Advocate Jacob Mudenda
We publish the opening remarks by Speaker of The National Assembly Advocate Jacob Mudenda last week at the Pre-Budget Seminar in Victoria Falls. The seminar ends today.
Let me start by extending a warm and fraternal welcome to you all to this critically important Pre-Budget Seminar whose theme is “ Consolidating economic development and transformation through domestic resource mobilisation and utilisation”.
This theme can be consummated if Parliament and the executive share unfettered developmental ideas which cement a common vision extrapolated upon pluralistic extractive economic and political institutions.et me start by extending a warm and fraternal welcome to you all to this critically important Pre-Budget Seminar whose theme is “ Consolidating economic development and transformation through domestic resource mobilisation and utilisation”.
History has recorded that from the 13th Century English Magna Carta right up to the industrial revolution of countries such as Britain, France, Germany, Russia, China and Malaysia, Parliaments have played a crucial role in providing the necessary legislation for that accelerated development.
No National Budget can achieve its intended economic development goals if it is not premised on progressive legislation which promotes the Ease of doing Business in a country.
In that regard, it is my fervent hope that the 22 identified pieces of legislation by the Office of the President and Cabinet Technical Committee will soon be presented as Bills to Parliament for enactment in order to improve our Ease of Doing Business.
Responsible and relevant parliamentary committees must cause this process to accelerate before the end of the year.
Principally, this pre-budget seminar must address the following key areas namely:
A review of the 2017 Budget implementation, outcomes and macro-economic performance is our unavoidable point of departure.
In other words, did the 2017 perform to expectation? If not, why?
Constructive and interactive engagement with line ministries in determining national priorities for the 2018 budget should be premised on the input Parliament has received from stakeholders and the general public; and
Recommending domestic resource mobilization strategies and utilisation patterns which ought to spur the revival of our consolidated economic development that is transformative of the livelihoods of Zimbabweans next year and beyond.
The 2018 fiscal year will be under immense spotlight from diverse stakeholders not only because it is election year but because it is the final year in the implementation of our economic blueprint, ZimAsset.
As we take stock of the achievements made and challenges we have encountered, our people are expecting more localized solutions and interventions in order to consolidate the gains arising from the implementation of ZimAsset.
The 2018 Budget, therefore, presents an opportunity for a prudent and targeted response to the well documented socio-economic challenges we have faced during that implementation process while at the same time acknowledging the successes achieved.
It is my fervent hope that the presentations we shall receive over the next three days from the committees will have domestic resource mobilisation and utilisation underpinnings and speak to the issues raised at the pre-budget briefing seminar held on the 20th October 2017 at Pandhari.
The presentations we received at the pre-budget briefing seminar brought to the fore the delinquencies of misplaced lending, narrow composition of exports, the large quantities of money tied up in RTGS balances and securities, dwindling foreign assets and the high cost of doing business in Zimbabwe.
We also noted with concern that Zimbabwe is receiving miniscule Foreign Direct Investment (FDI) of around $300 million compared to other regional countries such as Mozambique and Zambia which have been attracting in excess of $3billion and nearly $2 billion respectively since 2011.
Given this background, our continued focus on domestic resource mobilisation thus remains relevant and timely since we are experiencing inadequate foreign direct investments. Parliament, working very closely with the Executive, should come up with strategic policy and legal framework paradigm shifts attractive to foreign direct investors, albeit not ignoring domestic investments.
My clarion call today, therefore, is for us to marshal our innovative and creative ideas to enable us to affirm our resourcefulness as Parliament.
The 76th United States secretary of the treasury, Jacob Lew, postulated that, “the budget is not just a collection of numbers, but an expression of a nation’s values and aspirations .”
It is, therefore, instructive that our policies and strategies be aligned to this prudential ideal in canvassing for a robust budget in the context of our limited resources.
However, this is not to imply that we are blind to the immense contribution and assistance we have received from our cooperating partners, some of whom are part of this gathering.
I must acknowledge the indispensable supportive role that our cooperating partners have played through technical and financial assistance.
That support notwithstanding, it is time for us to explicitly recognise and acknowledge that external support cannot be our proverbial Joshua that will take us to the promised land of abundant honey and milk.
As the late great African author Chinua Achebe rightly stated, “the outsider cannot weep louder than the bereaved.”
The land of milk and honey can only be reached through our own concerted efforts underscored by enhanced domestic resource mobilisation anchored upon a stubborn optimism.
To this end, allow me to suggest a few pointers to what your committee presentations should address.
