Time to turn paras­tatals around

Chronicle (Zimbabwe) - - National News -

THE statis­tics are ex­tremely de­press­ing. Of the 107 State en­ter­prises and paras­tatals (SEPs) in the coun­try, 85 are record­ing losses an­nu­ally, with per­for­mance fig­ures for 2015 show­ing a worse po­si­tion com­pared to 2013. This means that only 22 are op­er­at­ing prof­itably. In the 1990s, they ac­counted for 40 per­cent of the Gross Do­mes­tic Prod­uct, but un­der­per­for­mance caused mainly by gross mis­man­age­ment and cor­rup­tion, has seen their con­tri­bu­tion plum­met­ing to 11 per­cent from year 2000.

At least 22 SEPs have never pro­duced fi­nan­cial re­sults since the in­tro­duc­tion of the multi-cur­rency sys­tem in 2009 while oth­ers were last au­dited seven years ago.

Good cor­po­rate gov­er­nance is an un­known in most SEPs. Cor­rup­tion, lazi­ness and cries for Gov­ern­ment hand­outs are their forte.

Pres­i­dent Mugabe is un­happy with their poor per­for­mance and the fact that they drain the econ­omy through sup­port they seek and ob­tain from the Gov­ern­ment.

“I can re­veal to you a Cab­i­net se­cret,” he told cap­tains of in­dus­try at an in­ter­face meet­ing in Harare last week.

“We were dis­cussing this sub­ject on Tues­day (and) I was very neg­a­tive about it and I could see the Min­is­ter of Fi­nance (Pa­trick Chi­na­masa) get­ting more and more de­pressed by my speech, which ended by, th­ese are non-per­form­ers, what we must do is to find coffins for them and bury them with the words ‘rest in peace’.

“So I said Min­is­ter of Fi­nance, well you can go your own way and they said im­por­tant ones must be kept, but the oth­ers we should get as many coffins as there are, those which have caused us im­mense ex­pen­di­ture, they should cer­tainly go.”

In Novem­ber 2010 he had the same mes­sage of un­hap­pi­ness.

“We have the story of deficits, deficits and deficits, fail­ure, fail­ure and fail­ure, loss, loss and loss and ap­peals to Gov­ern­ment to sal­vage sit­u­a­tions,” he said while of­fi­cially launch­ing the Cor­po­rate Gov­er­nance Frame­work (CGF) for State En­ter­prises and Paras­tatals. “In some sit­u­a­tions Gov­ern­ment would not be able to sal­vage you (SEPs) and in most cases Gov­ern­ment has come with as­sis­tance. It has come with some help but that can­not be ex­pected.”

Yes the eco­nomic chal­lenges are hit­ting ev­ery­one, SEPs in­cluded.

But a SEP that pays its se­nior staff an av­er­age of $50 000 monthly, can­not ac­count for its mul­ti­mil­lion dol­lar as­sets, doesn’t col­lect debts owed to it and al­lows it­self to drown in ef­fi­cien­cies does not de­serve our sup­port. In the pri­vate sec­tor such fac­tors re­sult in a com­pany col­laps­ing with no cheap res­cue pack­ages com­ing their way. The im­pli­ca­tions must be the same with SEPs, as the Pres­i­dent said.

Zis­cos­teel, Cold Stor­age Com­pany, Na­tional Rail­ways of Zim­babwe, Air Zim­babwe, Grain Mar­ket­ing Board, NetOne and Zupco are some of the un­der­per­form­ing paras­tatals.

To re­vive some of them, the Gov­ern­ment is, among other ini­tia­tives, tak­ing over their debts. The NRZ debt is $384 mil­lion, the Air Zim­babwe’s is $334 mil­lion, the Civil Avi­a­tion Au­thor­ity of Zim­babwe’s was $240 mil­lion in July, and Zis­cos­teel’s is $380 mil­lion while Hwange Col­liery Com­pany Limited’s was $300 mil­lion by May.

The cu­mu­la­tive debt that the Gov­ern­ment is set to as­sume works out to at least $1,6 bil­lion based on the fore­go­ing SEPs. That is a mas­sive for­tune that our fis­cus that is al­ready re­source-con­strained must and can­not bear.

As the Pres­i­dent said, this can­not be al­lowed to con­tinue. SEPs that are be­yond re­pair should just be al­lowed to go. It is pru­dent to do so. Those that are in chal­lenges but are strate­gic should be the lucky ones de­serv­ing Gov­ern­ment sup­port.

We re­port else­where in this edi­tion that the Gov­ern­ment has or­dered min­istries to draft turn­around strate­gies in line with its drive to re­tain prof­itable SEPs and shut down loss mak­ers.

Speak­ing at Pub­lic and Pri­vate Di­a­logue on the Pub­lic En­ti­ties Cor­po­rate Gov­er­nance Bill in Harare yes­ter­day, Chief Sec­re­tary to the Pres­i­dent and Cab­i­net, Dr Misheck Sibanda said Cab­i­net had di­rected him to en­sure that SEPs were re­struc­tured and op­er­ated vi­ably.

He said the Min­istry of Fi­nance, through the Ac­coun­tant Gen­eral’s depart­ment, the State En­ter­prises Re­struc­tur­ing Agency (Sera) and the Cor­po­rate Gov­er­nance Unit in the Of­fice of the Pres­i­dent, would as­sist min­istries in craft­ing their turn­around plans be­fore sub­mit­ting to the spe­cific Cab­i­net com­mit­tee deal­ing with paras­tatal re­forms. With­out ef­fec­tive per­for­mance and ef­fi­cient ser­vice de­liv­ery by SEPs, he said, the am­bi­tious goals and de­vel­op­ment ob­jec­tives un­der Zim-As­set may re­main be­yond reach.

We re­gret that paras­tatals have been an al­ba­tross on our col­lec­tive neck for far too long and that the Gov­ern­ment has de­clared that loss mak­ing ones would be dis­solved but the threats haven’t been fol­lowed through. This ap­pears to have em­bold­ened the SEP heads to con­tinue with their busi­ness-asusual ap­proach, rather loot­ing-as-usual ap­proach. The time for that to end is now. Min­istries and paras­tatal heads should ex­pe­di­tiously craft the plans as di­rected and sub­mit them to Cab­i­net for con­sid­er­a­tion. It is ob­vi­ous that Cab­i­net takes this is­sue very se­ri­ously af­ter its chair, who is none other than the Pres­i­dent has ex­pressed un­hap­pi­ness at SEPs’ un­der­per­for­mance and de­manded cor­rec­tive ac­tion.

There­fore, a speedy as­sess­ment of the turn­around plans is an­tic­i­pated so that they are ex­e­cuted ac­cord­ingly for the SEPs to get back to life and for the en­tire econ­omy to ben­e­fit.

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