Parliament Recalled to Consider Chinese Loan Agreement
An early recall to both Houses of Parliament to sit on Tuesday 31st May interrupted the adjournments of the House of Assembly [to 14th June] and the Senate [to 5th July]. The recall was in terms of Standing Orders which give the Speaker of the House and the President of the Senate the power to order a recall if they have been requested to do so by the [State] President and if they are satisfied that the public interest so requires. [House of Assembly Standing Order 187, Senate Standing Order 194.]
[Comment: There can be little doubt that the public interest required legislators to get back to work, now that most of them are once again available for normal Parliamentary duties. The Houses had adjourned because the majority of members were to be involved in the Thematic Committee stage of the constitution-making process. But by 26th May the Thematic Committees had been reconstituted and reduced in size, resulting in most legislators being released from Thematic Committee obligations.]
Reason for the Recall The Clerk of Parliament said on 26th May that the recall was for both Houses to deal with multilateral agreements and protocols, and Bills currently before Parliament. But, it turned out that the real reason for the recall was to get both Houses to approve a Chinese loan of US$98 million for the construction of the National Defence College and the sitting took place while a high-level Chinese military delegation was in the country. Although the Houses conducted some other business [see below for details], no other agreements or protocols were presented and only one Bill was taken further the Minister of Finances Deposit Protection Corporation Bill, which was passed by the House of Assembly with amendments. Both Houses have again adjourned to the dates of their previous adjournments.
Approval of Chinese Loan Agreement
Purpose of Loan: to construct a National Defence College.
Terms of Loan Agreement: The agreement provides for a loan in Chinese currency equivalent to US$98 million. It was signed by Minister of Finance Tendai Biti on 21st March, but an agreement of this sort has to be approved by both Houses of Parliament, otherwise it is not valid. This is a concessional loan, with interest at 2% per annum. There is a grace period of 7 years during which only interest is payable. Thereafter the loan must be repaid in 26 twice-yearly instalments over the next 13 years. Other noteworthy aspects of the agreement include:
States Diamond Revenues to be Used to Service Loan Article 9 in effect requires the Government to ensure that its income from the Sino-Zimbabwean Anjin joint diamond-mining venture at Chiadzwa will be dedicated to making payments due under the loan agreement to actually draw on the loan the Government must first enter into an agreement to establish an escrow account to secure the payment and repayment of the Facility with the revenue of the Zimbabwe sides benefits from Anjin Investment (Pvt) Ltd.
Preferential Treatment for Chinese Goods and Services Article 2.5 of the Agreement states that goods, technologies and services purchased with the proceeds of the loan must be purchased from China preferentially and also from Zimbabwe where this will benefit the Project and End-User the End-User being the Ministry of Defence.
Debate in the Senate: The loan agreement was presented by the Minister of Lands and Rural Resettlement on behalf of the Minister of Defence. Only one Senator asked questions and the agreement was then approved.
Debate in the House of Assembly: The debate in the House lasted two hours but the agreement was eventually approved. The Minister of Defence made a long speech justifying the establishment of the National Defence College [NDC] but said very little about the terms of the loan. MPs from both MDC formations objected to the short notice given to members to study the agreement most of them had only seen it that morning and complained about being asked to rubber-stamp it; also queried was how such a large loan would be serviced when the countrys external debt is already $7 billion and civil servants were not getting properly paid. MPs also complained that Chinese companies habitually brought in materials and labour from China, prejudicing local suppliers and workers. The Minister of Defence in reply said it was a very cheap loan and stressed the low interest rate of 2% and the generous grace and repayment periods. Minister of Finance Biti took no part in the presentation of the loan agreement nor in the debate.
Comment: Despite some resistance to last-minute rubber stamping and despite MPs querying misplaced priorities and the countrys capacity to service the loan, the debate in Parliament did not fully reflect the outrage that people have been publicly expressing about this deal, nor did it probe the purposes to which the NDC will be put. Public concern has focused on the diversion of diamond receipts from far more pressing needs, on the fact that the NDC will benefit an elite few rather than the struggling general population, and on reports that the complex will include VIP recreational facilities and medical facilities in contrast to the lack of health facilities for the general population and a techno-spy centre.
Adverse Report by Parliamentary Legal Committee [PLC] on Indigenisation Amendment Regulations
On Wednesday the Deputy Speaker told the House of Assembly that the PLC had returned an adverse report on the Indigenisation and Economic Empowerment (Amendment) Regulations gazetted in SI 34/2003. [Note: The regulations, and GN 114/2011 gazetted the same day, have been widely criticized as unconstitutional and ultra vires. See summary in Bill Watch 15/2011 of 1st April.]
The PLC also reported adversely on SI 30/2011 [Marondera Clamping and Tow-away By-laws] and SI 52/2011 [Harare Waste Management Amendment By-laws].
What an adverse report from the PLC means: A PLC adverse report on a statutory instrument states that the PLC considers all or part of the statutory instrument to be inconsistent with the Constitution and therefore invalid. An adverse report does not, however, nullify the statutory instrument although it may ultimately result in its repeal. The procedure laid down by the Constitution [Schedule 4, paragraph 8] is as follows: the Senate must consider the report and decide whether or not the statutory instrument is in conflict with the Constitution. [Note: As the Senate does not have the legal expertise that the PLC has, this is likely to be a party political decision, although the issue is a legal one.] If the Senate disagrees with the PLC and decides the SI is constitutional, that is the end of the matter the SI stands. If the Senate agrees with the PLC and passes a resolution that the SI is inconsistent with the Constitution, the responsible Minister [in this case Youth, Development, Indigenisation and Empowerment Minister Kasukuwere] has the right to ask the House of Assembly to resolve that the statutory instrument should not be repealed. If the House does not pass such a resolution within 21 sitting days after the Senates resolution, the President must repeal either the whole statutory instrument or the offending provision. [Note: A sitting day is any Tuesday, Wednesday, Thursday or Friday that is not a public holiday, whether or not Parliament actually sits.]
