Zimbabwe's State firms on the brink ...
THE haemorrhage among State-owned enterprises has reached crisis levels amid shocking revelations that the 23 parastatals audited by the government’s chief auditor plunged to cumulative losses of about US$470 million between 2012 and 2014.
The losses could have been worse had the Comptroller and Auditor General Mildred Chiri combed through the finances for ZESA Holdings and the Zimbabwe United Passenger Company, which,among others, have gained notoriety for bleeding the fiscus.
Government runs about 105 public enterprises all of which are in bad shape.
In her analysis of the financial statements of 23 State enterprises audited between 2012 and 2014, Chiri gave a dim view of their state of affairs.
All the 23 parastatals suffered heavy losses in the period under review, which means that they have become liabilities of the taxpayer. When firing from all cylinders, these enterprises can contribute up to 40 percent of the country’s Gross Domestic Product (GDP).
They are also meant to lessen government’s fiscal burdens by contributing to employment creation, revenue generation through dividends/taxes and economic growth as measured by GDP.
Instead, these parastatals have turned into black holes and havens for vices such as corruption, nepotism and maladministration.
The Civil Aviation Authority of Zimbabwe (CAAZ) is one such parastatal which is belly up. In 2012, its current liabilities exceeded current assets by about US$156 million.
In addition, the authority which manages all the airports, incurred a net loss amounting to about US$15 million for the year ended December 31, 2013, down from about US$24 million in 2012.
The cumulative loss rose from about US$98 million in 2012 to about US$113 million in 2013, representing a 15 percent increase. The State granary, the Grain Marketing Board (GMB), is in an equally precarious state.
It posted a loss of about US$51 million during the year ended December 31, 2014 from nearly US$1,4 million in 2013.
“This condition, along with other matters, indicates the existence of a material uncertainty which may cast significant doubt on the board’s ability to continue as a going concern,” said Chiri, the Comptroller and Auditor -General.
She also noted that the National Railways of Zimbabwe was in a net current liability position of about US$131 million during the year to ended December 31, 2014, when it fell to a US$31, 6 million loss.
The US$31,6 million loss for the rail operator was a significant improvement from a loss of US$49, 1 million in 2013.
The Zimbabwe Mining Development Corporation (ZMDC)’s working capital position was also deteriorating, and there was material uncertainty in its ability to continue as a going concern.
ZMDC incurred a loss before tax of about US$26 million for the year ended December 31, 2013 from a profit of US$73 million in 2012.
Its current liabilities exceeded its current assets.
“These conditions along with other matters…indicate the existence of material uncertainty that may cast significant doubt about the ability of the group to continue as a going concern,” the report said.
It said Mbada Diamonds, one of ZMDC’s joint venture operations, posted a US$50 million loss during the period under review, after posting US$56 million profit during the full-year to December 31, 2012.
Apparently, ZMDC is currently working towards resuscitating SMM Holdings, once the world’s sixth largest asbestos producer.
At the time of the audit, the corporation had invested a cumulative US$17 million into SMM Holdings.
All the 23 companies audited by Chiri revealed a sustained diminution of shareholder value, as they battled to shake off a ruthless liquidity crisis that has rocked the markets.
Consistent bailouts through the fiscus have kept these State firms afloat although some of them are now struggling to dispense salaries to their employees.
The continued dolling out of public funds into these enterprises has created a culture of complacence among public servants, leading to abuse of funds.
Here are the loss positions for the respective 23 State firms between 2012 and 2014:
CAAZ US$15m loss (2013)
US$$24 loss (2012)
GMB US$51m loss (2014)
US$1,4m loss (2013)
The National Railways of Zim US$32m loss (2014)
US$49m loss (2013)
ZMDC US$27m loss (2013)
Nat. Radiation Authority of Zim US$395 196 loss (2014)
Mbada Diamonds US$50m loss (2013)
Marange Resources $1, 5m loss (2014)
Powertel US$1,2m loss (2014)
$164 558 loss (2013)
Zimpost US$1,5m loss (2012)
US$4m loss (2011)
Courier Connect US$27 500 loss (2012)
US$207 000 loss (2013)
Agribank US$9m loss (2014)
US$5,6m loss (2013)
Hwange US$30,9m loss (2013)
US$37m loss (2014)
Zesa Enterprises US$7m loss (2014)
ZARNet US$290 000 loss (2013)
Jiang Mining Private Ltd US$28,4m loss (2013)
Capital Bank US$60m Cumulative loss (2012/13)
CSC US$10m loss (2012)
NetOne US$4,8m loss (2013)
US$5,9m loss (2012)
National Arts Council US$146 280 loss (2013)
Zim National Family Planning Co US$2m loss (2014)
US$1,6m loss (2013)
US$1,9m loss (2012)
Ingutsheni Central Hospital US$1m deficit (2013)
United Bulawayo Hospital US$5m deficit (2013)
ZIA US$28 400 deficit (2013)
US$206 000 deficit (2012)
US$469 million total