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Government has come up with strategies to ensure state enterprises improve efficiencies and good governance as it seeks to return them to their peak 1990s performance when they contributed over 40 percent to the country’s Gross Domestic Product (GDP), a cabinet Minister said on Wednesday.
Some of the strategies was the enactment and implementation of measures in the Public Entities Corporate Governance Act, which came into force last year and the setting up of rankings in terms of performance, starting next year.
The over 70 state enterprises and parastatals (SEPs) operate in over 50 percent of sectors of the Zimbabwean economy and their performance is a key enabler in ensuring economic prosperity.
Finance and Economic Development Minister, Professor Mthuli Ncube said the contribution of the public enterprises to GDP had slumped by over 30 percentage points over the years due to rot which was allowed to creep in.
“As the years went by, the public entities performance dropped to such an extent that as of now, they are contributing less than 10 percent to GDP,” Ncube said at a belated launch of the Public Entities Corporate Governance Act.
“Studies conducted have shown that misgovernance took over and some of the mischief led to the poor performance of the entities.”
Improvement in the performance of the entities was key in ensuring that Zimbabwe attained its vision of becoming an upper middle income country by 2030, with an empowered population.
“The vision cannot be attained if public entities do not play their part as enablers of economic growth,” he said.
“Our economic prosperity is to a larger extent dependent on the capacity of our SEPs.”
Chief secretary to the President and Cabinet, Dr Misheck Sibanda said the Public Entities Corporate Goverance Act was introduced as a “reform initiative aimed at ensuring that SEPs, which had been operating sub-optimally, were able to adequately fulfill their mandate.
“Most of the public entities had become increasingly burdensome to the economy and the national fiscus, often constantly seeking government financial bailouts at the expense of other socio-economic development obligations,” he said.
The reform initiatives are being supported by the World Bank under the development partners funded Zimbabwe Reconstruction Fund.
State enterprises, among them Air Zimbabwe, the National Railways of Zimbabwe and the Cold Storage Company make up the long list of struggling entities whose performance have over the years become a drag on the economy.
Ncube said well run SEPs would easily attract investment and raise funds for their operations, while calling on the government not to take a “laid back approach” in enforcing performance of the entities.
World Bank governance expert, Nicola Smithers emphasised the importance of the separation of role between the government as shareholder in SEPs, boards and management if the enterprises were to be turned around.
“The act is a critical foundation but implementation is critical to make it a reality,” she said. – New Ziana
Bongani Ndlovu