A Masvingo legislator has called on the governments of Zimbabwe and South Africa to plug a loophole being exploited by South African scrap metal to claim rebates from the South African Revenue Service for recovering gold from scrap when they have actually bought the gold from Zimbabwe.
Zaka Central Member of Parliament Paradzai Chakona said in Parliament on Tuesday Zimbabwe was losing between 100 and 300 kg a month of gold through smuggling.
He said gold leakages were largely due to high taxes on small scale miners and low monitoring and accountability by those in the gold industry.
“Another incentive for leakage which needs to be plugged through Government to Government discussion is the abuse of the South African Revenue Service rebate system by licenced smelters of scrap metal from that country.
“The RSA link is that these institutions send agents into Zimbabwe and offer to buy gold at 100% of international price, avoid paying local taxes and smuggle gold to RSA.
“In RSA, these refine and sell gold to Rand Refinery and claim a VAT rebate for recovering gold from scrap at a rate of 14% which is way above any price FPR or local players make in dealing in gold. The ZIMRA and SARS need to engage and close the loophole,” Chakona said.
The MP gave several suggestions on how to boost revenue from gold and how the government can help the nation improve on agricultural production.
Below is his full contribution:
MR. CHAKONA: Mr. Speaker Sir, I would like to congratulate you for being elected Speaker of this House. I would like to congratulate His Excellency, the President, Commander-In-Chief of the Armed Forces and Head of State and Government for his resounding victory in the just ended harmonised elections. I would like tocongratulate all honourable members of this august House for winning the right to represent the people of their respective constituencies.
Allow me to also congratulate those who were appointed senior ministers, ministers of various ministries and their deputies.
Mr. Speaker Sir, allow me to table my maiden speech by contributing towards the Speech presented by His Excellency, the President during the opening of this Parliament. On Agriculture, Mr.Speaker Sir, His Excellency, the President highlighted that the performance of the agricultural sector was largely affected by continuous droughts, climate change, erratic rainfall and inadequate funding.
Allow me to add that there is another dimension which has contributed significantly to the poor performance of the agricultural sector. It is the coordination of farming activities and marketing of products or produce. There is need to establish a well coordinated approach to agriculture. Farmers ought to know and be taught the types of crops to grow in terms of quantum and quality in each season. This should also be followed by a well coordinated marketing strategy for each crop.
I therefore propose the clustering of farmers to coordinate their activities and also call upon the House to seriously debate the issue of establishing a well coordinated agricultural sector to manage what farmers produce and how the produce finds its way to the market. There is an increase in imported agro-products at the expense of locally produced products, including but not limited to Mbare Musika, which was specifically built to market and distribute locally produced farm produce.
Mr. Speaker Sir, related to this issue, is the land reform and resettlement programme. Some new and old farmers are being affected by a new wave of land occupiers by land hungry members of our society. It is a fact that people need land. However, our dear Comrades have resorted to taking the law into their own hands by resettling themselves onto any piece of land in sight, despite it belonging to an indigenous farmer.
In order to create confidence among farmers,Government should seriously consider resolving this phenomenon once and for all. It is very difficult to seriously engage into productive farming when people are busy occupying one’s farm. Farmers feel insecure and lack confidence. It is therefore important that our Government has a clear and precise land resettlement policy which protects both the farmer and the unofficial land occupier.
The President also pointed out the need to realign the Banking Act to regulate the new forms of banking. It is important to note that as we debate the realignment of the banking sector, we take cognisance of the imminent danger and threat to the sector by new payment streams.
There is need to protect financial institutions from new payment streams that are being introduced as convenient money transfer agencies. As much as these payment streams bring about convenience to the public, they destroy the savings culture in our society. Mobile money transfer systems and channels must be driven by financial institutions which have the skills, experience and mechanism to surf money laundering or funds from terrorist organisations as well as clearing facilities.
I therefore call upon this august House to objectively debate this issue and call upon members to realise and understand the importance of the banking sector to this economy and the need to fight money laundering and terrorism.
