Online Reporter
Business Reporter
THE Ministry of Finance, Economic Development and Investment Promotion intends to settle debts owed to State-owned enterprises (SOEs) to ease their working capital constraints and restore viability.
The Government has already developed a comprehensive strategy to clear outstanding arrears, in collaboration with the World Bank, which provided a consultant to support the initiative.
All ministries and SOEs are now required to submit their arrears stock, in line with the implementation strategy.
It is believed this would allow for a more coordinated approach to debt management.
Treasury has since indicated that it is committed to providing funds to ensure the SOEs operate effectively.
While addressing stakeholders at the TelOne annual general meeting on Monday, Ministry of Finance, Economic Development and Investment Promotion principal accountant Ms Portia Hamadziripi said the Government had come up with a debt management strategy to contain the ballooning debt owed to ministries and SOEs.
“In terms of the debts that we owe to TelOne and other SOEs, we came up with an arrears stock clearance strategy that we are working on, together with the World Bank, which has already given us a consultant to work with. According to the framework, all the ministries and SOEs will submit their stock of arrears so that we are able to see the debts that we have in a holistic approach, case by case,” said Ms Hamadziripi.
“We had a workshop where all the SOEs and ministries presented their stock of arrears. The numbers are quite huge. We have also incorporated the use of auditors so that line ministries and SOEs give us a clear report on the exact amount of money that we owe instead of just paying.”
The payments, she added, would ensure that line ministries pay for key services.
“But we are trying to give some money to line ministries so that whatever we give to them they will be able to pay their utilities, which include TelOne, Zesa and other key services that were delivered to them. So, the situation currently is a bit tight, but we are trying as much as possible to have what we can and be able to share with you.”
At Monday’s meeting, TelOne indicated that it was facing significant financial challenges that have severely impacted the company’s working capital and its ability to fund essential capital expenditures.
As of December 31, 2024, the Government owed TelOne ZiG325,3 million, representing a significant increase from ZWL128,8 billion (restated to ZiG51,6 million) at the end of 2023.
By June 30 this year, the Government’s debt had ballooned to ZiG517,2 million (about US$19,2 million).
“Liquidity shortages persisted throughout the year, resulting in increased counterparty risks, which negatively constrained the company’s working capital and its ability to fund its capital expenditure,” said TelOne chief executive officer Mr Lawrence Nkala.
“However, TelOne is actively engaging with the Government of Zimbabwe to find timely solutions for settling these outstanding dues. The company is exploring various settlement options to mitigate the financial strain and ensure a more stable financial footing moving forward.”
Overall, TelOne is contending with legacy loans worth ZiG10,05 billion (US$389 million), which the company inherited from the Posts and Telecommunications Corporation (PTC).
The company’s net liability position stood at ZiG32,2 million as of December 31, 2024.
This has hindered its efforts to attract fresh capital required for network modernisation and digitalisation projects.
TelOne, through its shareholder Mutapa Investment Fund, continues to pursue the debt warehousing arrangement to free up its balance sheet, making it more attractive to investors.
In 2025, the company aims to capitalise on growing demand for telecommunications services by expanding its network infrastructure through intensified LTE and FTTH (fibre to the home) rollout.
This strategic move is expected to drive revenue growth and improve customer satisfaction by providing better service coverage and reliability.
Online Reporter