Zimbabwe: Parastatal Failure Unacceptable - VP

Herald Reporter

Government is forging ahead with its parastatal reform agenda aimed at bringing all the struggling entities back to profitability and has recorded early successes despite Covid-19 drawbacks, Vice President Constantino Chiwenga has said.

He said this during his presentation tilted; "The role of State Enterprises and Parastatals in enhancing national security and achievement of Vision 2030 discourse", at the Zimbabwe National Defence University's Course number 09/2020 in Harare yesterday.

VP Chiwenga said the failure of State enterprises and parastatals (SEPs) was unacceptable and highlighted some of the achievements made by the Second Republic in its reform agenda for State entities.

The reforms were mainly aimed at addressing the sharp decline of the entities' contribution to the Gross Domestic Product.

Historically, SEPs used to contribute at least 40 percent of Gross Domestic Product, but their overall contribution had drastically declined to around 10 percent.

The challenges bedevilling the SEPs included non-compliance with good corporate governance practices, under-capitalisation, indebtedness, failure to attract and retain skilled human capital and unsustainable employment costs.

Delays in board appointments and ever changing boards were also a challenge.

"The failure to perform by SEPs, for whatever reason, has telling consequence and implications, which would extend way beyond the parameters of any single entity and impact negatively on the entire economy and entire population," said VP Chiwenga.

"The current poor level of performance and service delivery by most of our SEPs is unacceptable. Any continuation of the status quo has negative implications on growth and development.

"SEPs are key enablers in increasing the country's per capita income, as enshrined in Vision 2030. They, therefore, play a leading role in achieving the targeted double digit economic growth.

"Buoyed by international best practices, vis-à-vis the painstaking governance nightmare bedevilling our SEPs sector, Government took a deliberate decision to review the SEPs ownership model, through a study funded by the African Development Bank.

"Following approval by Cabinet, implementation of the new ownership model will be one of the central SEPs reform to be implemented in 2021 fiscal year."

Government's Corporate Governance Unit would ensure that management teams in SEPs would be made to sign performance contracts as stipulated at law.

It was Government's expectation that compliance with the Public Entities Corporate Governance Act would be fully enforced within a reasonable period of time in order to address the current corporate governance malpractices," said VP Chiwenga.

VP Chiwenga highlighted some of the SEPs reform achievements and targets which included completion of the unbundling of the Grain Marketing Board, completion of the performance review of the Scientific Industrial Research and Development Centre (SIRDC), Allied Timbers, Agribank, Forestry Commission, Small to Medium Enterprise Development Corporation (SMEDCO) and the Infrastructure Development Bank of Zimbabwe.

Government was also working hard to restructure the foreign and local debts of Air Zimbabwe, with the airline now targeting the strategic deployment of its aircraft with a focus on domestic and regional routes, he said.

VP Chiwenga said a merger was planned for Petrotrade and Genesis, a subsidiary of the National Oil and Infrastructure Company, into fuel retailing business, as well as Central Mechanical Equipment Department (CMED) fuels.

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