Zimbabwe Government Addresses Massive Job Losses
by Levi Mukarati
Sunday, Aug 9, 2015
Zimbabwe Sunday Mail
The wave of job losses triggered by a Supreme Court ruling validating termination of contracts via three-month notices is the result of “bad” colonial era laws that are unfair, unjust and unacceptable, President Mugabe has said.
The President said while the court interpreted the letter of the law, Government was working on a raft of labour regulation amendments to create a win-win situation for employers and employees.
He was addressing Zanu-PF’s National Consultative Assembly at the party’s headquarters in Harare yesterday.
President Mugabe said some employers were taking advantage of the Supreme Court ruling to dismiss workers without the option of a retrenchment package.
“We have the courts, they have interpreted our law on the labour relations between workers and their employers; and they have said the law says that an employer can dismiss, discharge his employees, his workers upon giving that worker three months’ notice,” said President Mugabe.
“Well, not all the laws had yet been modified or amended by us, especially the bad ones. But this one comes from the past; and that’s what the settler employers wanted of course. But even in their case, they didn’t follow that law.
“But now what has occurred is that when that judgment was passed, oh, organisations and companies and employers who had wanted to discharge portions of their workers begun now sending people into the streets …
“Well, Government could not accept that. Even if one is given three months’ notice, what is three months’ notice when you would have worked 10 years 20 years? What do you get after that? (What is) the retrenchment package for the disparities?
“Perhaps you may be given salary or wages. That is three months’ wages and that is about all.
“And what pains is that the workers now become a real community of disadvantaged people different from those who yesterday had no jobs. But these ones had jobs and have lost the jobs …
“We have said no, that is not fair, it’s not just, it is not acceptable and it doesn’t make for the creation of jobs. That is why we have been working on an amendment of the law to ensure the employer will have the rights, but the rights to discharge an employee must be based on sound consideration that the worker. Is he neglecting his duties? Is he failing to execute his duties, lacking skills?”
President Mugabe questioned the morality of employers sending home breadwinners.
“To us, there should be some morality governing employers. When a person is employed, that becomes the source of living for him and his family, for her and her family, and it should not be an easy matter to get rid of a person,” charged President Mugabe.
“You just throw him in the street and just forget.
‘‘We do not want economics of that matter.
‘‘All of us – together, employers and employees – are all developers, developers of the country.
“It is not just a venture to make money; it’s a venture we are engaged in to develop our country, to transform our resources in mining, agriculture etcetera.”
President Mugabe said Government was also promoting development of the informal sector, pointing out that investment and agricultural support facilities from countries such as China, Russia, Brazil and Belarus had potential to create employment.
“We are inviting more investment as you have been reading from the Press. We are happy our Chinese friends are assisting, the Russian side also assisting in agriculture, we have got equipment from Brazil and from Belarus recently.
“Lots of equipment has been offered and this will create lots of room in agriculture and from agriculture, more employment will be created.
“But we would also want just to look at things from the point of view of employment of people by our companies. We also want to look at the possibility of making employees employers; give them some task, equip them with tasks, make them create SMEs of their own in the informal sector.
“So (let us) look at the problem from both sides, how to accommodate those who have been thrown into the street, but at the same time close the door and amend the law so that the employer cannot have that latitude which he has, the capacity which the law give at the moment to do as he pleases with the workers, the workers are precious and we do not want to see the street with people seeking jobs, without jobs.”
President Mugabe also took the opportunity to remind Zanu-PF members of the sacrifices made during the struggle to liberate Zimbabwe.
He said as the nation celebrated Heroes and Defence Forces days on August 10 and 11, respectively, it was of paramount importance that party leaders realise they alone were not responsible for bringing about Independence.
“There are the ordinary (people), vana baba nanamai, who gave shelter, who were the water to (liberation fighters) as the fish that was swimming.
‘‘Without the water, without that support, our struggle would have lasted much longer. So we won the fight because we were united,” said the President to loud cheers.
The National Consultative Assembly is constitutionally held biannually and was the first since Zanu-PF’s landmark 6th National People’s Congress of December 2014 that realigned the ruling party’s leadership while retaining Cde Mugabe as President and First Secretary.
The meeting brought together Zanu-PF’s top leadership, its Politburo and Central Committee, the Women’s and Youth Leagues, and ruling party legislators.
Ball in Parliament’s court
Sunday, Aug 9, 2015
Kuda Bwititi and Itai Mazire
Both Houses of Parliament will be summoned from leave to pass the Labour Act Amendment Bill, which is now with printers for formatting and gazetting.
Though The Sunday Mail could not establish when exactly Senate and the National Assembly will sit, we have gathered that the gazetting and debate of the Bill will be in quick succession.
Both Houses are constitutionally empowered to determine the time and duration of their sittings, other than the first sittings and recess periods.
However, the President may summon them at any time to conduct special business, according to Section 146 (a) of the Constitution.
It is estimated over 18 000 workers have been dismissed on three months’ notice and Government wants to quickly amend the Labour Act to avert further job losses.
The amendments were last Tuesday approved by Cabinet and lodged with Parliament whose members have adjourned to September 1.
The Bill is largely expected to sail through as a good number of legislators have previously advocated employee protection.
Part of Section 188 of Parliament’s Standing Rules and Orders reads,
“ . . . the House stands adjourned and (if) it is represented to the Speaker by the President that the public interest requires that the House should meet on any earlier day during the adjournment, the Speaker, if he or she is satisfied that the public interest does so require, may give notice that he or she is satisfied and the House shall meet on the day stated on such notice.”
