BUDGET MEETING OF THE PARLIAMENTARY

UNCLAS SECTION 01 OF 05 HARARE 001737

SIPDIS

AA/DCHA RWINTER
DCHA BGARVELINK, KSCHULZ
AFR/SA MWILLIAMS, MCOPSON
AFR/DP RBUCKLEY
AF/S MBELLAMY, SDELISI
NSC JFRAZIER, EABRAHAMS


E.O. 12958: N/A
TAGS: EAID EAGR PGOV ZI
SUBJECT: BUDGET MEETING OF THE PARLIAMENTARY
PORTIFOLIO COMMITTEE FOR LANDS AND
AGRICULTURE


SENSITIVE BUT UNCLASSIFIED

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SUMMARY
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1. (SBU) USAID/Zimbabwe's Democracy and Governance Team
Leader, Stephanie Funk, and Senior Democracy Advisor, Deprose
Muchena, attended a budget meeting of the Parliamentary
Portfolio Committee for Lands and Agriculture. The Committee
has oversight responsibility for two Ministries: the Ministry
of Lands, Agriculture and Rural Resettlement; and the Ministry
of Water and Rural Resources. With the support of USAID and
its implementing partner, the State University of New York
(SUNY) at Albany, Parliamentary Committees are now
implementing a re-engineered budget process involving open and
transparent review of budgetary priorities. As Daniel Ncube
(ZANU-PF),the chair of the Portfolio Committee stated, "This
is the first time this Committee is bringing people together
to discuss the budget. It makes a profound change in the way
Parliament operates in that we will now exercise control over
public expenditure and help the government allocate funds
where they need it most." By inviting both citizen groups
(stakeholders) and Ministry officials to this meeting, the
Portfolio Committee enhanced the public's involvement in
Parliamentary business and in good governance. Unlike the
past, Parliament is no longer rubber stamping executive
proposals or allowing the budget process to be done in secret.
There is now a concerted attempt to bring this aspect of
public policy into the public domain. These are hopeful signs
that may portend increased legislative oversight of executive
branch functions. However, these positive developments are
occurring only in Committees and not in the full House of
Parliament. More importantly, Parliament retains the power to
"fast track" legislation by short circuiting the Committee
process, and thus, nullify the benefits of the new portfolio
committee review process.

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New Participatory Approach to the Budgetary Process
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2. (SBU) The structure and proceedings of the Lands and
Agriculture Committee meeting showed that the budgetary
process is becoming increasingly participatory. The Portfolio
Committee invited key stakeholders to provide comments on the
2003 budget bids, including the Commercial Farmers Union
(CFU),the Indigenous Commercial Farmers Union (ICFU),the
Zimbabwe Farmers Union (ZFU),the University of Zimbabwe (UZ),
the Center for Applied Social Sciences (CASS),Women and Land
in Zimbabwe, the Farm Community Trust (FCT),the General
Agriculture and Plantation Workers Union of Zimbabwe (GAPWUZ),
the Cotton Growers Association, the Tobacco Association, and
the Farmers Development Trust (FDT). Also invited were
members from the private sector, including Cold Storage
Company (CSC),CFI Holdings, and Farm and City Center. On the
Government side, Ministry officials up to the Permanent
Secretary (PS) level were invited to defend their proposals,

SIPDIS
explain expenditure patterns from the 2002 budget, justify
projections for the 2003 budget and discuss the overall macro-
economic context with Parliament and the public. All invitees
participated actively throughout the entire day.

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State of the Civil Service
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3. (SBU) The meeting was characterized by the openness of the
ministry officials, the interest displayed by the various
stakeholders, and the convergence of analysis on issues of
land reform, the budget and what needed to be done to salvage
an increasingly desperate situation in Zimbabwe.
Presentations were heard from the two Ministries, followed by
questions from Members of Parliament (MPs) and the
stakeholders. Particularly striking was the level of
professionalism and excellence displayed by the civil
servants, their high level of commitment to their jobs under
harsh and deteriorating conditions, and their use of this
Parliamentary platform to advocate for more resources. The
Ministries' submissions highlighted a variety of concerns,
such as the inadequacy of budgetary allocations, ever
declining capital budgets, increasing recurrent costs, high
staff turn over, weak human resource development, non-existent
retention policies, the difficulty created by the withdrawal
of donor funding in many critical areas, the impact of the
foreign currency shortage, the difficulty of budgeting in an
inflationary environment, and the lack of synergy between the
various line Ministries and the Ministry of Finance which
allocates the resources. In private, a number of them
expressed their frustration with political interference by
Ministers who have little to offer technically.


4. (SBU) The ministry officials received sympathetic support
from all the stakeholders present. The general consensus was
that agricultural budget line items should be increased if the
country is to avoid sliding into a complete disaster. The
call for increased funding was strongest for veterinary
medicines and agricultural inputs in order to buffer the new
small holder sector. There was concern, however, that given
the macro-economic environment, this may not be possible.