Mr. Speaker Sir, the President pointed out the need for sustainable environmental conservation, whereupon he cited the establishment of sustainable transfrontier arrangements with our neighbours. However, internally, there is need to fight all forms of poaching and environmental degradation by members of our society.
There are rampant veld fires on an annual basis which destroy millions of acres of woodland, natural vegetation, property, humans as well as wild life. The destruction caused by veld fires on an annual basis is immeasurable. There is need to urgently control this occurrence through fully investigating each case by law enforcement agents and EMA. Our courts must impose stiff penalties on offenders to deter people from destroying our environment.
Related to this issue, Mr. Speaker Sir, we heard of instances where wild animals wreaked havoc by trying to co-exist with human beings in some areas. Sadly, only game rangers were deployed to control the situation. The reports at hand do not enlighten the reader what EMA officials have done to investigate why hyenas and other wild animals were now preying on livestock and human beings.
In my opinion, this is a clear sign of an ecological disaster, disequilibrium and poor environmental impact assessments. People and businesses have encroached into wild life territories and wild animals have nowhere to go, resulting in them sharing the same habitat with human beings and their livestock.
It is therefore important, Mr. Speaker Sir, for Government to craft policies that protect our wild life and the entire ecosystem to maintain an ecological equilibrium.
Related to the above issue, Mr. Speaker Sir, in my Province, Masvingo, the most prime farming areas of Masvingo East; Chatsworth,Mwenezi, parts of Chiredzi as well as conservancies were transformed into mostly A1 farms that saw thousands of families benefiting from the historical land reform program.
As the norm with small scale farming, people had to clear vast tracts of virgin land to farm. Unfortunately, no mitigatory measures were put in place to protect the environment. As a result the whole province slowly turned into a desert. It is a fact that the entire Masvingo Province is now experiencing erratic and below normal rainfall, season after season even in areas where this never used to happen. The instances encourage rehabilitation.
I therefore, call upon this august House to help formulate and ensure the effective development of a sustainable environmental conservation policy framework, which befits the nation and newly resettled farmers.
Mr. Speaker Sir, the President highlighted that the mining sector is poised to play a greater catalytic role in the country’s industrial development process. However, I would like to zero-in on gold.
Historically, the Reserve Bank of Zimbabwe was the sole buyer and trader of gold up until 2009 when liberalisation was introduced. Under the RBZ monopoly, Fidelity Printers (FPR) was a mere agent and RBZ a player and referee. This has resulted in the near collapse of the industry through self-serving pricing through fixed exchange rates and surrender requirements.
It is important for the country to learn from lessons learnt so far to strengthen what is working and correct. The liberalisation of the gold sector introduced in 2009 has had its fair share of problems but the only notable benefit has been the ability of the miners to get full and fair value of their gold. This has happened without the RBZ’s monopolistic operations of being buyer, referee and umpire.
It would therefore appear the model where the RBZ trades in gold must be avoided. However, the primary trading of the metal needs to be at arm’s length, in this case, at Fidelity Printers and Refineries (FPR) level, with the RBZ being able to buy refined gold from FPR as and when the State needs to build reserves.
In order to preserve and improve public confidence in Government policy, a situation where FPR becomes the principal trader of gold and not an agent of the RBZ or Government, must be preserved. FPR is owned by the State through RBZ and therefore invariably the State benefits.
FPR has, since 2009, been able to compete aggressively and cut their place in the market without the monopolistic framework of the past. FPR must secure commercial financial arrangements to buy all the gold available. There is no need to burden the fiscus which is already burdened by other needs.
Mr. Speaker Sir, it is important to note that the fragmented marketing arrangement introduced in 2009, affected the ability of FPR to accumulate enough gold stock to kick-start refining. In this regard, FPR should be able to buy all the gold produced locally so that it can start refining and consequently secure accreditation to London Bullion Market Association (LBMA) within the next 12 to 18 months.