In an interview with The Sunday Mail, Public Service, Labour and Social Welfare Minister Prisca Mupfumira indicated Government is vying for speedy legislative procedure.
She would not, however, be drawn into revealing the specific amendments.
“The Bill was brought before Cabinet’s Committee on Legislation after which it was presented to full Cabinet, which, in turn, recommended that it be forwarded to Parliament.
“Advocate Jacob Mudenda – as Speaker of the National Assembly – was handed the Bill on Thursday 6, 2015 and he has assured us it will be gazetted. After that, Parliament will be recalled urgently, and the Bill will go through other processes that take place in Parliament up to the level where it becomes law.”
She added, “The tenets of the Labour Act are based on the principle of social justice and democracy. So, basically, if the Labour Act (Amendment) Bill becomes law, the employer will not be able to fire a worker without giving reasons for the termination of his or contract.
“To be specific, we are saying there should be consensus between both parties.
‘‘There is need for us to protect both employer and worker. People cannot be fired willy-nilly; these amendments seek to ensure the worker is protected. One cannot have his/ her contract terminated without knowing the reason.”
Adv Mudenda said Parliament can be recalled on “urgent business”.
“I am in South Africa, so I am not privy to developments. But once the Bill has been gazetted, it can then be tabled before Parliament.
“This means Parliament can be recalled to deal with that business; if the business is urgent.”
On July 17, 2015, Chief Justice Godfrey Chidyausiku – sitting with four Supreme Court justices – ruled that the common law position placing employees and employers on an equal slate was operational.
They were deciding on a case in which two former Zuva Petroleum managers were challenging termination of their contracts by notice.
The duo did not find joy either when they appealed this ruling in the Constitutional Court.
Several parastatals and private companies have jumped onto the Supreme Court outcome, dismissing their workers on three months’ notice.
Government – though apportioning no blame to the Judiciary – has spoken against such wanton sackings and wants to halt them via law amendments.
Section 12 (3) of the Labour Act (28:01) says, “A contract of employment that does not specify its duration or date of termination, other than a contract for casual work or seasonal work or for the performance of some specific service, shall be deemed to be a contract without limit of time.”
Sub-section 4 (a) reads: “Except where a longer period of notice has been provided for under a contract of employment or in any relevant enactment, and subject to subsections (5), (6) and (7), notice of termination of the contract of employment to be given by either party shall be — (a) three months in the case of a contract without limit of time or a contract for a period of two years or more.”
Parliamentary Legal Committee Chair Mr Fortune Chasi said the amendments should be taken through due process.
“Headway has already been made in that Cabinet has approved the Bill. So, the natural process should be followed so that the Bill becomes law.
“I am sure given the urgency of the business at hand, the House will be called to sit and the adjournement is of no consequence.”
Constitutional law Professor Lovemore Madhuku added: “The adjournment of Parliament is not a significant occasion, and MPs can be called back at any time.
It is different from the case when the House is dissolved.
‘‘In such a scenario, the President can invoke Presidential powers because there would be no lawmakers at all. However, in this case, the lawmakers are there. All that needs to be done is call them to work.
‘‘So, the MPs can just come back to deal with that specific issue only and go back to their leave.”
Section likely to be amended
Part of Section 12 of Labour Act (28:01)
Duration, particulars and termination of employment contract
(3) A contract of employment that does not specify its duration or date of termination, other than a contract for casual work or seasonal work or for the performance of some specific service, shall be deemed to be a contract without limit of time:
Provided that a casual worker shall be deemed to have become an employee on a contract of employment without limit of time on the day that his period of engagement with a particular employer exceeds a total of six weeks in any four consecutive months.
(4) Except where a longer period of notice has been provided for under a contract of employment or in any relevant enactment, and subject to subsections (5), (6) and (7), notice of termination of the contract of employment to be given by either party shall be—
(a) three months in the case of a contract without limit of time or a contract for a period of two years or more;
(b) two months in the case of a contract for a period of one year or more but less than two years;
(c) one month in the case of a contract for a period of six months or more but less than one year;
(d) two weeks in the case of a contract for a period of three months or more but less than six months;
(e) one day in the case of a contract for a period of less than three months or in the case of casual work or seasonal work.
(5) A contract of employment may provide in writing for a single, non-renewable probationary period of not more than—
(a) one day in the case of casual work or seasonal work; or
(b) three months in any other case; during which notice of termination of the contract to be given by either party may be one week in the case of casual work or seasonal work or two weeks in any other case.
(6) Whenever an employee has been provided with accommodation directly or indirectly by his employer, the employee shall not be required to vacate the accommodation before the expiry of a period of one month after the period of notice specified in terms of subsection (4) or (5).
(7) Notwithstanding subsection (4) or (5), the parties to any contract of employment may, by mutual agreement, waive the right to notice:
Provided that where the termination is at the initiative of the employer, the employee shall have a right to payment for a period corresponding to the appropriate period of notice required in terms of subsection (4) or (5).
TOP FIRMS, INDIVIDUALS LANGUISH IN DEBT
by Darlington Musarurwa
Sunday, Aug 9, 2015
Darlington Musarurwa and Africa Moyo
PROMINENT individuals and top companies are now living in mortal fear of the Sheriff of the High Court and the Messenger of Court as more properties continue to be attached and put under the hammer for outstanding debts and mortgages owed to creditors, mainly banks.
