Parliament urges treasury to take over Ministry of Defence debt


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The Parliamentary Portfolio Committee on Defence and Home Affairs has urged treasury to take over the Ministry of Defence’s debt of $59 million as there is no provision for funds to service this debt in its 2016 budget.

According to the committee, which is chaired by Buhera Central Member of Parliament Ronald Muderedzwa, most of the companies that are owed by the ministry are indigenous companies that are in dire need of finance.

“Failure to pay the debt would further strain the working relationship between the Ministry and the suppliers of goods and services,” Muderedzwa said. “It was noted with great concern that the Ministry of Defence has been using set-offs to acquire its goods and services as an alternative to avert the challenge of inadequate and unavailability of financial resources.”

The Ministry was allocated a total amount of $358.1 million and is ranked third on national priority allocation. However, the allocation is $18.6 million less than the 2015 revised budget allocation of $376.7 million of which $309.2 million covers employment costs.

 

Full contribution:

 

HON. MUDEREDZWA:

 

Introduction

The Committee on Defence and Home Affairs has an oversight role over the Ministries of Defence and Home Affairs. During the 2016 Post-Budget review, your Committee examined the budget allocations for the Ministries of Defence and Home Affairs and also received oral submissions from the Ministries’ officials. Several observations were made from the budget allocations about the funding needs and gaps, and the subsequent effects on expected expenditure on several sub-Vote items in these Ministries. These observations culminated into some recommendations to improve the operational efficiency of the Ministries so that they meet their Constitutional and Statutory obligations. Below is the economic analysis of the allocations to each Ministry.

MINISTRY OF DEFENCE – VOTE 4 ($358,065,000)

2.1 The Mandate of the Ministry of Defence

The Ministry is mandated to:

  • Ensure the country's territorial integrity and sovereignty over the land and air space against both internal and external aggression.
  • Provide rescue assistance to civilians in times of disasters.
  • Promotes international peace and security through participation in peace-keeping missions.

2.2 Major achievements during 2015

The Ministry managed to:

  • Acquire new vehicles for use by the Defence Forces.
  • Utilized the resources disbursed effectively and within time. thereby improving on internal capacities and efficiencies.
  • Run military training programmes for both cadets and recruits.
  • Achieve its constitutional mandate and statutory obligations.

2.3 Policy Priorities 2016-2018

The Ministry’s major policy priorities are:

  • Meeting the constitutional and statutory obligations which cover rations, uniforms, medical care and accommodation,
  • Maintaining existing Defence Forces equipment and facilities,
  • Re-equipping, refurbishing and upgrading Defence Forces’ equipment and facilities,
  • Training of military personnel,
  • Research and development, and
  • Formulating the risk policy.

3.0 Global Overview of the Ministry’s Budget

3.1    The Ministry is made up of Civil Service personnel and the Defence Forces Headquarters. The Defence Forces Headquarters consists of the Army and Air Force services.

3.2    The Ministry was allocated a total amount of $358,065,000 and is ranked third on national priority allocation. However, the Ministry’s allocation is $18,612,377 less than the 2015’s revised budget allocations of $376, 677,377 for this Vote of which $309, 246,000 covers employment costs.

3.3    The allocation is inadequate given that there are inescapable expenditures and outstanding domestic debt amounting to $59 million which the Ministry has to honour. A total of $183.5 million (excluding employment costs) was bided for but were allocated $48.5 million which translates to 26% of the total requirement for 2016. Thus, the $135 million shortfall will negatively impact on the operations of the Defence Forces especially on the major Defence Forces’ requirements which are:

  • Training and retraining of military personnel (both local and international) to keep them current,
  • Training and re-training of the Air Force pilots to keep them well-equipped with the necessary skills and expertise.
  • Institutional provisions like rations, uniforms, accommodation and medical supplies,
  • Military equipment including vehicles, specialized communication equipment, aircraft and armoured cars.
  • Fuels, oils and lubricants to be used in military and aviation vehicles and equipment in both training and other daily routine activities,
  • Special fuel used in aircrafts (jet fuel) by the Air Force in both training and operational activities. If this is not well catered for, an ideal 18 months training will take up to 5 years.
  • Utilities like electricity, water and sewer.

3.4    Thus, the allocation by Treasury neither covers the Ministry’s outstanding debt nor the expected requirements in 2016. Your Committee noted that there has been a series of underfunding of the Ministry’s operations since 2013 making it extremely difficult for the Ministry to discharge its mandate under the Results Based Management System.

Given the recurrent underfunding for the Ministry of Defence and non-release of funds by Treasury, the Ministry of Defence reduced its bid for operations down to $183,500,000 in 2016 from as high as $470,000,000 in 2015.

3.5    This underfunding is accelerated by the non-release of allocated funds. Your Committee noted that for the past three years, Treasury has never released the allocated funds in full thereby further paralysing the Ministry’s execution of its mandate. More-over, Treasury takes a long time to release the allocated funds due to inflexible bureaucracy in the budgetary structures whereas the Ministry requires ready cash for it to be well prepared for any form of aggression.

3.6   The amount not released each year is increasing but could have been used to finance several important expenditure items for the Ministry if released. It was observed that Treasury did not fully consult the Ministry about the 2016 priorities, and hence the allocations to various sub-Vote items do not reflect the wish of the Ministry of Defence. Consequently, the Defence Ministry is likely to start the 2016 financial year in a very difficult operating condition and can forthwith miss its set targets.