It is my expectation that your committee presentations will be premised on native resource mobilization which must strategically guarantee the narrowing of the budget deficit to 4 percent of GDP in 2018 as enunciated in the Treasury 2018 Pre-Budget Strategy Paper.
Additionally, your submissions today should enunciate the need for a well-grounded economic investment framework that is predicated on the Special Economic Zones whose enabling legislation has been passed by Parliament.
Parliament has to exercise intense oversight in order to ensure that the proposed Special Economic Zones are not white elephants, but a sound bedrock for local resource mobilisation emanating from accelerated investment therein.
Moreover, your presentations must address the debilitating spirit of procrastination, indolence and inertia that has slowly become endemic and is proving to be the biggest enemy in our bureaucracy, apart from the scourge of corruption.
For instance, for more than 10 years we have eloquently enunciated the need for and the benefits of establishing a One Stop Investment Centre in order to bolster the ease of doing business in Zimbabwe.
The question is, more than a decade down the line where is the One Stop Investment Centre? Where is the Minerals Exploration Bill which will enable the country to precisely know the worth of our vast mineral resources underground that could underpin a profound growth of our Sovereign Wealth Fund?
Where is the evidence-based informal sector formalisation policy which ought to encourage its growth and development?
Where is the revised Indigenisation and Economic Empowerment Act reconfigured in line with the Presidential Policy Directive of 14 April 2015?
We must kill the vices of procrastination, indolence and inertia if we are to positively respond to the questions I have just posed.
It is no secret that Zimbabwe’s foreign payment backlog runs into hundreds of millions of dollars despite spirited efforts by the Reserve Bank team led by Dr Mangudya to ensure critical areas receive adequate forex.
Our forex sources are principally exports, diaspora remittances and the limited Foreign Direct Investments.
We, therefore, yearn for proposals on special tax and other incentives for diaspora investments in property, equities and other assets.
We want to hear suggestions on how to reroute remittances through formal channels instead of concealed envelopes.
Indeed, this is not wishful thinking. It has been done in other developing countries such as Ethiopia whose Diasporian remittances back home are in excess of $4 billion annually.
Honestly, we cannot just expect diasporians to remit through our formal financial channels without spelling out what’s in it for them.
State Enterprises and Parastatals reform is one area which can address both revenue generation on the supply side and expenditure slashing on the demand side simultaneously, thus killing two birds with one stone.
Reports in the mainstream media two weeks ago suggest that the Chief Secretary to the President and Cabinet, Dr Misheck Sibanda, was not at all amused, and rightly so, that 38 of the 93 State Owned Enterprises audited in 2016 incurred a combined loss of $270 million.
The poor performance is attributed to the weak corporate governance practises and ineffective control mechanisms.
How do we explain a situation where some SOEs operate without full boards, and some of the boards are reconfigured when ministers change while in some instances we have heard of improperly constituted boards?
The 2018 Budget should endeavour to plug in the loopholes so that more State Owned Enterprises operate viably.
Parliament must make some concrete input in that regard.
His Excellency, the President, during his meeting with the private sector on 7 September, emphatically poured out his frustration on this menace as he described these parastatals and SOEs as “ awful money spenders, awful burdens around our neck”.
We cannot afford to continue bailing out these under performing entities whose contribution to GDP has fallen from around 40 percent to miniscule figure of below 10 percent.
Make no mistake about it, I am clearly alive to the fact that SOEs cannot be purely evaluated only on the basis of financial results (the profit and loss account), but more widely on how they contribute to societal wealth creation, thus taking an integrated and holistic view of their corporate impact.
We, therefore, need to support and craft sustainability strategies for those SOEs which can truly become catalysts for continual public wealth creation.
For example, a vibrant (Zimbabwe Iron and Steel Company) Zisco can guarantee efficient and sufficient steel production necessary for the upscaling of our foundry industries and other downstream manufacturing entities throughout the country.
However, for Zisco to achieve sustainable growth, there must be a synergised business model.
Hwange Colliery must produce enough coal to fire Zisco furnaces.
The National Railways of Zimbabwe must have adequate rolling stock to haulage coal to Zisco.
In tandem, Zesa should supply reliable electricity to Zisco and Sable Chemicals must be able to constantly supply adequate oxygen to the Zisco plant.
In that context, I am intrigued by three Chinese SOEs (Sinopec Group, China National Petroleum and State Grid) which have consistently made the top ten on the Fortune Global since 2010 and contributed 16 percent of China’s total revenues from the 114 SOEs on the list in 2014.