There are real fears that such foreclosures will continue as companies and individuals that borrowed funds after the transition from the Zimbabwe-dollar era to the multicurrency system are caught up in a sticky debt trap.
Interest rates in Zimbabwe post-dollarisation oscillated between 18 percent and 25 percent. It is only last week that the Reserve Bank of Zimbabwe (RBZ) announced a new regime of interest rates – now capped at 18 percent – that have been agreed to by the Bankers Association of Zimbabwe(BAZ), a grouping of banks operating in Zimbabwe.
In what has turned out to be a boon for auctioneers and gloom for debtors, activity has gradually picked up.
Companies in debt, banks in hot pursuit
Last week, Realty World Estate Agents, Valuers (and) Auctioneers advertised a number of properties that were set to go under the hammer for loans owed to local banks. Among the properties is a vacant 1 969 square metre stand along Willowvale Road owned by businessman and farmer Mr Cecil Muderede and his wife who seem to have failed to service an undisclosed debt owed to MBCA Bank.
The businessman is however not new to being pursued by creditors as he recently witnessed his investment in Jaggers Wholesalers go up in smoke. Mr Muderede bought Jaggers from Metcash in April 2010 through his investment vehicle Borlscade Investments but he could turnaround its fortunes. It collapsed from a US$13 million debt overhang.
In 2011, Jaggers assets went under the hammer to pay off US$443 795 that the company owed to Delta Beverages.
Another prominent entrepreneur who is in the clutches of a debt recovery onslaught from CABS is Pandhari Lodge proprieter Mr Sunday Chifamba. His property – Stand Number 754 in Glen Lorne measuring 4298 square metres – is in danger of being auctioned off for struggling to pay off obligations amounting to US$3,3 million. He has since repaid US$2 million and is engaging the bank to renegotiate terms to pay back the outstanding amount.
Youthful emerging businessman Mr Trevor Mupamhadzi, who was the owner of Potrid Clothing, is also reeling for a debt he owed to Kingdom Bank, which has however since closed. A property measuring 10 hectares, which has been subdivided into plots measuring 2000 square metres and 21 houses at various stages of completion, will soon be sold as the bank seeks to recover its dues. Former newscaster Mr Walter Mupfanochiya is also reeling. POSB is set to sell his house in Budiriro over an undisclosed debt.
But it is not only individuals that are struggling as prominent companies are also being sucked in the debt spiral.
Kingstones Limited’s four-storey head office along Kwame Nkurumah Avenue is in danger of being sold for outstanding obligations owed to ZB Bank.
Similarly, Millenium Tobacco Floors “and two others” are smarting from an unserviced debt to Kingdom Bank.
As a result, its property along Adare Road, Rolfvalley, Harare will be sold.
Targeted businessman provides insight
Pandhari Lodge managing director Mr Sunday Chifamba last week provided a rare insight into the treacherous conditions that have affected local businessmen.
According to Mr Chifamba, he had fallen behind payments to CABS “because for the past two years, business was bad, very bad”.
The bulk of the money he is now servicing is in interest repayments.
“We don’t dispute that we owe them; this property has a mortgage with CABS hence the moves we have been making to find ways of settling the arrears.
“Our plan was that we pay them US$100 000 on Friday (last week) and the balance should be rescheduled and we pay at least US$30 000 per month in 20 years,” said Mr Chifamba.
The two parties’ met on Wednesday 0morning for marathon discussions that were designed to cobble up a payment plan. It is however believed that Cabs is reluctant to accept payment plans.
The Messenger of Court and auctioneers visited the premises on Friday July 24 to view the conference room, but they could not access the property as it was in use.
They never returned. Added Mr Chifamba: “To my surprise, they go ahead and indicate in the newspaper advert that they were denied access. How do you deny the Messenger of Court access when we all know that they do whatever they can to gain entry into any premise?
“Now the property they want to sell is not Pandhari, Stand Number 754 does not have any rooms. It only has four conference rooms, a kitchen and a thatched gazebo and a few offices.
“It encroached a little onto Stand Number 753 (which has the hotel) but I am surprised that while the stay of execution we got from the court has not been finalised, they are coming back.”
High interest rates squeeze borrowers
Last week’s statistics from the central bank show that banks continue to pour much of their resources to consumption through individuals. As at June 30, 2015 the banking sector loans to deposit ratio stood at 74,4 percent and US$4,9 billion of the US$5,6 billion deposits was loaned out.
Individuals got 25,65 percent of the allocations mainly through salary-based loans, while the manufacturing sector only received 10,87 percent of the funds.
But interest rates between 18 percent and 25 percent are still considered punitive. Market watchers say local interest rates are high because most of the bank deposits at 55,49 percent are demand deposits or transitory. Demand deposits cannot be used to fund long-term projects. In most case the high interest rates have led to high default rates and high non-performing loans in bank portfolios.
The RBZ acknowledges that interest rates are unsustainably high.
Dr Mangudya said in the mid-term Monetary Policy Statement on August 5, 2015 banks should reduce their cost structures “to enable them to contribute to the reduction of the cost of doing business in Zimbabwe”.
Interest rates have since been capped at 18 percent.
Under the new regime, prime borrowers with low credit risk will be charged between 6 percent and 10 percent per annum, while those with moderate risk will be levied 10 percent to 12 percent. Borrowers with high credit risk will have to put up with interest rates of between 12 percent and 18 percent.