FPR is a quasi State owned enterprise which must operate commercially and as such, it should not be difficult for this institution to borrow from the market to buy gold. I believe this is already happening and it must be supported.
In summary, Mr. Speaker Sir, the streamlined market arrangements should be as follows:
- All Gold assaying and refining should be by FPR which has a capacity to refine 50 to 100 tonnes per year. The country is currently producing below 50% of annual refining capacity. Therefore, no new gold refineries are necessary.
- Gold buying and selling should be by a Gold Dealership License Holder of which FPR is but one. The number of these should be very limited. These are the only ones authorised to export refined gold.
- Gold Buying Permits or in other words, the middlemen must be eliminated so that all the gold produced by primary producers must be sold to a Gold Dealership Licence holder such as FPR.
- Gold produced by small scale miners must either be sold directly to FPR or through its agents or it must be sold to Custom Millers and Elusion Plants which stand at about 200.
Custom Milling and Elusion Plants are the largest source of gold leakage to the grey market. The key issue is to ensure all these are fully licenced, made to keep impeccable records and are monitored by Ministry of Mines, ZIMRA and ZRP Minerals Unit. The Custom Milling and Elusion Plants must buy all the gold from small scale mines received for milling and then sell all the gold to FPR or Gold Dealership Licence holders.
Where the Custom Milling and Elusion Plant has no resources to buy all the gold offered, FPR must set up a buying centre at such a plant. These must not be allowed to export. For the purposes of empowering our people, FPR must not crowd out this sub-sector as it creates business opportunities and employment to the sub-sector. What is necessary is providing incentives to make the prices viable, coupled with stiff monitoring.
Mr. Speaker Sir, the taxation regime needs to be revised especially for the small scale sector level so that the incentive to avoid taxes significantly reduces. The current 7% royalty and 2% presumptive tax affect small scale miners who then avoid FPR which is compelled by law to collect such taxes.
We need everybody to participate in paying taxes. Therefore, the royalty taxes need to be adjusted for small scale miners to levels below 3% overall. This move will encourage small scale miners to send gold to FPR with a little education of the benefits of paying taxes to Government.
Local authority and EMA taxes must be reduced as they add to the burden of the small mining sector.
Mr. Speaker Sir, Ministry of Mines should work out mechanisation models for small scale miners after formalising their claim ownership, resource definition and establishment of support services across the mining areas. Again this is business and therefore, such mechanisation must be on a commercial basis as a way to assist the small scale miners to formalise profitable development of their businesses.
Mr. Speaker Sir, gold leakages have largely been due to high taxes and low monitoring and accountability of those in the industry. The level of smuggling can be estimated to be between 100 and 300 kg per month. This is commensurate with expected gold recovery trajectory in Zimbabwe.
Mr. Speaker Sir, another incentive for leakage which needs to be plugged through Government to Government discussion is the abuse of the South African Revenue Service rebate system by licenced smelters of scrap metal from that country. The RSA link is that these institutions send agents into Zimbabwe and offer to buy gold at 100% of international price, avoid paying local taxes and smuggle gold to RSA.
In RSA, these refine and sell gold to Rand Refinery and claim a VAT rebate for recovering gold from scrap at a rate of 14% which is way above any price FPR or local players make in dealing in gold. The ZIMRA and SARS need to engage and close the loophole.
Mr. Speaker Sir, His Excellency spoke about the continuous advances in the field of Information Communication Technologies and opportunities therein. He also highlighted the need for Government to be more connected to its citizens and for the improvement of business processes.
Mr. Speaker Sir, the need for Government systems to be urgently e-enabled and automated is not an under-statement. Our citizenry has for long periods grappled with inefficient Government systems, especially in the Ministry of Home Affairs which is responsible for birth and deaths registration, issuing of passports, police records, et cetera.
Our people have also suffered from the continuous centralisation of services in Harare. The rollout of robust e-enabled Government systems in all ministries will allow citizens of Zimbabwe to enjoy efficient service from any part of the country.
