti-Money Laundering and Combating Financing of Terrorism requires identification of the ultimate beneficial owner.  The Securities Sector also outlaws recording of transactions in the name of a nominee.

Actuarial Valuation of Pension Funds

          It is recommended that the provision which empowers the regulator to exercise discretion with respect to exemption of some pension funds from complying with the requirements for actuarial valuation, be amended.  The criteria for exempting a pension fund should be specified in the subsection, as opposed to relying on the regulator’s discretion.

          Restriction of Investment with Related Parties

          The proliferation of incestuous relationships among inter-party transactions, particularly in institutions within an insurance conglomerate, has resulted in policy holders losing money in a number of shady deals.  In views of this, it is recommended that legislation be amended by the insertion of the following provision:-

          “Notwithstanding anything to be contrary contained in the rules of a registered fund, a fund shall not, directly or indirectly:-

·       grant a loan to, or invest more than 5% of the market value of its

 assets in a party related to the sponsoring employer;

·       issue a guarantee against its assets to the sponsoring employer or

any of its subsidiaries or its holding company or a subsidiary;

·       grant a loan to a member of the fund or make any of its funds

available whether by way of investment or otherwise, to be utilised in any manner by the fund or someone else in order to provide a loan to a member;

·       invest in shares controlled by an officer or member of the fund or a

 director of a company which is an employer participating in the scheme; and

·       without the prior approval of the regulator, directly or indirectly

 acquire or hold shares or any other financial interests in another entity, which results in the fund exercising over that entity”

          Power of the Commissioner to Grant Exemptions

          The current legislation empowers the Commissioner to vary or exempt any fund from the reporting obligations or regulatory requirements set out in the Act.       It is recommended by the Commission that the circumstances under which such exemption is granted be prescribed in regulations, for transparency purposes.

          Annual Reports by the Commissioner

 

          The section stipulates with respect to annual reports by the Commissioner that the Commissioner shall, at the end of each calendar year submit to the Minister a report on the pension and provident fund business in Zimbabwe during that calendar year.  It is recommended that the provision should empower the Minister to prescribe, in regulations, the minimum disclosure requirements in an annual report that is filed by IPEC and should provide guidelines on the key parameters to be included in the report. The mischief is that the current annual reports are skeletal and their contents are determined by the regulator.

          In addition, it is recommended by the Commission that the period within which annual reports are logged with the Minister should be reduced from six months to three months, after the end of a financial year. 

          Offences and Penalties

With respect to offenses and penalties, the highest level of penalty for non-compliance by a fund is level six.  The challenge is that the standard scale of fines is on the lower side, given that level 14 attracts a fine of $5 000.  In this regard, the cost of non-compliance can be very low compared to the cost of compliance.  It is accordingly recommended by the Commission that the provision be amended with a view to coming up with deterrent sanctions.  A cue can be taken from the 2014 amendments to the Money Laundering and Proceeds of Crime Act, wherein penalties of up to $250 000 are clearly stipulated.

The Commission is of the view that the pension sector is unique in that it touches on people’s life savings, hence the need for deterrent sanctions for non-compliance with provisions of the Act or regulations. 

Pension Contribution Arrears

For the purpose of monitoring and ensuring compliance, a new section is being proposed to the principal officer of the fund or any authorised person shall, at the times and in the manner and format prescribed, submit reports to the regulator and the contributing employees.

Personal Liability on Non-Remittance of Pension Contributions

With respect to personal ability on non-remittance of pension contributions, it is recommended that every employer/company, every director or executive officer who is regularly involved in the management of the company’s overall financial matters be personally liable for compliance with the requirement to remit pension contributions.

Conclusion

In conclusion, overall, the Inquiry is recommending, that is the Commission, that every category of complaints raised by members of the public during public hearings at a policy, regulatory or institutional level be addressed.  This will restore confidence in the insurance and pension industry.   Public confidence in the sector is very low yet the insurance and pension industry has a key role in social protection and mobilisation of long-term capital for development.  Parliament is hereby requested to go through the Report of the Commission of Inquiry and provide its views on the report.  I thank you Madam Speaker.