Also, defaulters will be charged penalty rates from 3 percent to 8 percent over and above the interest rate charged. Currently, defaulters are charged as much as 20 percent in penalties. University of Zimbabwe economics lecturer Dr Albert Makochekwanwa intimated last week that the fluid and unpredictable economic environment was the main reason for defaults.
He said borrowers are aware of the interest rates well before they commit themselves.
“Other individuals, together with companies, also borrow to try and boost their business only for them to suffer from competition or their products become uncompetitive. Such situations result in them failing to repay their loans,” said Dr Makochekanwa.
Other economists opine that the country’s risk premium naturally makes borrowings expensive. Financial Express analysts Mr Respect Gwenzi believes that external lines of credit have been scarce and where available, they have bee offered “relatively at a premium to the rest of the region”.
“This country risk weighs on the overall cost and successively drives the net upwards.
“The premium is reflected in the high price of money, and this has in turn made it difficult for borrowers to repay loans. Besides the premium is the short term nature of funds, and borrowing from the yield curve, it is clear that short term money is more expensive, but the need for survival has pushed firms to opt for that available option in desperation.
“However, this has not helped either as it resulted in erosion of operating profits and losses in some instances. Persistent losses have in turn resulted in defaults in some cases,” said Mr Gwenzi.
He observed that consumptive borrowers have equally been caught in the same trap regardless of punitive rates charged.
Banks, he said, had to “relay their rates downwards”, giving a safe margin ahead of the libor (London Interbank Offered Rate) and minimise extension of funds to unproductive sectors.
RBZ moves in, rescues five firms
The apex bank is now moving in to rescue highly indebted companies who fortunes can be reviewed when their debt is either rescheduled or restructured.
This is now being done through the Zimbabwe Asset Management Company(Zamco) – a special purpose vehicle created by the RBZ to acquire toxic debts on bank balance sheets . Last week, the RBZ indicated that it has since taken over debts worth US$58 million for four yet to be named distressed firms.
On the overall, the spike in the number of properties being auctioned by financial institutions to recover their money has reignited the debate on whether or not to reschedule debts to allow borrowers some breathing space in light of economic challenges.
While the banking sector’s aggregate ratio of non-performing loans (NPLs) to total loans has eased from a peak of 20,45 percent in June 2014 to 14,52 percent as at June 30, 2015, there is still pressure for them to further reduce them.
The benchmark internationally acceptable limit for NPLs is 5 percent.
Rogue bosses face jail time
by Sunday Mail Reporter
Sunday, Aug 9, 2015
Senior Government officials are under investigation for allegedly hiring ghost workers so that they fraudulently draw these “employees’” monthly salaries.
Among the targets are the Salaries Service Bureau and the ministries of Women’s Affairs, Gender and Community Development; Youth, Indigenisation and Economic Empowerment; and Primary and Secondary Education.
If fraud is proved, all those involved will either be sacked or face prosecution.
This follows revelations by a staff audit last week that at least 3 000 civil servants -mainly teachers – were drawing monthly salaries despite not reporting for duty.
Some were getting paid twice while others had been unjustly promoted.
Public Service, Labour and Social Welfare Minister Prisca Mupfumira told The Sunday Mail that the scale of “ghost workers” could be much more than previously thought.
She said her ministry would soon transmit its findings to the Office of the President and Cabinet.
“We have other cases in various ministries where we established ghost workers. We have such cases in the ministries of Youth, Indigenisation and Economic Empowerment; and Women’s Affairs, Gender and Community Development; as well as the Salaries Service Bureau.
“Obviously, disciplinary action will be taken against those 3 000 civil servants who were exposed by the March physical head-count, and action to be taken will depend on the nature of the case. We have Public Service Regulations (Statutory Instrument 1 of 2000) and all of them will be charged under this SI.”
Government commissioned the audit in March 2015 to determine its exact staff complement as civil service salaries were gobbling 80 percent of revenue.
Estimates put the number of people employed by Government at between 200 000 and 300 000.
Auditors have established that hundreds of people were still on Government’s payroll despite having left the service.
In one case, an ex-civil servant migrated to Australia, but was still being paid.
Over 63 schools were being run by two headmasters who have been getting allowances that come with the posts.
Some teachers have also been receiving double salaries.
Last week, about 3 000 civil servants were struck off the payroll after it was discovered they were not at their workstations.
Their salaries will only be re-instated if they prove their employment status.
Minister Mupfumira said: “We were not targeting teachers, the head-count we carried out in March was for the entire Civil Service. But from our observations, we noted that teachers were the ones who were duping Government.
“Obviously, we need to probe the senior officials who manned these districts or provinces because all this happened under their noses. We have district and provincial officers in the education sector and their responsibilities are to monitor what will be happening at these schools.”
She continued, “For instance, when our audit teams were on the ground, villagers told them that some schools had closed well before the official dates. At one school, we discovered that there were only teachers for grades one up to four, and the same teaching staff would double as teachers for the remaining grades.
“These teachers would then get double salaries. So, the question is: how was this happening when we have senior officials in those areas?”
A Public Service, Labour and Social Welfare Ministry official told The Sunday Mail that those found guilty would likely face severe punishment for fleecing taxpayers of millions of dollars.
Said the official: “The Public Service Regulations (SI 1 of 2000) basically focus on the conduct and conditions of civil servants while on duty. We have to carry out disciplinary action against these senior Government officials and those who were carrying out fraudulent activities will likely be discharged from service.
“We have to bring these matters to the police, considering that these are criminal offences. In the education sector, we have to probe those provincial officers and, possibly, these will have to be brought before the courts. They were aware of the criminal activities at these school.”
