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Chipo Chaumba
State firms’ contribution to the country’s Gross Domestic Product, has plunged to below 10 percent from previous levels of 40 percent, on the back of serious corruption allegations, poor corporate governance tenants and weak revenue collection structures, Finance and Economic Development Minister Mthuli Ncube has said.
Minister Ncube revealed this on Wednesday on the occasion to officially launch the Public Entities Corporate Governance Act in Harare.
He said the new dispensation is desirous of a return to the past where the entities had a firm foothold in the economy and as key economic enablers, they were supposed to contribute more than 40 percent to the GDP.
Minister Ncube said the envisaged thresholds (40 percent) would be achieved through enforcing the Public Entities Corporate Governance Act, which seeks to foster good corporate governance as well as curtail rampant corruption currently obtaining in these state firms.
“The background to this Act is that State Enterprises and Parastatals (SEPs), which are Government entities, operate in over 50 percent of the sectors of the economy,” said Minister Ncube. “They are in water, energy, infrastructure, transport and education amongst other sectors and they used to contribute over 40 percent to the country’s gross domestic product in the 1990s.
“As the years went by, the public entities performance dropped to such an extent that as of now, they are only contributing less than 10 percent to the GDP.
“Studies conducted showed that mis-governance took over and mischief led to the poor performance of the entities,” he said.
He said it was disturbing to note that there remains some remnants of state entities that are still resisting to embrace tenets of good cooperate governance, insisting on the old practices.
“The new dispensation of the Second Republic requires State Enterprises and Parastatals (SEPs), some of whom remain key enablers to business, as well as both domestic and foreign investment, to play a pivotal role towards the realisation of Vision 2030’s aspiration for an upper middle income economy and an empowered society,” he said.
There are about 107 parastatals in Zimbabwe across all sectors of the economy, but nearly all of them have been posting huge loss on the back of corruption, poor corporate governance, weak revenue collection structures among others.
The country is facing water challenges that have also impacted on industry operations, reduced power generation and poor transport infrastructure that have slowed movement of industrial goods and made them expensive.
In October last year Government gave under — performing enterprises and parastatals earmarked for disposal — among them NetOne, TelOne and People’s Own Savings Bank (POSB) — nine months to conclude privatisation deals.
Minister Ncube told delegates at Chatham House in London where he gave a presentation on the ongoing reforms in Zimbabwe that Government was serious about privatisation of SOEs.
He said Government was spending half a billion dollars supporting struggling SOEs and parastatals over the last two years, as the perennial loss-making entities continued to drain public funds.
However, since the directive was issued last year, not much has been said about the progress made so far on the identified parastatal earmarked for privatisation and Government continues to pump in millions into operations of these firms without meaningful returns.
Bongani Ndlovu