PARASTATALS continue to perform dismally with the majority of state-controlled entities making losses amounting to millions of US dollars in 2011 due to undercapitalisation, high overheads and lack of customer confidence.
Report by Brian Chitemba
According to a report presented to cabinet recently by State Enterprises and Parastatals minister Gorden Moyo, the companies were struggling to perform because of cash-flow problems, inability to attract investors and access lines of credit due to unattractive balance sheets.
Parastatals which recorded huge losses include the National Railways of Zimbabwe (NRZ), Grain Marketing Board (GMB), Industrial Development Corporation (IDC) and TelOne, while those performing well only managed to make marginal profits.
The report showed the NRZ recorded revenue of US$91,6 million in 2011, representing a 17% increase from US$78,4 million in 2010. But of the revenue, more than US$45 million was gobbled up by administrative and general expenses while finance costs were US$4,4 million.
NRZ, which requires over US$2 billion to resuscitate operations, recorded a loss before tax of over US$60 million with low capacity utilisation, high overheads and operational inefficiencies cited for poor performance.
“The available number and state of locomotives, wagons, coaches and other critical equipment is insufficient to meet the demands of the productive sectors of the economy,” reads the report.
The report revealed GMB has not posted a profit in the past decade due to sub-economic prices the company was charging which were not supported by a corresponding subsidy.
The parastatal’s 2010/11 first quarter management accounts show the value of assets amounts to US$150,7 million compared to total liabilities of US$19,9 million, indicating the firm was technically solvent but sits on a huge asset base comprising properties, plant and equipment which cannot be converted to cash.
“Sub-economic prices charged by the GMB translated into disinvestment resulting in inadequate working capital. The introduction of the multi-currency system worsened the situation as no additional capital was injected into the GMB,” the report reads.
GMB’s poor performance was attributed to undercapitalisation, lack of logistics fleet to collect grain and lack of lines of credit.
Although fixed telephone operator, TelOne realised total revenue of US$158,9 million in 2011, the company still recorded a US$7,5 million loss.
The company is failing to perform due to a US$285 million debt inherited from the disbanded Post and Telecommunications Corporation, while an outdated billing system compounded the situation. Some of the major problems facing TelOne are shortage of skilled human capital, particularly switching technicians for both analogue and digital systems while power outages affect the uptime of exchanges countrywide. Obsolete equipment is also a problem.
IDC recorded US$153,3 million from the sale of group products while gross profit stood at US$32 million and after-tax losses were at US$10,9 million in 2011.
Agribank struggled throughout 2011 due to lack of liquidity to enable it to underwrite meaningful business and generate positive earnings.
The State Enterprises and Parastatals ministry said recovery of parastatals was premised on good corporate governance and restructuring under the framework adopted in 2010.