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Land Reform Program
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5. (SBU) The principal Director for Agriculture Engineering,
Mr. R.J. Chitsiko stated that land reform is coming to an end,
ushering in a new era of agrarian reform characterized by
three phases:

a. Restoration- restoring productive capacity on newly
acquired farms and in small holder farming areas
(mechanization, training and technical support);
b. Consolidation- consolidating infrastructure and growth
(including tobacco barns, roads, water services, fences, etc);
and
c. Expansion- expanding the agro base and output on the
acquired farms as well as in communal areas.


6. (SBU) The Director did not clearly spell out how all these
phases would be accomplished but a look at the ministries'
budget proposals highlights the challenges that lies ahead.
While the Government's slogan, "Land is the Economy, the
Economy is Land" is often repeated, the allocation for
agricultural inputs to support newly "resettled" farmers was
grossly inadequate. The expenditure of resources in the 2002
budget and the projection for 2003 exposed the mismatch
between the rhetoric of the political leadership and reality
of actual expenditures. In the 2003 bids, the Ministry
requested Z$15 billion for agriculture inputs but stakeholders
from the tobacco sector indicated that tobacco needed a
minimum of Z$31 billion in 2003 for input costs to enable
farmers to recapture productions levels of the 1990s. The
private sector said that they estimated that at least Z$50
billion was needed for agriculture inputs alone. The Acting
Director of the Grain Marketing Board (GMB) indicated that the
parastatal is currently operating under a serious deficit and
needed Z$20 billion for food imports against an allocation of
Z$6 billion. Questions were also raised about why the Ministry
had spent only 9% of its 2002 first quarter allocation for
Land, Resettlement and Technical Services, considering the
verbal importance attached to it by ranking GOZ officials.


7. (SBU) One MDC MP asked who the beneficiaries were in the
fast track land reform program and warned of the negative
impact of allocating farms to untrained and inexperienced
people who have other jobs. This prompted calls from other
participants that a thorough audit of the land reform should
be conducted especially after the PS from Water and Rural
Resources admitted that an initial audit had revealed that
beneficiaries were only living on 5 out of 31 farms. Other
issues that were discussed included: the proposal to establish
a "Land Bank," guaranteed by government; training of new
farmers; land acquisition costs; and the role of the private
sector. The CFU called for compensation for commercial
farmers who have lost their properties under the reform
program and are now legally required to pay their workers two
months salary for every year they worked for the farmer.
GAPWUZ pointed out that the dislocation of farm workers from
resettled farms is causing an increase in the number of
Internally Displaced People (IDPs) as some of them do not have
rural homes to go back to. GAPWUZ argued that these people
need food and shelter and they should be considered for land
resettlement.

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Livestock: The Threat of Foot and Mouth Disease
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8. (SBU) Dr Stewart Heagreaves, the Principal Director of
Veterinary Services informed the Committee that the agro-based
nature of the Zimbabwean economy required a significant
investment in eradicating foot and mouth disease. He pointed
out that South Africa would soon be requiring a certificate
that shows that all agro-based exports were grown in non-foot
and mouth disease zones. Morocco already requires such a
certification for tobacco exports. He warned that sooner or
later Zimbabwe will find it difficult to export, thereby
affecting projected foreign currency inflows and ultimately
the entire economy. Zimbabwe had a very small budgetary
allocation for foot and mouth disease in 2002, to the extent
that the GOZ relied on assistance from the Botswana Vaccines
Institute, for the bulk of medical requirements. The
Institute has since discontinued supplying vaccines to
Zimbabwe following the GOZ's failure to pay its debts. While
the 2003 veterinary budget reflects a 90% increase from 2002,
there has been no increase in real terms due to an inflation
rate of over 118%. The problem of inadequate medicines is
worsened by other severe operational problems such as
transport problems, with 78% of its vehicle fleet out of
service.

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General Approach of Bi-Partisanship
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9. (SBU) The vast majority of MPs conducted themselves in a
non-partisan manner and the Chair of the Committee, Daniel
Ncube (ZANU-PF),shared the chairmanship with the ranking
opposition member, Renson Gasela (MDC).
However, the testimony of the PS for Water and Rural Resources
Mr. Pazvakavambwa was the one exception. In response to the
private sector's concern on the issue of price controls and
their causal linkages to shortages in the retail sector, the
PS declared that the private sector must complement the
government and recognize that they are in a new partnership
with government around land reform, and as such they must not
be profit-driven. He threatened that, "if the private sector
continues to be driven by profit, then there will be no
private sector." The rhetoric of this PS reflects some of the
anti-private sector sentiments of the GOZ. The Committee
Chairman, MP Ncube, deftly maneuvered the potential minefield
that the PS' remarks created and ensured that the discussions
remained focused on the budget bids.


