Government acts on parastatals
GOVERNMENT has set up two units to look into ailing State-owned enterprises, which have been hurting economic recovery through perennial dependence on the fiscus.
Finance Minister, Patrick Chinamasa, told the Financial Gazette’s Companies and Markets last week that these units will deal with gross mismanagement and corruption in the loss making entities.
“I have already set up two units in my ministry, one to analyse all financial statements of all public sector institutions. The other unit will follow up on all audit findings and recommendations done by the Auditor General,” he said.
Parastatals are grappling with high overheads, inter-parastatal debts, maladministration, under-capitalisation, corruption and lack of good corporate governance which have negatively impacted on their operations.
And yet these have the potential to contribute 40 percent to the country’s gross domestic product.
Instead, most parastatals have failed to make meaningful contribution to the economy and are essentially draining the fiscus.
Chinamasa said he was disappointed by the performance of State-owned institutions.
“I delayed taking action and did not want to act out of anger. We have been blamed for our failure to address the negative reports as far as the public sector is concerned. Now, I am happy to tell you that this is the time to tackle the issues and corrective measures are currently being implemented,” he said.
For several years, Auditor-General, Mildred Chiri, has presented damning reports on parastatals to Parliament, exposing the rot that has made it impossible for the country’s economy to grow.
She has even made recommendations to curb the problems but government did not act.
Government once came up with strategies to restructure and dispose shareholding in some State-owned enterprises, but has failed to implement these measures over the years.
Several entities were once earmarked for restructuring or privatisation.
These included the National Railways of Zimbabwe (NRZ), ZESA Holdings, Air Zimbabwe, Agricultural Bank of Zimbabwe, the Grain Marketing Board, POSB, Zimbabwe Grain Bag, NetOne and TelOne.
NRZ requires in excess of US$2 billion to turnaround by replacing its old infrastructure, including railway tracks, telecommunication signals and wagons, which have outlived their lifespan.
Its resuscitation would increase the movement of goods by rail within Zimbabwe and in the region, earning significant revenue in the process and helping in efforts to grow the economy.
Air Zimbabwe has also been a chronic loss-maker.
Former energy minister, Dzikamai Mavhaire, in 2014 reversed the Electricity Amendment Act passed by Parliament during the inclusive government.
The Act was meant to restructure ZESA and its units to make them profitable.
The power utility, was meant to be dissolved and the National Grid Services Company (NGSC) formed in its place, with the Zimbabwe Electricity and Transmission Distribution Company being unbundled and its transmission functions transferred to NGSC while the distribution functions were to go to a new company called Zimbabwe Distribution Company.
Cold Storage Company, once the leading meat supplier in Zimbabwe and the region, including to the European Union, is also facing collapse due to mismanagement, corruption and lack of innovation.
Privatisation of State-owned enterprises has failed to materialise despite several promises by government to accelerate the process in order to stem the drain on the fiscus.
Only a few firms have been privatised since Zimbabwe liberalised its economy in the 1990s.
These include Dairibord Holdings Limited, which was the first to be privatised in June 1999, from a portfolio of about 40 public enterprises back then.
The counter has since then notched good results.
Other entities to emerge out of the privatisation programme include Cottco, CBZ Holdings, Rainbow Tourism Group and the diversified financial services group, ZimRe Holdings Limited.
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