Mr. Speaker Sir, changes in the ICT industry and the macroeconomic environment over the past 10 years, in other countries and the region at large, must be used as an express objective to refocusing Zimbabwe’s economic development and strategy to developing ICT solutions, electronic, mobile commerce and payment systems to match international standards, after a decade of technological stagnation or slow growth.
Central to the realisation of widespread e-commerce and m-commerce usage, is the establishment of a world class telecommunication services. It is important, Mr. Speaker Sir, that we aim to transform Zimbabwe into a global ICT house by 2015. I am calling upon this august House to debate on “Sustainable development of Zimbabwe by the year 2015, through the usage of ICT, in line with the “National Economic Development Programme” currently ZIM ASSET in line with the Millennium Development Goals (MDGs)”.
Mr. Speaker Sir, Information Communication Technology is a powerful tool for improving and rationalising public and private sector activities, enhancing access to key community services, facilitating public control and participation in decision making processes and stimulating the business sector’s competitiveness. ICT thus enables sustainable economic growth and prosperity for all citizens nationwide.
As the global economy becomes increasingly ICT-embedded, the competitiveness of Zimbabwe becomes more reliant on the availability of a vibrant ICT sector that offers efficient and cost effective services.
Cognisant of the National Guiding Principles derived from documents such as the Vision 2020, Science and Technology Policy, Zimbabwe Development Goals among others, as well as drawing inspiration from His Excellency the President’s initiative to equip schools with computers which are key tools in realising the benefits. This august House’s key objective is to see ICT drive a coordinated approach to the successful implementation of Quick Wins for all sectors of our economy at large.
Mr. Speaker Sir, other countries, the world over, have developed their ICT sectors and stirred them into national economic mainstreams. ICTs now contribute considerably to the national GDP of those countries. An example that comes to mind is India’s ICT sector which contributes up to 10% of the country’s GDP.
It is from this background that our country should embark on the development of a coherent ICT policy framework to provide strategic direction and guidance for sustainable national development through the use of ICTs.
Mr. Speaker Sir, the President spoke about dualisation of our trunk roads. May this Government urgently prioritise the dualisation of the Beitbridge –Chirundu Roads. However, I hasten to also mention that most of the feeder roads, especially in rural areas, are in dire need of reconstruction and upgrading as well. It is therefore important that efforts and resources are channeled towards this exercise.
In my Constituency, Zaka Central, most major roads are almost impassable.The Chinorumba-Benzi and Jerera –Nemauku-Ndanga roads need urgent rehabilitation or reconstruction.
Mr. Speaker Sir, water and sanitation are key pillars of our rural people’s sustainable livelihood. The Inclusive Government totally ignored the maintenance and continuous development of a sustainable water and sanitation programme in most rural areas, Zaka included.
The people in my constituency desperately need the rehabilitation of boreholes as well as drilling new ones to augment the ever increasing demand for fresh water. It is important that we vigorously plan water harvesting in whatever form. It may be the construction of water weirs, small to medium or large dams. The water situation in my constituency has become desperate.
Mr. Speaker Sir, it has come to my attention that DDF is totally incapacitated, with no vehicles, spare parts, stationery in most offices and under staffed. The provision of clean water and road maintenance is DDF’s prerogative in most rural areas. Such incapacitation requires nothing short of a miracle for DDF to do anything to meet any task at hand, in the meantime.
I therefore appeal to this august House to prioritise the retooling and re-equipping of the DDF as a matter of urgency. I understand Government has withdrawn vehicles from JOMIC staffers. I appeal for the reallocation of these vehicles to DDF.
Mr. Speaker Sir, the continuous droughts in my province, Masvingo and the resultant food shortages are no news to this august House. There is need for a permanent solution to ensuring food security in my province and district in particular. I call upon Government to ensure adequate grain stocks in every GMB depot in Masvingo Province to mitigate hunger.
I thank you.
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