Sunday, Aug 9, 2015
Zimbabwe Sunday Mail
The wave of job losses triggered by a Supreme Court ruling validating termination of contracts via three-month notices is the result of “bad” colonial era laws that are unfair, unjust and unacceptable, President Mugabe has said.
The President said while the court interpreted the letter of the law, Government was working on a raft of labour regulation amendments to create a win-win situation for employers and employees.
He was addressing Zanu-PF’s National Consultative Assembly at the party’s headquarters in Harare yesterday.
President Mugabe said some employers were taking advantage of the Supreme Court ruling to dismiss workers without the option of a retrenchment package.
“We have the courts, they have interpreted our law on the labour relations between workers and their employers; and they have said the law says that an employer can dismiss, discharge his employees, his workers upon giving that worker three months’ notice,” said President Mugabe.
“Well, not all the laws had yet been modified or amended by us, especially the bad ones. But this one comes from the past; and that’s what the settler employers wanted of course. But even in their case, they didn’t follow that law.
“But now what has occurred is that when that judgment was passed, oh, organisations and companies and employers who had wanted to discharge portions of their workers begun now sending people into the streets …
“Well, Government could not accept that. Even if one is given three months’ notice, what is three months’ notice when you would have worked 10 years 20 years? What do you get after that? (What is) the retrenchment package for the disparities?
“Perhaps you may be given salary or wages. That is three months’ wages and that is about all.
“And what pains is that the workers now become a real community of disadvantaged people different from those who yesterday had no jobs. But these ones had jobs and have lost the jobs …
“We have said no, that is not fair, it’s not just, it is not acceptable and it doesn’t make for the creation of jobs. That is why we have been working on an amendment of the law to ensure the employer will have the rights, but the rights to discharge an employee must be based on sound consideration that the worker. Is he neglecting his duties? Is he failing to execute his duties, lacking skills?”
President Mugabe questioned the morality of employers sending home breadwinners.
“To us, there should be some morality governing employers. When a person is employed, that becomes the source of living for him and his family, for her and her family, and it should not be an easy matter to get rid of a person,” charged President Mugabe.
“You just throw him in the street and just forget.
‘‘We do not want economics of that matter.
‘‘All of us – together, employers and employees – are all developers, developers of the country.
“It is not just a venture to make money; it’s a venture we are engaged in to develop our country, to transform our resources in mining, agriculture etcetera.”
President Mugabe said Government was also promoting development of the informal sector, pointing out that investment and agricultural support facilities from countries such as China, Russia, Brazil and Belarus had potential to create employment.
“We are inviting more investment as you have been reading from the Press. We are happy our Chinese friends are assisting, the Russian side also assisting in agriculture, we have got equipment from Brazil and from Belarus recently.
“Lots of equipment has been offered and this will create lots of room in agriculture and from agriculture, more employment will be created.
“But we would also want just to look at things from the point of view of employment of people by our companies. We also want to look at the possibility of making employees employers; give them some task, equip them with tasks, make them create SMEs of their own in the informal sector.
“So (let us) look at the problem from both sides, how to accommodate those who have been thrown into the street, but at the same time close the door and amend the law so that the employer cannot have that latitude which he has, the capacity which the law give at the moment to do as he pleases with the workers, the workers are precious and we do not want to see the street with people seeking jobs, without jobs.”
President Mugabe also took the opportunity to remind Zanu-PF members of the sacrifices made during the struggle to liberate Zimbabwe.
He said as the nation celebrated Heroes and Defence Forces days on August 10 and 11, respectively, it was of paramount importance that party leaders realise they alone were not responsible for bringing about Independence.
“There are the ordinary (people), vana baba nanamai, who gave shelter, who were the water to (liberation fighters) as the fish that was swimming.
‘‘Without the water, without that support, our struggle would have lasted much longer. So we won the fight because we were united,” said the President to loud cheers.
The National Consultative Assembly is constitutionally held biannually and was the first since Zanu-PF’s landmark 6th National People’s Congress of December 2014 that realigned the ruling party’s leadership while retaining Cde Mugabe as President and First Secretary.
The meeting brought together Zanu-PF’s top leadership, its Politburo and Central Committee, the Women’s and Youth Leagues, and ruling party legislators.
Ball in Parliament’s court
Sunday, Aug 9, 2015
Kuda Bwititi and Itai Mazire
Both Houses of Parliament will be summoned from leave to pass the Labour Act Amendment Bill, which is now with printers for formatting and gazetting.
Though The Sunday Mail could not establish when exactly Senate and the National Assembly will sit, we have gathered that the gazetting and debate of the Bill will be in quick succession.
Both Houses are constitutionally empowered to determine the time and duration of their sittings, other than the first sittings and recess periods.
However, the President may summon them at any time to conduct special business, according to Section 146 (a) of the Constitution.
It is estimated over 18 000 workers have been dismissed on three months’ notice and Government wants to quickly amend the Labour Act to avert further job losses.
The amendments were last Tuesday approved by Cabinet and lodged with Parliament whose members have adjourned to September 1.
The Bill is largely expected to sail through as a good number of legislators have previously advocated employee protection.
Part of Section 188 of Parliament’s Standing Rules and Orders reads,
“ . . . the House stands adjourned and (if) it is represented to the Speaker by the President that the public interest requires that the House should meet on any earlier day during the adjournment, the Speaker, if he or she is satisfied that the public interest does so require, may give notice that he or she is satisfied and the House shall meet on the day stated on such notice.”
