HomePoliticsCabinet approves parastatal reforms

Cabinet approves parastatal reforms

CABINET on Tuesday approved a raft of proposals by Minister of State Enterprises and Parastatals Gorden Moyo which will pave the way for sweeping reforms at the mostly dysfunctional public entities which are either technically insolvent or facing collapse.

Moyo yesterday confirmed approval of a number of issues which he had presented to cabinet to overhaul the public entities.
“We have 76 state enterprises and we are currently working with them to deal with a number of issues which need urgent attention,” Moyo said. “Cabinet on Tuesday approved our proposals to address issues related to performance of those public entities, their corporate governance, debts and restructuring programmes.”

Moyo had made proposals on corporate governance and performance at state enterprises and parastatals to cabinet for consideration and this was approved.
Some of the approved issues related to the board of directors, appointment of substantive chief executive officers, board fees and sitting allowances, remuneration of CEOs, financial reporting and annual general meetings, staff complement and restructuring. The need for state companies to adhere to procedures when entering into joint ventures and strategic partnerships was also approved.

Moyo has been pulling out all the stops to reform state enterprises which have been bedevilled by mismanagement, incompetence, corruption and debt. The public entities have been a huge burden on the taxpayers and have been failing to deliver reliable and quality services.

Even basics such as water and electricity, as well as education, health and transport are a problem mainly because of the failure of state companies to deliver.

Moyo has been holding meetings with state enterprises and parastatal boards and CEOs to discuss ways of addressing serious problems facing the public entities.

So far the minister has met with management at Grain Marketing Board, Pig Industry Board, Zupco, Industrial Development Corporation, Agricultural Rural Development Authority, Agribank, National Social Security Authority, TelOne, Potraz, Zimbabwe Mining Development Corporation, Zimbabwe National Road Authority, Rural Electrification Agency and National Parks.

The issues discussed with the heads of parastatals related to performance, corporate governance, restructuring and debt.
Moyo yesterday met with the ambassadors of South Africa, Brazil and India to “compare notes and share experiences” on parastatal reforms and management.

The minister and the ambassadors’ discussion focused on experiences of reforming state-owned enterprises, areas of cooperation, learning tours and strategic partnerships.
Moyo is also soon expected to meet officials from the U
nited Nations Development Programme and Britain’s Department for International Development. The issues which would be discussed include challenges facing state enterprises and parastatals, restructuring of public entities and technical assistance.
There are concerns that some state enterprises such as ZMDC enter into joint ventures and strategic partnerships without following due process. This sort of behaviour has resulted in government being prejudiced in terms of equity and revenue, while individuals enriched themselves from public assets at the expense of the nation.

ZMDC is particularly in the spotlight after it entered into joint ventures with South African companies to mine diamonds at Chiadzwa without following due process. This resulted in the formation of Mbada Diamonds and Canadile which are at the centre of controversy over diamonds mining. The joint ventures were established without transparency and hence lack of accountability in their operations.

The proposed restructuring process requires that a responsible minister –– liaising with the Minister of State Enterprises and Parastatals –– presents a proposal to the inter-ministerial committee on commercialisation and privatisation of parastatals before it is approved by cabinet.

Line ministers have now been told to ensure that due process, as directed by cabinet, in the restructuring of state enterprises is complied with.
In his recent mid-term fiscal policy statement, Finance minister Tendai Biti said government was intensifying its programme to rationalise state enterprises.

“Government has categorised public entities into three broad categories, namely those to be commercialised, those to be privatised and those to be restructured,” Biti said.

“The Ministry of State Enterprises and Parastatals will be required to produce, working with line ministries, case-by-case time-framed implementation strategies for commercialisation and privatisation during the last half of the year.”

Biti said public utilities still faced a number of challenges, notwithstanding the opportunities brought in by the new economic environment.
In line with cabinet guidelines over the deployment of adequate revenue collections towards service delivery and development, public entities including local authorities, would now be required to observe the 30:70 ratio.

Under this requirement, particularly with regards to Zesa, local authorities and Zinwa, at least 25% of the revenue collected would have to be earmarked for infrastructure maintenance and rehabilitation programmes.

“The efficiency, competitiveness and effectiveness of most public utilities is being compromised mainly by under-capitalisation,” Biti said.
“Given resource constraints by government to recapitalise its parastatals, the focus will be on attracting private capital through speeding up privatisation as well as public private partnership models.”

Moyo said it was worrying that some state enterprises have been operating without boards, some boards take time to be appointed and lack requisite skills, while some people sit on too many boards.

He said there was need to appoint substantive CEOs, ensure board fees and sitting allowances were properly approved by ministers and salaries for heads of state entities were rationalised and approved by ministers. State enterprises would now be required to meet their financial reporting requirements and regularly hold their annual general meetings. Staff at the parastatals also need to be rationalised, Moyo said.  

Dumisani Muleya

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