3.7   Your Committee also noted that there was no activity on a number of PSIP projects in the last financial year due to non-release of funds hence these projects were not completed. The projects whose completion was delayed are:

  • Dzivarasekwa Housing Project,
  • 52 Infantry Battalion Housing project,
  • Zimbabwe Military Academy in Gweru,
  • Rehabilitation of Sewer Systems at 42 Infantry Battalion,
  • Construction of R31 Flats at Field Air Force Base,
  • The Diagnostic Lab,

3.8 The anti-personnel mine clearance, mine risk education and victim assistance programme has always been underfunded despite missing three deadline extension since March 2009 to January 2015. Only $200,000 was allocated against a total bid of $2,000,000 thereby further constraining progress towards the completion of this programme. Zimbabwe is a signatory to the Ottawa Convention on the prohibition of the use, stockpiling, transfer of anti-personnel mines and their destruction, thus has to meet its obligation of clearing all the anti-personnel mines.

3.9 The Ministry had accumulated a total debt of $59 million, hence the allocated amount is inadequate since a larger amount shall cover the debt owed to suppliers of goods and services first, leaving a paltry budget for 2016 expenditures. Most companies which the Ministry got its goods and services were indigenous which are in dire need of financial resources. Failure to pay the debt would further strain the working relationship between the Ministry and the suppliers of goods and services. It was noted with great concern that the Ministry of Defence has been using set-offs to acquire its goods and services as an alternative to avert the challenge of inadequate and unavailability of financial resources.

3.10  The Ministry has to recruit for training since it lastly recruited three years ago. This means that enough rations at a cost of $20.2 million have to be provided. However, for survival $15.77 million is enough to purchase the nine rations that were considered appropriate down from the required 54 rations to keep the diet and morale of the military troops. It was disturbing to note that for 2016, only $9,000,000 was allocated for all the institutional provisions without factoring in the set-offs that were used in acquiring food and other materials for the Defence Forces. This will negatively affect the training process and the welfare of soldiers.

3.11  Uniforms and ceremonial dress is very important for the Defence Forces to maintain its image hence should be adequately catered for in the budget. The uniforms have to be changed twice every six months and this is an institutional provision. Thus, the $1.22 million cannot adequately kit the whole army. Similarly, medical supplies should be prioritized since it has become a trend that other medical service providers like PSMAS no longer offer health services to the Defence Forces due to serious financial challenges. The failure to obtain basic health services, inadequate rations, transport and accommodation has altogether led to low Defence staff morale, hence needs to be given due attention.

3.12  The Defence Forces require specialized communication equipment to link up with even the remote areas and this is very expensive. However, only $156,000 was allocated for this expenditure item regardless of the $1,800,000 owed by the Ministry of Defence to ZRP for using their communication equipment.

3.13  Your Committee learnt that the availability and efficiency of military equipment determines the capability and readiness of the Defence services, hence the Ministry should acquire new military equipment, service the equipment and train the Force in the use of the equipment. ZNA’s main thrust was to purchase new equipment such as armoured cars and self-propelled artillery weapon system, all of which are very expensive to the tune of $300 million each while refurbishing one armoured car costs $1 million. However, only $900,000 was allocated to cater for the acquisition of new vehicles and mobile equipment and it is not enough even to maintain one armoured car.

3.14  Similarly, Air Force business is capital intensive since it requires specialized equipment. Unfortunately, Zimbabwe is under sanctions which extend to military embargo. Thus, the Ministry has to acquire spares from middlemen who charge very high premium, making it very costly to acquire the spare parts. Modest maintenance of the existing vehicles, buildings and other infrastructure is very important to lengthen their lifespan and increase efficiency. So, the allocation of $5,069,500 is too little to cater for the maintenance and repair requirements for the Ministry.

3.15  Since the Ministry has prioritized training, a lot of mobility is involved hence there is need for adequate fuels, oils and lubricants; accommodation for recruits, enough vehicles and equipment, and other training materials. It also implies that the movable machines (vehicles and other military equipment) have to be constantly serviced and maintained. However, your Committee observed that the Ministry failed to replenish its old furniture, computers, vehicles and other military equipment.

5.0 Recommendations

After an analysis of the Ministry of Defence’s budget by your Committee, the following recommendations were made:

5.1 Treasury should prioritise adequately funding major expenditure items such as institutional provisions which include uniforms, rations, food, medicals, accommodation, training and development expenses.

5.2 Having failed to meet the January 2015 Ottawa Convention third extension deadline, Treasury should fully and urgently support the completion of the demining programme.

5.3 Treasury should prioritise funding for the completion of housing and other PSIP projects for the Ministry, which are:

  • Dzivarasekwa Housing Project,
  • 52 Infantry Battalion Housing project,
  • Zimbabwe Military Academy project in Gweru,
  • Rehabilitation of Sewer Systems at 42 Infantry Battalion,
  • Construction of R31 Flats at Field Air Force Base,
  • The Diagnostic Lab,

5.4    Treasury should also review the amount allocated towards maintenance of existing Defence Forces’ infrastructure, fleet of vehicles and for servicing aircraft. In the same vain, enough funding should be made available to purchase new military equipment to facilitate training of cadets.

5.5    There is need to urgently and fully avail targets to facilitate smooth operations of the Ministry. This should also involve consulting with the Ministry’s officials about the targeting of expenditure and timing of releases to cover such prioritised expenditure items to avoid weakening the Zimbabwe Defence Forces.

5.6    Treasury should take over the Ministry’s outstanding debt so that operations earmarked for 2016 are better funded.   

(63 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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