HON. DR. CHAPFIKA: Thank you Madam Chair.  I rise to propose that the debate be adjourned on this topic. I say so because we met as a Committee, following the submission, we met with the Chairperson of the Commission, Justice Smith and his team who briefed the Committee on this issue and we have lined up other affected stakeholders and we are treating this issue as urgent to ensure that we solicit their views after which we will submit a response to the Hon. Minister’s presentation. I therefore, propose that the debate be adjourned. Thank you.

          THE MINISTER OF JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS (HON. ZIYAMBI): I move that the debate do now adjourn.

          Motion put and agreed to.

          Debate to resume: Thursday, 10th May, 2018.

ANNOUNCEMENT BY THE TEMPORARY SPEAKER

NON-ADVERSE REPORT RECEIVED FROM THE PARLIAMENTARY LEGAL COMMITTEE

          THE TEMPORARY SPEAKER (HON. DZIVA): I have received a Non-Adverse Report from the Parliamentary Legal Committee on the Shop Licences Amendment Bill, H.B. 10A. 2016.

          Consideration Stage: With leave forthwith.

CONSIDERATION STAGE

SHOP LICENCES AMENDMENT BILL [H. B. 10A, 2016]

          Amendments to Clauses 7 and 8 put and agreed to.

          Clauses 7 and 8 as amended, put and agreed to.

          Third Reading: With leave, forthwith.

THIRD READING

SHOP LICENCES AMENDMENT BILL [H. B. 10A, 2016]

          THE MINISTER OF JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS (HON. ZIYAMBI): Mr. Speaker, I now move that the Bill be read the third time.

          Motion put and agreed to.

          Bill read the third time.

ANNOUNCEMENT BY THE TEMPORARY SPEAKER

NON-ADVERSE REPORT RECEIVED FROM THE PARLIAMENTARY LEGAL COMMITTEE

THE TEMPORARY SPEAKER (HON. DZIVA): I have received a Non-Adverse Report from the Parliamentary Legal Committee on the Electoral Amendment Bill, [H. B. 6A. 2017].

Consideration Stage: Thursday, 10th May, 2018.

SECOND READING

ZIMBABWE IRON AND STEEL COMPANY (DEBT ASSUMPTION) BILL [H. B. 2, 2018]

          Thirteenth Order read: Second Reading: Zimbabwe Iron and Steel Company (Debt Assumption) Bill [H. B. 2, 2018].

          THE MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHINAMASA): Madam Speaker, I rise for the second reading of the Zimbabwe Iron and Steel Company (Debt Assumption) Bill [H. B. 2, 2018].

          To refresh Hon. Members’ memories, the Zimbabwe Iron and Steel Company Limited (ZISCO) was an integrated iron and steel manufacturing company with an annual production capacity of one million tonnes of liquid steel. It started as a small company in 1948 at its present site in Redcliff.

          ZISCO produced long products like bars, rods, channels, angles and square bars. For the production of steel, iron ore was mined within 20 km of the steel plant, limestone was mined within the steel works and coal was railed from Hwange Colliery Company Limited some 650 km from Redcliff.

          At its peak, ZISCO was the lifeline of the economy and the city of Redcliff. It produced about 800 000 tonnes of steel, 70% of its production was exported in the form of billets while 30% was sold in the form of finished products on the domestic and regional markets. Of the domestic sales, 75% was for the construction industry, 15% for manufacturing and fabrication, 6% for mining and 4% for agriculture.

          ZISCO had 2 subsidiary companies, that is, Buchwa Iron Mining Company (BIMCO) which was the mining arm of ZISCO and Lancashire Steel which produced wire and fencing products.

          The company halted operations in 2008 following successive and debilitating failures in power supply and other chronic problems which afflicted the plant. Following these systematic failures, no operations have resumed at the plant and this therefore, has compromised the company’s capacity to contribute to the economy and, by extension, its capacity to meet its debt obligations.

          Prior to the period before the eventual stoppage of operations, the company had embarked on a rehabilitation programme which involved the procurement, installation and commission of new plants from Germany and China respectively.