In an interview with The Sunday Mail, Public Service, Labour and Social Welfare Minister Prisca Mupfumira indicated Government is vying for speedy legislative procedure.
She would not, however, be drawn into revealing the specific amendments.
“The Bill was brought before Cabinet’s Committee on Legislation after which it was presented to full Cabinet, which, in turn, recommended that it be forwarded to Parliament.
“Advocate Jacob Mudenda – as Speaker of the National Assembly – was handed the Bill on Thursday 6, 2015 and he has assured us it will be gazetted. After that, Parliament will be recalled urgently, and the Bill will go through other processes that take place in Parliament up to the level where it becomes law.”
She added, “The tenets of the Labour Act are based on the principle of social justice and democracy. So, basically, if the Labour Act (Amendment) Bill becomes law, the employer will not be able to fire a worker without giving reasons for the termination of his or contract.
“To be specific, we are saying there should be consensus between both parties.
‘‘There is need for us to protect both employer and worker. People cannot be fired willy-nilly; these amendments seek to ensure the worker is protected. One cannot have his/ her contract terminated without knowing the reason.”
Adv Mudenda said Parliament can be recalled on “urgent business”.
“I am in South Africa, so I am not privy to developments. But once the Bill has been gazetted, it can then be tabled before Parliament.
“This means Parliament can be recalled to deal with that business; if the business is urgent.”
On July 17, 2015, Chief Justice Godfrey Chidyausiku – sitting with four Supreme Court justices – ruled that the common law position placing employees and employers on an equal slate was operational.
They were deciding on a case in which two former Zuva Petroleum managers were challenging termination of their contracts by notice.
The duo did not find joy either when they appealed this ruling in the Constitutional Court.
Several parastatals and private companies have jumped onto the Supreme Court outcome, dismissing their workers on three months’ notice.
Government – though apportioning no blame to the Judiciary – has spoken against such wanton sackings and wants to halt them via law amendments.
Section 12 (3) of the Labour Act (28:01) says, “A contract of employment that does not specify its duration or date of termination, other than a contract for casual work or seasonal work or for the performance of some specific service, shall be deemed to be a contract without limit of time.”
Sub-section 4 (a) reads: “Except where a longer period of notice has been provided for under a contract of employment or in any relevant enactment, and subject to subsections (5), (6) and (7), notice of termination of the contract of employment to be given by either party shall be — (a) three months in the case of a contract without limit of time or a contract for a period of two years or more.”
Parliamentary Legal Committee Chair Mr Fortune Chasi said the amendments should be taken through due process.
“Headway has already been made in that Cabinet has approved the Bill. So, the natural process should be followed so that the Bill becomes law.
“I am sure given the urgency of the business at hand, the House will be called to sit and the adjournement is of no consequence.”
Constitutional law Professor Lovemore Madhuku added: “The adjournment of Parliament is not a significant occasion, and MPs can be called back at any time.
It is different from the case when the House is dissolved.
‘‘In such a scenario, the President can invoke Presidential powers because there would be no lawmakers at all. However, in this case, the lawmakers are there. All that needs to be done is call them to work.
‘‘So, the MPs can just come back to deal with that specific issue only and go back to their leave.”
Section likely to be amended
Part of Section 12 of Labour Act (28:01)
Duration, particulars and termination of employment contract
(3) A contract of employment that does not specify its duration or date of termination, other than a contract for casual work or seasonal work or for the performance of some specific service, shall be deemed to be a contract without limit of time:
Provided that a casual worker shall be deemed to have become an employee on a contract of employment without limit of time on the day that his period of engagement with a particular employer exceeds a total of six weeks in any four consecutive months.
(4) Except where a longer period of notice has been provided for under a contract of employment or in any relevant enactment, and subject to subsections (5), (6) and (7), notice of termination of the contract of employment to be given by either party shall be—
(a) three months in the case of a contract without limit of time or a contract for a period of two years or more;
(b) two months in the case of a contract for a period of one year or more but less than two years;
(c) one month in the case of a contract for a period of six months or more but less than one year;
(d) two weeks in the case of a contract for a period of three months or more but less than six months;
(e) one day in the case of a contract for a period of less than three months or in the case of casual work or seasonal work.
(5) A contract of employment may provide in writing for a single, non-renewable probationary period of not more than—
(a) one day in the case of casual work or seasonal work; or
(b) three months in any other case; during which notice of termination of the contract to be given by either party may be one week in the case of casual work or seasonal work or two weeks in any other case.
(6) Whenever an employee has been provided with accommodation directly or indirectly by his employer, the employee shall not be required to vacate the accommodation before the expiry of a period of one month after the period of notice specified in terms of subsection (4) or (5).
(7) Notwithstanding subsection (4) or (5), the parties to any contract of employment may, by mutual agreement, waive the right to notice:
Provided that where the termination is at the initiative of the employer, the employee shall have a right to payment for a period corresponding to the appropriate period of notice required in terms of subsection (4) or (5).
TOP FIRMS, INDIVIDUALS LANGUISH IN DEBT
by Darlington Musarurwa
Sunday, Aug 9, 2015
Darlington Musarurwa and Africa Moyo
PROMINENT individuals and top companies are now living in mortal fear of the Sheriff of the High Court and the Messenger of Court as more properties continue to be attached and put under the hammer for outstanding debts and mortgages owed to creditors, mainly banks.
