Parastatals reform gets major boost

Government is drawing down a $4,6 million African Development Bank grant to restructure eight State enterprises and parastatals (SEPs), a Government official has said.

The targeted SEPs are Agribank, the Infastructure Development Bank of Zimbabwe, the Small and Medium Enterprises Development Corporation, the Zimbabwe National Roads Administration, Allied Timbers, the Zimbabwe Electricity Distribution and Transmission Company, and the Scientific and Industrial Research and Development Centre.

$2,4 million will be used to engage independent consultants to undertake performance reviews, develop turn- around/reform strategies, and transaction advisory services.

To date, $250 000 has been used for staff development and purchasing equipment for the State Enterprises Restructuring Agency, and to finance a performance review of Allied Timbers. Secretary for Finance and Economic Development Mr Willard Manungo told The Sunday Mail that: “The objectives of the programme are to build capacity, with a view to strengthen the results-based management system within Government and improve efficiency of the State enterprises and parastatals.

“The project scope will include reviewing performance of eight selected State enterprises and parastatals and making appropriate recommendations for reforms; strengthening results-based management; and monitoring and evaluation and planning and budgeting, as well as undertaking programmes that enhance corporate governance compliance in SEPs.”

Processes to recruit consultants who will conduct performance reviews are underway.

Government received the AfDB grant in 2017 through the Institutional Support for State Enterprise Reform and Delivery Project, a three-year programme running until 2020.

In the 2018 National Budget, Finance Minister Patrick Chinamasa said Government would reform SEPs that exhibited potential. Those that cannot be rehabilitated will be privatised or closed.

The contribution of SEPs to the fiscus fell from 60 percent in 1996 to two percent in 2017.

Experts say reforming public entities will help attract FDI and generate foreign currency.

Economist Dr Gift Mugano last week said Government’s move to rope in technocrats to help shape the reform process was the right way to proceed.

“I am glad that Government is strategically reforming the parastatals and if correctly implemented, would help restore the economy. The fact that Government is seeking technical assistance and selecting frameworks that work before implementing is something that should be commended,” said Dr Mugano.

He added: “We would not want to have the same scenario that happened in Zambia where reforms which saw the privatisation of some parastatals made life very difficult for ordinary citizens.

“Institutions such as Zinara and ZEDTC are instrumental to the economy and to the lives ordinary citizens; thus, great caution must be taken during reforming.

“It is a good programme that will see transformation from the current status quo where State-owned enterprises draw funds from Treasury to a new order where the State-owned enterprises will contribute to the fiscus.”

A 2016 audit showed that 38 out of 93 SEPs incurred a combined $270 million loss due to weak corporate governance practices and ineffective control systems.

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