          Madam Speaker, by and large, the total debt for ZISCO stood at US$494.8 million, as at 31 December, 2017, broken down as follows:

Liability                                        Amount (US MILLIONS)

Foreign Loans                                            211.9

Foreign Creditors                                           6.1

Local Loans                                                  57.7

Local Creditors                                           219.1

Total                                                           494.8

As I have already pointed out, ZISCO has been unable to pay its debts, a situation which demands attention and rectification, given the pivotal role it plays in the manufacturing sector and the overall economy.

Madam Speaker, I am pleased to announce that the Board of ZISCO and the Ministry of Industry, Commerce and Enterprise Development have identified a Chinese investor to resuscitate ZISCO operations.

The contract agreement is now in place and work is anticipated to begin shortly.  The restructuring of ZISCO debts, especially cleaning up the balance sheet is a condition precedent to operationalise this Agreement. 

In this connection, Madam Speaker, Cabinet approved assumption of ZISCO debts in July last year and to that end, the draft Bill before this august House has been developed as a step towards the resuscitation of ZISCO’s operations.

Madam Speaker, it has been agreed with the Ministry of Industry, Commerce and Enterprise Development that in the long run, this debt assumption will not translate into an increase in Government debt because:

1.    The current project structure is based on ZISCO being compartmentalised into three main components.  The first part involves the new Chinese investor who will invest in a new plant and equipment and operate the rest of the steel plant.  The new plant, in addition to long products, will produce flat products and special steel.  It is believed that, Madam Speaker, this investment will exceed $1 billion and has tremendous potential benefits to the economy.

2.    The second part encompasses the Coke Oven batteries ancillary plant and equipment which will be used to produce coke for exports by a local investor.  The proceeds from coke export will be used to pay off the Germany KFW debt amounting to $174 million.

I need to point out, Madam Speaker, that this arrangement has already been concluded and when we come to the Committee Stage, I am going to ask for an amendment of the schedule of debts to reduce it by $170 million which already obligation has been taken over by the new investor who is going to operate the coke oven.

Lastly, Madam Speaker, a separate company will be incorporated with ownership of mining claims and rights and any investor will equip and operate the mines for a fee payable to the new company.  This fee will be used to pay the Chinese and local debts which amount to $284 million.

Madam Speaker, given the context I have provided, I shall now proceed to highlight the salient features or provisions of the Bill.

Clause 3 of the Bill establishes the extent of the liabilities to be assumed by the Government of Zimbabwe.  The legacy debt accrued by ZISCO prior to 1st January, 2017 will be taken over by Government and thereafter, ZISCO will be responsible for its own operational costs and liabilities as any other business entity.

However, Madam Speaker, before any debt is assumed by the Government, the debt must be subjected to a process of meticulous verification and reconciliation as provided for in terms of Clause 6.  This process is carried out by the Public Debt Management Office, which resides in my Ministry and which office is authorised to do so in terms of Clause 5 of the Bill as well as in terms of the Public Debt Management Act [Chapter 22:21].

The proof that is to be tendered in support of a Creditor’s claim includes authenticated copies of loan agreements and contracts and court judgments supported by other relevant Creditor documents which will be scrutinised by the Debt Management Office.

Finally, Madam Speaker, in terms of Clause 9, once the exercise is concluded by all relevant parties, the President shall repeal the Act. 

In the light of the above, Madam Speaker, I submit and ask that the Zimbabwe Iron and Steel Company (Debt Assumption) Bill, 2018 be now read a second time.  I thank you Madam Speaker.

HON. DR. CHAPFIKA:  Thank you Madam Chair.  I was going to submit the report from the Portfolio Committee on the ZISCO Steel Debt Assumption Bill, but in the absence of a quorum, I do not think other Hon. Members of Parliament who are not in the chamber would have benefited.  So, with your indulgence, I seek that I submit my response tomorrow. 

THE MINISTER OF JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS (HON. ZIYAMBI):  I move that the debate do now adjourn.

Motion put and agreed to.

Debate to resume: Thursday, 10th May, 2018.

On the motion of THE MINISTER OF JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS (HON. ZIYAMBI), the House adjourned at Eighteen Minutes Past Five o’clock p.m.   

 

 

 

 

 

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