Urgent roadmap for parastatal reform required

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THE Auditor-General Mildred Chiri has made shocking findings that 23 state-owned enterprises and parastatals are on the verge of collapse due to poor corporate governance, corruption, political interference and mismanagement, among other irregularities.

Candid Comment Faith Zaba
fzaba@zimind.co.zw

The state of these entities reflects the general decay of the struggling and bankrupt state-run enterprises, which are supposed to be the country’s drivers of economic progression. In a report for the financial year ended December 31, 2017 on State Enterprises and Parastatals, Chiri said gross corruption and mismanagement at the firms, among them, struggling airline Air Zimbabwe (AirZim), Zesa Holdings Private Limited and its subsidiaries such as Zimbabwe Electricity Transmission and Distribution Company, Zimbabwe Power Company, as well as the National Railways of Zimbabwe (NRZ), have contributed to their near collapse.

Other parastatals such as the Zimbabwe National Road Administration (Zinara), Grain Marketing Board (GMB) and Civil Aviation Authority of Zimbabwe are also on shaky ground. In the report, Chiri said most of the audited parastatals are technically insolvent and tottering on the brink of collapse. The majority are saddled with enormous debt overhangs. Gross mismanagement, weak corporate governance and corruption have ruined most of them.

One of the critical reforms that government has to urgently confront head-on is the restructuring and commercialisation of strategic state-run entities such NRZ, AirZim, GMB, Zimbabwe National Water Authority and Zesa, to ensure profitability, competency and professionalism. It also needs to dispose of perennially loss-making parastatals, which are haemorrhaging state coffers.

Last year, government invited bids from the private sector to buy stakes in 24 state-run organisations, which have become a drain on the fiscus after decades of mismanagement and plunder, largely by government stalwarts.

Finance minister Mthuli Ncube must, in his budget statement on November 22, clearly state a plan of action to put to finality the issue of loss-making parastatals. Government had given under-performing state-owned enterprises it has earmarked for disposal — among them NetOne, TelOne and People’s Own Savings Bank — between six and nine months to conclude privatisation deals.

Government cannot continue spending hundreds of millions of dollars supporting them. Over the past two years, government spent US$500 million backing the ailing enterprises. It is hard to imagine that parastatals used to contribute 40% to the economy, but now contribute a meagre 2%.

Ncube must walk the talk by moving beyond reform rhetoric and start commercialising and privatising these companies. Ncube said government plans to privatise at least 11 enterprises as a matter of urgency.

As long as issues of poor work ethic, overstaying and intra-swapping of parastatal leadership, lack of leadership capacity to steer the parastatals out of the doldrums, as well as corruption, remain unaddressed, they will continue to drain public funds.

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