Eddie Cross praises Mugabe for new business initiatives but asks how to you collect only $385 million from vehicle imports valued at $1.5 billion when duty is 60 percent?


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Bulawayo South Member of Parliament Eddie Cross yesterday praised President Robert Mugabe for coming up with some sound business policies like the establishment of the One-Stop Investment Centre, the reorganizing of the State Procurement Board, the setting up of the National Border Post Authority, and the conversion of the Incomes and Pricing Commission into a National Competitiveness Commission.

Cross said the establishment of the National Border Post Authority was a move in the right direction because there was so much chaos at the country’s borders, especially at Beitbridge, that was costing the government a lot of revenue.

“We import $1.5 billion worth of motor vehicles a year and yet the total revenue received at the border last year was only $385 million which is five percent,” he said in his contribution to the President’s Speech for the official opening of Parliament.

“The average duty on a motor vehicle is 60 percent, Mr. Speaker, that means we should be earning 600 to 700 million dollars a year just from motor vehicles. Why is it not coming into the exchequer? That is one of the principal reasons why in fact we are so short of money. It is because our border posts are so porous.”

Cross said he was also appalled at the salaries some people like those at the Premier Medical Aid Society and the Harare City Council were getting.

“We saw the story in The Sunday Mail this week of the top five people in the PSMAS drawing $22 million of unauthorised benefits for themselves. Mr. Speaker Sir, the budget of this Parliament for twelve months is less than that and these are five individuals,” he said.

“Why have they not been imprisoned? Why have they not been prosecuted? Where is the Prosecuting Authority? We have heard what their salaries were. This guy Dube, why was he getting $600 000 a month? Where does he think that kind of salary comes from? It was approved by the board of the PSMAS. At the time they drew that, nearly $40 million in salaries and benefits, the medical aid society was in $119 million in arrears to its creditors.

“Mr. Speaker, this is State money and not a private organisation. The Minister of Finance spends $140 million a year with the PSMAS. If civil servants cannot get medical treatment on time, it is because of this kind of behaviour. As far as I am concerned, I will not be satisfied until Mr. Dube is in jail.”

On the City of Harare, he said: “In the City of Harare, Town Clerk has been earning US$23 000 a month and on top of that has been getting US$7 000 a month at the least in terms of benefits, that is US$30 000 a month. The minimum wage in Harare is US$480, in South Africa it is US$176 and US$84 in Zambia. Mr. Speaker Sir, as a country we cannot possibly hope to be competitive until we stop paying these kinds of ridiculous salaries.”

Cross also lamented the price farmers were being paid for their produce be it maize, cotton or cattle. He said middlemen were prospering at the expense of farmers.

 

Full speech:

 

MR. CROSS: Mr. Speaker Sir, I rise to respond to the Presidential Speech and I want to start by making a number of comments with regards to extremely positive developments which would be prospects for improvement in our national affairs.

The first item in the speech that I appreciated very much was the proposal to reorganize the One Stop Investment Centre which is currently responsible for dealing with investment into the country. I happen to know what the proposals are and I must say I found them very comprehensive and extremely positive. I think that once this new revised One Stop Investment Centre is in place, foreign investors will discover that in fact Zimbabwe is relatively easy to deal with. The necessary procedures requiring the pre-investment needs of the individual enterprises will be satisfied in short order.

I was also very pleased to see the President’s proposal to reorganize the State Procurement Board and to give the board regulatory authority and to devolve responsibility for procurement to the individual agencies that are responsible for procurement. Mr. Speaker, I regard this as being an extremely positive development …

MR. SPEAKER: Order, order. Members on the left, your own is on the floor and you are making noise. What does that mean? It is amazing.

MR. CROSS: Thank you Mr. Speaker. I have criticized the Procurement Board for a number of reasons in the past. Firstly, I think that centralizing this complex function of Government is really not technically a sensible thing to do. To be able to deal with all the different requirements of our country through a single central authority is virtually impossible. This has resulted in extensive delays to procurement and unnecessary delays in investment decisions. I also think devolving responsibility done to the actual operating agencies is the way to go. I hope this will result in improvement in the speed with which decisions are made regarding procurement.

The other criticism I have is that putting all the power in the hands of one central agency was an invitation to corruption. I think all of us have experienced corruption with the National Procurement Board in one way or another and we hope that those days are gone. I do hope that what the Minister will do in future is not to allow these key agencies of Government to be staffed by individuals, particularly chaired by individuals for many years without seeking significant changes. I do not believe it is possible to remain fresh and innovative in a job for more than five years. I think we should make it a policy that whenever possible, people in key managerial positions on agencies like this should be regularly revolved.