There are real fears that such foreclosures will continue as companies and individuals that borrowed funds after the transition from the Zimbabwe-dollar era to the multicurrency system are caught up in a sticky debt trap.
Interest rates in Zimbabwe post-dollarisation oscillated between 18 percent and 25 percent. It is only last week that the Reserve Bank of Zimbabwe (RBZ) announced a new regime of interest rates – now capped at 18 percent – that have been agreed to by the Bankers Association of Zimbabwe(BAZ), a grouping of banks operating in Zimbabwe.
In what has turned out to be a boon for auctioneers and gloom for debtors, activity has gradually picked up.
Companies in debt, banks in hot pursuit
Last week, Realty World Estate Agents, Valuers (and) Auctioneers advertised a number of properties that were set to go under the hammer for loans owed to local banks. Among the properties is a vacant 1 969 square metre stand along Willowvale Road owned by businessman and farmer Mr Cecil Muderede and his wife who seem to have failed to service an undisclosed debt owed to MBCA Bank.
The businessman is however not new to being pursued by creditors as he recently witnessed his investment in Jaggers Wholesalers go up in smoke. Mr Muderede bought Jaggers from Metcash in April 2010 through his investment vehicle Borlscade Investments but he could turnaround its fortunes. It collapsed from a US$13 million debt overhang.
In 2011, Jaggers assets went under the hammer to pay off US$443 795 that the company owed to Delta Beverages.
Another prominent entrepreneur who is in the clutches of a debt recovery onslaught from CABS is Pandhari Lodge proprieter Mr Sunday Chifamba. His property – Stand Number 754 in Glen Lorne measuring 4298 square metres – is in danger of being auctioned off for struggling to pay off obligations amounting to US$3,3 million. He has since repaid US$2 million and is engaging the bank to renegotiate terms to pay back the outstanding amount.
Youthful emerging businessman Mr Trevor Mupamhadzi, who was the owner of Potrid Clothing, is also reeling for a debt he owed to Kingdom Bank, which has however since closed. A property measuring 10 hectares, which has been subdivided into plots measuring 2000 square metres and 21 houses at various stages of completion, will soon be sold as the bank seeks to recover its dues. Former newscaster Mr Walter Mupfanochiya is also reeling. POSB is set to sell his house in Budiriro over an undisclosed debt.
But it is not only individuals that are struggling as prominent companies are also being sucked in the debt spiral.
Kingstones Limited’s four-storey head office along Kwame Nkurumah Avenue is in danger of being sold for outstanding obligations owed to ZB Bank.
Similarly, Millenium Tobacco Floors “and two others” are smarting from an unserviced debt to Kingdom Bank.
As a result, its property along Adare Road, Rolfvalley, Harare will be sold.
Targeted businessman provides insight
Pandhari Lodge managing director Mr Sunday Chifamba last week provided a rare insight into the treacherous conditions that have affected local businessmen.
According to Mr Chifamba, he had fallen behind payments to CABS “because for the past two years, business was bad, very bad”.
The bulk of the money he is now servicing is in interest repayments.
“We don’t dispute that we owe them; this property has a mortgage with CABS hence the moves we have been making to find ways of settling the arrears.
“Our plan was that we pay them US$100 000 on Friday (last week) and the balance should be rescheduled and we pay at least US$30 000 per month in 20 years,” said Mr Chifamba.
The two parties’ met on Wednesday 0morning for marathon discussions that were designed to cobble up a payment plan. It is however believed that Cabs is reluctant to accept payment plans.
The Messenger of Court and auctioneers visited the premises on Friday July 24 to view the conference room, but they could not access the property as it was in use.
They never returned. Added Mr Chifamba: “To my surprise, they go ahead and indicate in the newspaper advert that they were denied access. How do you deny the Messenger of Court access when we all know that they do whatever they can to gain entry into any premise?
“Now the property they want to sell is not Pandhari, Stand Number 754 does not have any rooms. It only has four conference rooms, a kitchen and a thatched gazebo and a few offices.
“It encroached a little onto Stand Number 753 (which has the hotel) but I am surprised that while the stay of execution we got from the court has not been finalised, they are coming back.”
High interest rates squeeze borrowers
Last week’s statistics from the central bank show that banks continue to pour much of their resources to consumption through individuals. As at June 30, 2015 the banking sector loans to deposit ratio stood at 74,4 percent and US$4,9 billion of the US$5,6 billion deposits was loaned out.
Individuals got 25,65 percent of the allocations mainly through salary-based loans, while the manufacturing sector only received 10,87 percent of the funds.
But interest rates between 18 percent and 25 percent are still considered punitive. Market watchers say local interest rates are high because most of the bank deposits at 55,49 percent are demand deposits or transitory. Demand deposits cannot be used to fund long-term projects. In most case the high interest rates have led to high default rates and high non-performing loans in bank portfolios.
The RBZ acknowledges that interest rates are unsustainably high.
Dr Mangudya said in the mid-term Monetary Policy Statement on August 5, 2015 banks should reduce their cost structures “to enable them to contribute to the reduction of the cost of doing business in Zimbabwe”.
Interest rates have since been capped at 18 percent.
Under the new regime, prime borrowers with low credit risk will be charged between 6 percent and 10 percent per annum, while those with moderate risk will be levied 10 percent to 12 percent. Borrowers with high credit risk will have to put up with interest rates of between 12 percent and 18 percent.
Also, defaulters will be charged penalty rates from 3 percent to 8 percent over and above the interest rate charged. Currently, defaulters are charged as much as 20 percent in penalties. University of Zimbabwe economics lecturer Dr Albert Makochekwanwa intimated last week that the fluid and unpredictable economic environment was the main reason for defaults.