10. (SBU) Issues of incompetence, maladministration and sheer
corruption also arose during the PS' presentation. He
admitted that a recurring problem in the Ministry was that of
dam construction and other large projects, where payments were
sometimes made for work that was never carried out. He said a
lot of money was paid for "standing time," where contractors
were not working but still claiming payment either because the
government had failed to meet its part of the bargain, delayed
implementation or had foreign currency shortages that affected
operations. He cited the Tokwe Mokusi and Dande Dams as
typical examples of such cases where the government paid
contractors six billion Zimbabwe dollars in
suspension/standing time. Dam construction is taking longer
than planned because of delays, suspensions, overturning of
tender decisions by politicians and other factors beyond the
control of Ministry officials. One official from the Ministry
pointed out that tender decisions were being manipulated
towards indigenous contractors who had no knowledge or
equipment to carry out the task. "When some of these
indigenous contractors are advanced money to kick start the
contract, they spend the money on luxuries and other things
unrelated to the project, causing delays and embarrassment to
the policy of indigenization."


11. (SBU) The PS surprised delegates in response to a
question about equipment that was bought from China. When
asked if the equipment had been purchased, he responded, "We
received tractors, caterpillars, lorries and front-loaders
from China. Most of these came just before the elections, and
we were able to use some of the trucks for election
activities." The audience audibly gasped at this statement,
in response to which the PS quickly added that the trucks had
been used to ferry ballot boxes and not party people.

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Commitment is Wearing Thin
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12. (SBU) The civil service specialists who made
presentations at this meeting are the backbone of Zimbabwe's
public sector. They possess the knowledge, skills and
understanding of government policy to manage government
functions efficiently. In private discussions with the civil
servants in the Ministry of Lands, Agriculture, and Rural
Resettlement, a bleak picture emerged of a demoralized staff
that is seriously considering leaving government service and,
perhaps, the country. If their sentiments are shared by their
colleagues, then the possibility of a massive exodus of
specialists and experienced people from key Ministry positions
is a strong possibility. This exodus would seriously erode
Zimbabwe's ability to recover from its current crisis. One
senior civil servant confided that: "We are doing all we can
under very difficult circumstances. We have a competent
professional work force whose frustration levels have reached
a boiling point. My department is a skills-based department,
but I am losing an average of a person per week to the private
sector and to the region due to poor salaries and inept
leadership. Another senior civil servant pointed out that he
had been in government service for 33 years and if he were to
go to the UK and become a junior veterinarian in an abattoir,
he would equalize his annual salary in six days. He too
confessed that he had reached a breaking point and was
considering quitting. This picture raises serious concerns for
Zimbabwe's future.

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The Role of the Committee in Budget Allocations
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13. (SBU) The Stakeholders asked the Committee how much
influence it had to change priorities in the budget. The
Committee Chairman explained that in the past, Parliament
would add input to the budget process late in the day or not
at all. He said the Committee lacked the capacity to argue
the case to the Executive but this process was helping to
strengthen their abilities. He said they would take what they
had heard and move to the next level. He explained that the
next step was for the Budget and Finance Committee to look at
all the submissions from the Portfolio Committees and then
start negotiations with the Ministry of Finance. The
stakeholders emphasized that the Parliamentary process has to
be implemented on a regular basis and become the norm; they
stressed that stakeholder consultation should not end with
this meeting. They urged the Committee to be involved in the
actual negotiations with the Ministry of Finance and the whole
decision making process. Chairman Ncube wrapped up by stating
that "We work as one in the Committee, not as party members
but as Zimbabweans, to try and get our economy going and we
are at your disposal. This is the beginning and we will see
it through to the end."


14. (SBU) At the end of the meeting, there was a general
consensus that Parliament should take leadership on fiscal
policy in general and the budget in particular.

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Conclusion
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15. (SBU) The Lands and Agriculture Portfolio Committee is
one of the six Committees that USAID-funded SUNY has worked
with to hold public consultations on the national budget.
These six Committees are leading the implementation of
Parliamentary reforms by enhancing public participation in the
legislature and by exercising increased legislative oversight
of the executive branch. Having Parliament host the CFU, ZFU,
ICFU, GAPWUZ, the private sector and civil servants in
dialogue serves to enhance its legitimacy and is important to
stakeholders, who feel that their views are being considered.
In the long run, the goal is that the Committees gain
confidence in their new roles and will pressure the House to
ensure that legislation be subjected to Committee review and
not fast tracked without proper examination.


16. (SBU) Through USAID's assistance to Parliament, the
committee system is being strengthened and committees are
taking incremental steps towards bridging the divide between
the MDC and ZANU-PF MPs. There is more bi-partisan
collaboration at the committee level than in the full House,
as this meeting showed. At the conclusion of the meeting the
Chairmen of the Portfolio Committee publicly thanked both
USAID and SUNY for the support given to Parliament and
underscored the importance of the reform agenda to the
resolution of the outstanding issues in Zimbabwe that require
a stronger and more proactive Parliament. SULLIVAN