In respect to Special Economic Zones Mr. Speaker, I have not had sight of what is the intention but I do understand the spirit. I think that Special Economic Zones have the prospect for creating areas or zones within Zimbabwe where we can encourage Foreign Direct Investment on a significant scale and I think for example of the Redcliff area and all the potential that exists in that area for heavy industry. If we had Special Economic Zones, we may apply to that sort of an area, that we could in fact encourage the development of significant new industry there. I look at the Victoria Falls, I have long held and I have spoken to the Minister of Tourism and Hospitality Industry that the Victoria Falls, which is one of the principal tourist attractions in the world, could become a major centre growth for Zimbabwe. Instead, we find all our neighbouring states using the Victoria Falls as if it was their own. If you have visited South African Tourist Board stand in California, you discover that at the front of their stand is the picture of the Victoria Falls. If you have visited Zambia, you would think that the Victoria Falls was their personal enclave.

I think Mr. Speaker Sir, that the Victoria Falls could be the subject of massive investment under today’s circumstances because it has a special character. As soon as we get the Special Economic Zones legislated, I think we should set up with vigour, to start encouraging inward investment into these specific areas. One of the great crisis centres of this economy at this moment in time is agriculture. I was pleased to see the President make clear that the formation of the Land Commission was a priority for this Government.

I was happy that the land audit would be conducted in parallel with the formation of the commission, so the audit can lead into the Commission and the Commission can then start tackling the problem of sorting out land in Zimbabwe. We have to acknowledge Mr. Speaker Sir, that the land issue is far from being settled and we need to tackle the problem with vigour.

I was delighted to see that he is proposing to convert the Incomes and Pricing Commission into a National Competitiveness Commission. I was a businessman when the Pricing Commission was active. On three occasions we were instructed to cut our prices by half and I watched the destruction of my own business which employed two and a half thousand people during that time. I watched famous names like Jaggers simply destroyed. I had experienced Mr. Speaker Sir, when they announced this, crowds crushing up against the doors of our businesses demanding entry and demanding that we cut our prices by fifty percent no matter what the consequences were. It was a moment of madness. I am glad to see the end of this particular institution. I cannot believe that we are still funding it, but to convert it into a National Competitive Commission is exactly the right thing to do. I think we have to welcome that.

The fundamental problem in this country is not on how much we are paying our people but it is the low productivity. I was a director of the largest shoe factory in Bulawayo where we employed three and a half thousand people in Bulawayo. We manufactured four and a half million pairs of shoes a year. Our productivity was 20 percent of the Chinese and unless we get on top of that, we simply cannot be competitive as a nation. The issue of competitiveness is the centre of our struggle to re-industrialise as a country.

The next point I would want to make Mr. Speaker, is the question of the National Border Post Authority Bill. Everybody in this House who has had to use one of our border posts, particularly Beitbridge, will understand the situation that confronts visitors to Zimbabwe. I personally, have witnessed foreign tourists arriving at Beitbridge, turning back, going back into South Africa because they simply could not face the chaos. Everyday at Beitbridge, some over 700 heavy duty vehicles cross the bridge with 14 million tonnes of cargo a year. It is by far in the way the busiest border post in Africa. About five to six million people a year traverse the border post. Up to three and a half days, I had a business colleague in Mutare who runs a manufacturing business there and he has had a truck coming through Beitbridge. The truck, without any problems whatsoever regarding the cargo or the documentation, was held up at the bridge for 16 days.

Mr. Speaker Sir, anybody in the world will tell you that that is simply a recipe for disaster. It cost them R2000 a day to keep a heavy duty truck at the border post. Obviously, if the average delays is three and a half days, that represents a loss to Zimbabwe of $250 million a year. It is effectively another tax. When we realise that the total revenue that we receive from customs duties and excise taxes at the border is only $380 million a year and we are talking about transport that is losing 250 which is a quarter of a billion dollars simply on delays of a border post, we have got to understand that the border post problem simply has to be tackled.

The other principal problem – I am pleased to see the Minister of Finance and Economic Development in the House again. One of the principal problem, businessmen in Zimbabwe today is the fact that our borders are so porous. You ask a question, the Minister has imposed duty on products coming into the country but you can find the very same products in our stores today evidently duty free. How on earth is that happening? We import $1.5 billion worth of motor vehicles a year and yet the total revenue received at the border last year was only $385 million which is five percent. The average duty on a motor vehicle is 60 percent, Mr. Speaker, that means we should be earning 600 to 700 million dollars a year just from motor vehicles. Why is it not coming into the exchequer? That is one of the principal reasons why in fact we are so short of money. It is because our border posts are so porous.