For how long shall we continue treating small scale producers who are raking in more than 50 percent of gold deliveries to Fidelity Printers as criminals?
What legal supportive measures can we give to the sector if we are to exceed the 25 tonne gold target we have set for ourselves in 2017?
What policy measures can we advance as Parliament if we are to exceed the US$753,3 million brought by gold exports in 2015 and US$913,4 million in 2016?
My layman’s calculation informs me that capacitating artisanal miners to the tune of US$1 billion would raise no less than US$3 billion to the fiscus.
Additionally, the proposed Budget should indicate how our country can maximise earnings from the abundant chrome reserves in and around the Midlands Province, which when properly extracted and marketed can generate approximately US$3 billion annually.
We must, therefore, come up with suggestions that reinvigorate our mining sector to contribute even more extensively to our Gross Domestic Product.
In as much as we bank on domestic resource mobilisation in the wake of global diminished financial support, we need to re-examine and proffer solutions to the impediments in this regard.
Smuggling remains a challenge in the country with ZNCC estimating a loss of U$1,5 billion annually in potential revenue through foregone duty and value-added tax.
The World Bank estimates that tax flights from developing countries are several times higher than aggregate inflows from official development assistance.
On a related issue, Afrodad in 2014 estimated that Zimbabwe lost US$2,83 billion between 2009 and 2013, translating into an annual average cash leakage equivalent to US$570,75 million through illicit financial flows.
The mining sector accounted for the bulk of the leakages of $2.793 billion, constituting 97,9 percent of the illicit outflows from the country.
We also need to proffer legally based solutions to the worsening liquidity and cash challenges which have resulted in the proliferation of financial indiscipline, speculation and widespread foreign currency manipulation in the black market giving rise to price distortions of goods and services.
Having said all this, I entreat you to input into and pass a budget which exudes pro-poor and gender sensitive national economic development strategies embracive of the sustainable development goals.
I am inspired by the wise counsel of the former Vice President of the United States of America, Mr. Joe Biden, who once said, “ Don’t tell me what you value. Show me your budget, and I’ll tell you what you value. ”
This statement is succinct and instructive in that it acknowledges the fundamental fact that the whole world shall see what we value as a nation through the allocations we prioritise in this Budget.
I need not repeat the inspiring examples of countries which have thrived by focusing on domestic resource mobilisation.
The Asian Tigers of Hong Kong, China, Singapore, South Korea, Malaysia, Taipei, Philippines and Thailand have leveraged on their domestic bond markets to spur the growth of their economies.
Allow me to express Parliament’s gratitude for the budgetary support to its activities by the Ministry of Finance and Economic Development during this current financial year despite the financial constraints.
We are however, concerned about the late disbursement of funds which has hamstrung Parliament from carrying out its mandate as outlined in the Constitution.
Members of Parliament have thus expressed their concern, at the perceived treatment of Parliament as a poorer cousin among the three organs of State.
In some instances, Committees of Parliament have not been able to carry out oversight visits or conduct public hearings as required by the Constitution due to the inadequacy of resources.
This is an unacceptable state of affairs that has the potential to undermine the integrity of Parliament in particular and the credibility of the national governance system in general in the eyes of the public.
Honourable members, I hope your constructive contributions to the 2018 Budget will lead to a sound vote for Parliament in particular and Government in general.
Let me also express my appreciation to the Honourable Minister of Finance and Economic Development, Dr Chombo, for your presence here today and in particular your participation at the Pre-Budget Briefing Seminar which took place in Harare.
Parliament is inspired by such positive overtures and encouraged by the extent to which the Treasury incorporated the measures proposed by the Parliament into the 2017 National Budget.
It is my fervent hope that in crafting the 2018 National Budget, the Ministry of Finance and Economic Development will again take on board most of the constructive ideas and recommendations drawn from the people of Zimbabwe through the public engagement of Parliamentary Committees as they will be presented today.
As I conclude, allow me to reiterate my passionate plea to all participants to actively engage and participate in this seminar as we reflect on how the country can strengthen domestic resource mobilisation strategy to ensure that Zimbabweans attain transformative prosperity.
How refreshing it can be if we can come up with at least a $10 billion Budget for 2018 with a zero Budget deficit made possible through native resource mobilisation!
It is now my singular honour to declare this seminar officially open and to wish you all fruitful and mutually rewarding deliberations.
67,474 total views, no views today