HomeLocal NewsCabinet puts state firms up for sale

Cabinet puts state firms up for sale


CABINET on Tuesday resolved to finalise the privatisation of perennial loss-making parastatals and state-owned enterprises by year-end after Finance minister Mthuli Ncube reported that it had become unsustainable for the government to continue funding their operations.

Ncube, who, since his appointment in 2018 has been pushing an aspersed neo-liberal agenda placing emphasis on private institutions and non-government interference in business, initially gave the companies a December 2019 deadline by which time they were supposed to have privatised.

However, nine months after the deadline, they all continue to be a drain to the fiscus. Only the People’s Own Savings Bank (POSB) has been privatised.

Sources said Ncube, at the weekly high-level meeting, reported that none of the companies were performing well and had only become citadels of corruption.

He reportedly listed the Zimbabwe National Roads Administration (Zinara), Zesa Holdings, Air Zimbabwe, the National Railways of Zimbabwe (NRZ), the Grain Marketing Board, NetOne and the Civil Aviation Authority of Zimbabwe (Caaz) as some of the most corrupt organisations as indicated in successive audit reports.

President Emmerson Mnangagwa and his two deputies, Kembo Mohadi and Constantino Chiwenga, reportedly supported the idea as well as other ministers.

“He reported that most of the parastatals are not doing well and are not following regulations as stated in the Public Finance Management Act. He said they are hiding information and misrepresenting issues,” a senior government official said.

“He added that these companies are siphoning money from the Treasury. Government ends up supporting them financially. He listed all of them which are not performing. He said most of them actually have not had audited accounts for years and years while the few that have had them are always outdated. So it was agreed that things are not well at all and action must be taken urgently,” the source said.

Apart from Mnangagwa and his deputies, Ncube’s proposals also got support from three ministers — Ministers of State for Presidential Affairs Joram Gumbo, Defence Oppah Muchinguri-Kashiri and Home Affairs Kazembe Kazembe.

“It was a not surprising that only those three supported the idea of privatisation since they fundamentally do no superintend over too many parastatals. The rest of them with parastatals under their portfolios opted to remain silent,” the source said.

“So the agreement was that they should be privatised by year-end except for a few which are really Strategic, the likes of NetOne, Air Zimbabwe, Caaz and GMB. It will, however, not be easy to wean them off given their overreliance on Treasury and how previous such efforts have failed to yield results,” an official said.

Zimbabwe has 107 state-owned enterprises and parastatals, which used to contribute 40% to the economy, but poor management, corruption and weak governance systems have seen them run down with contribution to the economy plummeting to just 2%.

In 2016 alone, about 38 of these firms ran cumulative losses of US$270 million, indicating poor management, weak corporate governance and deep-seated corruption in the public enterprises.

As of July 2018, the state enterprises and parastatals owed the taxman US$491 million.

But as part of Ncube’s economic reform agenda, government announced a restructuring exercise of up to 47 state enterprises and parastatals in 2018 arguing it would improve efficiencies and reduce reliance on Treasury.

According to Nucbe’s plan, some of them will be partially privatised through the engagement of strategic partners and/or listing on the Zimbabwe Stock Exchange, while others will be merged, fully privatised and/or even liquidated.

Ncube recently revealed that government spends around US$250 million supporting struggling parastatals annually.

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