We are importing $7 billion and everybody complaints about that but do we realise what that means? It means that we are the largest market in the world for South African industrial goods. We are South Africa’s biggest trading partner. The reason for that and why that it is not influencing our young Zimbabweans, what is happening – the deleterious effect on our economy is because we simply cannot control the movement of goods and services into Zimbabwe because of the chaos at our border posts.

I do not believe the chaos at our border posts is casual. Anybody who has witnessed firsthand as I have, the collusion between touts who work at the border posts and the people on duty behind the desks, working for their different agencies of Government, you will know that if I pay a tout R200 or R300 to get myself through the border post quickly, he gives 50 percent of that to the people behind the counters. That is the reason why they tolerate them.

Therefore, the formation of a National Border Post Authority is a great step forward because at least there will be somebody in charge. At the moment, you get 10 to 12 agencies of the Government at the border posts – CIO, police, ZIMRA, Immigration, Tourism, Health, Agriculture- they are all there, nobody is in charge. Therefore, nobody takes responsibility for this chaotic situation.

I hope Mr. Speaker Sir, that this port authority will be effective and it will be properly managed and will not be one of the agencies drawing money from the poor public and not doing its job.

Finally Mr. Speaker, I would want to welcome the regulation of the medical aid societies. I point to the chaos in the Premier Medical Aid Society. We saw the story in The Sunday Mail this week of the top five people in the PSMAS drawing $22 million of unauthorised benefits for themselves. Mr. Speaker Sir, the budget of this Parliament for twelve months is less than that and these are five individuals. Why have they not been imprisoned? Why have they not been prosecuted? Where is the Prosecuting Authority? We have heard what their salaries were. This guy Dube, why was he getting $600 000 a month? Where does he think that kind of salary comes from? It was approved by the board of the PSMAS. At the time they drew that, nearly $40 million in salaries and benefits, the medical aid society was in $119 million in arrears to its creditors.

Mr. Speaker, this is State money and not a private organisation. The Minister of Finance spends $140 million a year with the PSMAS. If civil servants cannot get medical treatment on time, it is because of this kind of behaviour. As far as I am concerned, I will not be satisfied until Mr. Dube is in jail. – [HON. MEMBERS: Hear, hear.]-

On the negative side Mr. Speaker Sir, I was very sad to note that the President did not deal with the issue of labour relations in an adequate fashion. One of our principal problems is that the tripartite negotiating forum which was set up many years ago on a consensual basis between labour, business and Government is not effective and it is not functioning properly. It needs legislative backing. I would have thought in the present situation it is something that desperately needs to be done.

We have to sort out the distorted salaries which are being applied in some sectors of the country. If I just to mention one, the City of Harare. In the City of Harare, Town Clerk has been earning US$23 000 a month and on top of that has been getting US$7 000 a month at the least in terms of benefits, that is US$30 000 a month. The minimum wage in Harare is US$480, in South Africa it is US$176 and US$84 in Zambia. Mr. Speaker Sir, as a country we cannot possibly hope to be competitive until we stop paying these kinds of ridiculous salaries. There is no reason why they cannot be adjusted downwards. We have the example of Econet which has just reduced salaries substantially. NetOne apparently is doing the same thing right now on the face of tough trading conditions. We need to do the same thing but we must not do it in isolation.

We cannot impose these kinds of reductions on the people, it must be negotiated. That is where the tripartite negotiating forum comes in. We need to give the forum teeth. When they make a decision it should be mandatory and applied to all three social partners. I was very sad to see that the President did not tackle this issue because for me this is one of the primary priorities of the country.

The other thing that concerns me Mr. Speaker Sir, is the fact that we have four new universities on the table on top of – I do not know how many we have at the moment, 12? I am not sure. We cannot afford this multiplication of institutions of higher learning. If we are going to establish universities like this, we need to be in a position to fund them. It costs at least US$4 000 to US$5 000 a year to put a student through university. We are unable to generate those kinds of resources in our economy today. Therefore, establishing all these new universities is not only weakening existing establishments because we cannot expand the budget. It is also providing the very wrong thing here, that we are down grading the standards of our universities.

