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Recalled Parliament approves Chinese loan agreement - Bill Watch
22/2011
Veritas
June 06, 2011
Both Houses
of Parliament
have adjourned after this week’s special recall:
The House of
Assembly until Tuesday 14th June
and the Senate
until Tuesday 5th July
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 Finance’s 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:
- State’s
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 side’s 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 country’s 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 country’s 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 Senate’s 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 Biti’s 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-T’s 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.]
[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.]
Bills in Parliament
[Electronic versions available.]
House
of Assembly
- National
Incomes and Pricing Commission Amendment Bill [awaiting Second
Reading].
Senate
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.
- Government
Gazette
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
veritas@yoafrica.com
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