He said borrowers are aware of the interest rates well before they commit themselves.
“Other individuals, together with companies, also borrow to try and boost their business only for them to suffer from competition or their products become uncompetitive. Such situations result in them failing to repay their loans,” said Dr Makochekanwa.
Other economists opine that the country’s risk premium naturally makes borrowings expensive. Financial Express analysts Mr Respect Gwenzi believes that external lines of credit have been scarce and where available, they have bee offered “relatively at a premium to the rest of the region”.
“This country risk weighs on the overall cost and successively drives the net upwards.
“The premium is reflected in the high price of money, and this has in turn made it difficult for borrowers to repay loans. Besides the premium is the short term nature of funds, and borrowing from the yield curve, it is clear that short term money is more expensive, but the need for survival has pushed firms to opt for that available option in desperation.
“However, this has not helped either as it resulted in erosion of operating profits and losses in some instances. Persistent losses have in turn resulted in defaults in some cases,” said Mr Gwenzi.
He observed that consumptive borrowers have equally been caught in the same trap regardless of punitive rates charged.
Banks, he said, had to “relay their rates downwards”, giving a safe margin ahead of the libor (London Interbank Offered Rate) and minimise extension of funds to unproductive sectors.
RBZ moves in, rescues five firms
The apex bank is now moving in to rescue highly indebted companies who fortunes can be reviewed when their debt is either rescheduled or restructured.
This is now being done through the Zimbabwe Asset Management Company(Zamco) – a special purpose vehicle created by the RBZ to acquire toxic debts on bank balance sheets . Last week, the RBZ indicated that it has since taken over debts worth US$58 million for four yet to be named distressed firms.
On the overall, the spike in the number of properties being auctioned by financial institutions to recover their money has reignited the debate on whether or not to reschedule debts to allow borrowers some breathing space in light of economic challenges.
While the banking sector’s aggregate ratio of non-performing loans (NPLs) to total loans has eased from a peak of 20,45 percent in June 2014 to 14,52 percent as at June 30, 2015, there is still pressure for them to further reduce them.
The benchmark internationally acceptable limit for NPLs is 5 percent.
Rogue bosses face jail time
by Sunday Mail Reporter
Sunday, Aug 9, 2015
Senior Government officials are under investigation for allegedly hiring ghost workers so that they fraudulently draw these “employees’” monthly salaries.
Among the targets are the Salaries Service Bureau and the ministries of Women’s Affairs, Gender and Community Development; Youth, Indigenisation and Economic Empowerment; and Primary and Secondary Education.
If fraud is proved, all those involved will either be sacked or face prosecution.
This follows revelations by a staff audit last week that at least 3 000 civil servants -mainly teachers – were drawing monthly salaries despite not reporting for duty.
Some were getting paid twice while others had been unjustly promoted.
Public Service, Labour and Social Welfare Minister Prisca Mupfumira told The Sunday Mail that the scale of “ghost workers” could be much more than previously thought.
She said her ministry would soon transmit its findings to the Office of the President and Cabinet.
“We have other cases in various ministries where we established ghost workers. We have such cases in the ministries of Youth, Indigenisation and Economic Empowerment; and Women’s Affairs, Gender and Community Development; as well as the Salaries Service Bureau.
“Obviously, disciplinary action will be taken against those 3 000 civil servants who were exposed by the March physical head-count, and action to be taken will depend on the nature of the case. We have Public Service Regulations (Statutory Instrument 1 of 2000) and all of them will be charged under this SI.”
Government commissioned the audit in March 2015 to determine its exact staff complement as civil service salaries were gobbling 80 percent of revenue.
Estimates put the number of people employed by Government at between 200 000 and 300 000.
Auditors have established that hundreds of people were still on Government’s payroll despite having left the service.
In one case, an ex-civil servant migrated to Australia, but was still being paid.
Over 63 schools were being run by two headmasters who have been getting allowances that come with the posts.
Some teachers have also been receiving double salaries.
Last week, about 3 000 civil servants were struck off the payroll after it was discovered they were not at their workstations.
Their salaries will only be re-instated if they prove their employment status.
Minister Mupfumira said: “We were not targeting teachers, the head-count we carried out in March was for the entire Civil Service. But from our observations, we noted that teachers were the ones who were duping Government.
“Obviously, we need to probe the senior officials who manned these districts or provinces because all this happened under their noses. We have district and provincial officers in the education sector and their responsibilities are to monitor what will be happening at these schools.”
She continued, “For instance, when our audit teams were on the ground, villagers told them that some schools had closed well before the official dates. At one school, we discovered that there were only teachers for grades one up to four, and the same teaching staff would double as teachers for the remaining grades.
“These teachers would then get double salaries. So, the question is: how was this happening when we have senior officials in those areas?”
A Public Service, Labour and Social Welfare Ministry official told The Sunday Mail that those found guilty would likely face severe punishment for fleecing taxpayers of millions of dollars.
Said the official: “The Public Service Regulations (SI 1 of 2000) basically focus on the conduct and conditions of civil servants while on duty. We have to carry out disciplinary action against these senior Government officials and those who were carrying out fraudulent activities will likely be discharged from service.
“We have to bring these matters to the police, considering that these are criminal offences. In the education sector, we have to probe those provincial officers and, possibly, these will have to be brought before the courts. They were aware of the criminal activities at these school.”
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