When I went to the University of Zimbabwe and attained my degree, it was acceptable throughout the world. My colleagues in medicine who took their degrees in Harare, found that they could go anywhere in the world and find acceptance. We earned degrees which were international in standard and were recognised throughout the globe. If we are going to maintain universities of high standard, we need to recognise our limitations and concentrate our resources on a few institutions of fine repute. NUST for example, in Bulawayo, is probably our best university. The university in Harare is still an exceptional institution, I can remember the day when institutions like the main University in Uganda – were regarded as global players, but now are no longer world class institutions or even polytechnic standard. The degrees are not recognised anywhere in the world. We do not want to get to that. If we are going to compete in the 21st and 22nd century, our young people must get an education which is world class. You cannot afford to have universities which are third world standard. We need first world standard universities and therefore we need to concentrate on establishing universities and maintaining them at very high levels. I know we can do it. We have done it in the past and so we can do it again.

The other thing I want to say Mr. Speaker Sir, is let us recognise that universities are a businesses. If you go to a place like South Africa, for example, Rhodes or Fort Hare, you will find that one third of the enrolment comes from Zimbabwe. I spoke to the Vice Chancellor the other day at a dinner in Harare. He was here recruiting students for his university. He told me that the Zimbabwean students were the best payers, they pay full fees and they were the best students in the university. Mr. Speaker Sir, if we had universities which could compete with Rhodes and that is not difficult, why should those students that go to Rhodes – 2 000 students last year should come here and go to our own institutions and pay full fees? That should be our objective. I hope that the Minister of Higher Education will tackle that kind of issue.

Finally, just one last point….

*MR. CHINOTIMBA: On a point of order Mr. Speaker Sir. The hon. member’s time for debate has elapsed.

*MR. SPEAKER: Order, order. Hon. Chinotimba, do you want to take over from the Chair? His time has not yet elapsed.

MR. CROSS: Thank you. The last point, I have spent my whole life in agriculture. I was chief economist of the Agriculture Marketing Authority when we ran a pretty dynamic industry in Zimbabwe. I looked at what happened last year in the agricultural sector, frankly I was appalled. I was appalled by the fact that our farmers grew crops and did not get paid for them. If I look at the situation regarding maize for example, although the GMB price was fixed at US$395 a tonne, which is a very high price and totally unrealistic, both in regional and international terms the US price is about $176, Zambia $220 and South Africa $200. The GMB does not have any money and was unable to pay for the product given to them. The farmers were left at the mercy of the traders. What the traders did, led by the millers, they fixed a price of $150 per tonne. That is half the cost of production of maize in Zimbabwe. They have been paying for maize at this very low price since our farmers started marketing their maize. I do not know how many tonnes have been sold. The crop is now finished and we are about to go into that period where we have to start importing 100% tonnes of our requirements from South Africa and Zambia. We will be paying $300 and $350 a tonne for that product when it arrives here. In the mean time we have denied our farmers a decent return on the crop that they grew. We are going to pay for it in the coming season because those people do not have the money to pay for the next crop.

If you look at cotton we have the same situation. We have 12 ginnery companies here. The 12 companies got together and fixed one price for cotton, 30 cents a kilogram across the board irrespective of the grade. They bought the entire crop, 136 000 tonnes at 30 cents a kilogram. Mr. Speaker Sir, the present price of cotton lint on the international market is 150 cents a kilogram. The present price of raw cotton seed on the local market is 38 cents a kilogram. The cost of ginning a kilogram of cotton is about 23 cents. It means that our ginners could have paid a price of 60 to 70 cents on the crop and made a profit. What concerns me is that both of these prices were determined by cartels. These are top businessmen phoning each other and fixing prices, and that in my view is illegal. These people should be sent to jail for this kind of activity. I calculated that this sort of activity has cost our farmers this year over $300 million and the problem with that, is that US$300 million is going into the pockets of individual firms and individuals who are already wealthy and powerful and they are denying income to mostly our rural population. We are the poorest people in the country and those people now do not have the money to pay for the next crop or to buy food for themselves this season, which is creating a rural income crisis. When looking at the tobacco crop – I was one of the people who criticised the tobacco auctions. Mr. Speaker Sir, I want you to know that with the majority of the crop contracted to major international tobacco companies, they are paying nothing for some of our crop – 20 cents a kilogramme. Do you know what tobacco is worth when it is made into a cigarette, over a US$100 a kilogramme? This simply means that the margins of these intermediaries are being inflated and again the person who is suffering is the guy at the bottom of the pile.

The last thing that I want to comment on is the fact that I was the CEO of the Cold Storage Commission for 5 years. We guaranteed the price of cattle throughout the country. If you were producing cattle in Binga, you got the same price as someone who is selling cattle at an auction in Harare but today that is gone. I was in Binga 2 weeks ago and I talked to cattle producers who said they are getting US$350 for a mature ox. Mr. Speaker, what are we doing as a nation if we cannot look after the welfare of the absolute poor, the majority of them who are peasant farmers? I thank you.

(354 VIEWS)

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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