[Note: If proceedings on an adverse report in the Senate and House of Assembly do not result in the repeal of the SI or the offending parts of it by the President, the SI can still be challenged in the Supreme Court by interested parties. Although the Supreme Court is not obliged to reach the same conclusion as the PLC, a well-reasoned PLC adverse report will obviously be of value to anyone applying to the court to invalidate an SI or any of its provisions on the ground of inconsistency with the Constitution.]
Other Parliamentary Business Conducted
Senate The Senate sat on Tuesday only, for 1 hour 23 minutes. It did not deal with either of the two Bills on its Order Paper the Small Enterprises Development Corporation Amendment Bill and the POSA Amendment Bill. Before the discussion of the Chinese loan agreement, there were brief contributions to the debate on the thematic committee report on the Ministry of Foreign Affairs [electronic version of report available] and the debate on the motion on the achievements of the inclusive government.
House of Assembly The House sat on Tuesday, until 5.48 pm, and Wednesday, until 3.50 pm. The debate on the Chinese loan agreement on Tuesday afternoon was followed by the Second Reading of the Deposit Protection Corporation Bill. This Bill provides for the establishment of a Deposit Protection Corporation and Deposit Protection Fund to provide for the compensation of depositors in failed financial institutions; this will replace the existing compensation scheme. Minister Bitis presentation was so persuasive that there was no debate after his explanatory speech. The Committee Stage was concluded on Wednesday when the House approved amendments proposed by the Minister to clauses 36 and 37 of the Bill and its First Schedule. The Parliamentary Legal Committee [PLC] cleared the amendments the same afternoon with a non-adverse report and the amended Bill received its Third Reading. It was then transmitted to the Senate, where it joins two other Bills already passed by the House. [Electronic version of Bill available.]
Members Question Time Questions raised in the House of Assembly on Wednesday included:
Lifespan of GPA Deputy Prime Minister Mutambara said that the GPA has no specific termination date and that its termination depends on the creation of conditions for a free and fair election, including a new Constitution and related reforms; it could not, however, last beyond the life of the present Parliament, which would expire after five years in 2013.
Housing for Relocated Chiadzwa Residents The Minister of National Housing and Social Amenities, MDC-Ts Giles Mutsekwa, revealed that he had not been made aware of developments concerning the provision of housing and social amenities for persons relocated from the Chiadzwa diamond fields.
Problems in Banking Sector The Minister of Finance said that the Government could not and would not bail out failed banks. At the same time it had the duty to protect bank depositors, not only in the case of Renaissance Merchant Bank currently in the news, but also by improving regulation of the whole financial sector. [The next day RMB was placed under curatorship by the Reserve Bank.]
New Parliament Building Awaiting Funding The Minister of Public Works said that all plans for the new $110 million complex on the Harare Kopje site were ready but there was no funding; work on the site could commence within 45 days of funding becoming available.
Update on Acts and Bills
Acts of 2011 Gazetted to date [Electronic versions available.]
Zimbabwe National Security Council Act (No. 2/2011)
General Laws Amendment Act (No. 5/2011)
[Note: Acts Nos. 1, 3 and 4/2011 have not been gazetted. They are in the pipeline; see below.]
Bills Passed and Awaiting Presidential Assent and/or Gazetting as Acts [Electronic versions available.]
Criminal Laws Amendment (Protection of Power, Communication and Water Infrastructure) Bill
Attorney-Generals Office Bill
Energy Regulatory Authority Bill
Bills in Parliament [Electronic versions available.]
House of Assembly
National Incomes and Pricing Commission Amendment Bill [awaiting Second Reading].
Three Bills now await Second Reading:
Public Order and Security [POSA] Amendment Bill
Small Enterprises Development Corporation Amendment Bill
Deposit Protection Corporation Bill [transmitted from House of Assembly 1st June].
Bills Gazetted and Awaiting Presentation in Parliament None
Bills Being Printed for Presentation in Parliament [electronic versions not available texts not yet released]
Electoral Amendment Bill [to be presented by the Minister of Justice and Legal Affairs]
Human Rights Commission Bill [to be presented by the Minister of Justice and Legal Affairs]
Older Persons Bill [to be presented by the Minister of Labour and Social Services]
Bills Referred for Drafting after Approval in Principle by Cabinet
State Enterprises Restructuring Agency Bill
State Enterprises and Parastatals Management Bill
Zimbabwe Investment Authority Amendment Bill.
The Gazette dated 3rd June only became available today. No Bills or Acts are gazetted, only local authority by-laws: Gokwe [SI 65 road traffic and other offences], Redcliff [SI 66 rents and charges], Epworth [SI 67 supplementary charges], Zvishavane [SI 68 rents and charges].
Requests for electronic versions that have been offered should be emailed to [email protected]
Veritas makes every effort to ensure reliable information, but cannot take legal responsibility for information supplied