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Minister Wants State Enterprises Restructured

ZIMBABWE’S State Enterprises minister on Wednesday called for quickly finding investment partners for some state companies to help stem decades of losses and rebuild the shattered economy.

Zimbabwe is trying to recover from a devastating economic crisis that was marked by the world’s highest inflation rate, shortages of foreign currency and the closure of companies, which pushed unemployment past 90%.

State enterprises have been key in the provision of affordable services such as water, transport and electricity, but low tariffs have seen the companies recording losses and racking up huge debts of more than US$2 billion.

Minister of State Enterprises and Parastatals Gabuza Joel Gabbuza said most of the companies, like electricity utility Zesa Holdings, transport entity National Railways of Zimbabwe, Air Zimbabwe and state broadcaster Zimbabwe Broadcasting Holdings were operating at between 8-20% capacity.

The government wholly owns and has substantial shares in 64 entities, Gabbuza said.

“One thing that we have said is needed is the need to immediately restructure (and) very soon we will be presenting (proposals) to cabinet on what needs to be done for about 10 of them,” Gabbuza told Reuters in an interview.

“The restructuring will be in the form of identifying partners, bringing in partners who will bring in capital investment. There will be no more government money so for some parastatals we have to re-organise their tariff structures.”

Economic Planning minister Elton Mangoma had earlier said despite the government’s urgent need to raise funds, there would be no sell-off of underperforming state enterprises because a global economic downturn meant assets would be sold cheaply.

But Gabbuza said that would not stop his ministry recommending the sell-off, arguing that they were a huge burden on the treasury.

In the past five years, the companies have been propped up by the central bank with Air Zimbabwe gobbling up US$2 million every week.

Gabbuza said his ministry was preparing a uniform governance code to be used by all parastatals, which would include performance-based contracts for senior management.

Critics say most of the parastatals have been run-down through mismanagement by political appointees while President Robert Mugabe’s past governments have been reluctant to sell off shareholding in the companies.

Zimbabwe’s government in 2006 raised hope it was moving towards privatising state firms when it clinched a US$400 million deal allowing Indian steel concern Global Steel to manage its giant Zimbabwe Iron and Steel Company (Ziscosteel), only for the deal to collapse within months.

Ziscosteel used to be the largest integrated mining steelworks in the region and was cornerstone for the survival of the then white Rhodesian government before independence in 1980.

“The interest for some of these parastatals are very high. Certainly we are receiving unsolicited bids from in and outside the country now,” Gabbuza said.

“The fact that an investor can now generate forex (foreign exchange) inside Zimbabwe is one thing that is attracting many people. We are actually moving very slowly for them.”

Zimbabwe has since the start of the year allowed the use of multiple currencies, effectively replacing its worthless Zimbabwe dollar and officials say it will only be re-introduced once the country starts generating enough money to support it. — Reuters.

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