Govt or­ders min­istries to im­me­di­ately craft turn­around strate­gies

Chronicle (Zimbabwe) - - National News/worldwide - Harare Bureau

GOV­ERN­MENT has or­dered all min­istries to im­me­di­ately craft turn­around strate­gies in line with its new thrust to re­tain vi­able State En­ter­prises and Paras­tatals (SEPs) and dis­solve those that are in­ef­fi­cient, Chief Sec­re­tary to the Of­fice of the Pres­i­dent and Cab­i­net Dr Misheck Sibanda said yes­ter­day.

The move fol­lows Pres­i­dent Mugabe’s call when he met cap­tains of in­dus­try and com­merce re­cently that some paras­tatals have be­come an al­ba­tross to the fis­cus, con­tin­u­ously re­quest­ing for fi­nance to fund their un­prof­itable op­er­a­tions.

In his key­note ad­dress dur­ing the Pub­lic and Pri­vate Di­a­logue on the Pub­lic En­ti­ties Cor­po­rate Gov­er­nance Bill in Harare yes­ter­day, Dr Sibanda said Cab­i­net di­rected him - as head of the pub­lic ser­vice - to en­sure that SEPs were re­struc­tured and op­er­ated vi­ably.

“I have since writ­ten a cir­cu­lar to all min­istries ask­ing all of you to pro­vide to Cab­i­net your sub­mis­sions on turn­around pro­grammes of your paras­tatals as well as whether the paras­tatals are do­ing what they were sup­posed to do, and if not, com­ing up with sug­ges­tions for the way for­ward.

“So this cir­cu­lar, if you have not re­ceived it, you will find it on your desks be­cause it was a chal­lenge to all of us,” said Dr Sibanda.

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.

Gov­ern­ment is de­ter­mined to trans­form the op­er­a­tions of SEPs, as part of a holis­tic agenda to turn around the econ­omy in line with Zim-As­set and the Ten Point Plan enun­ci­ated by Pres­i­dent Mugabe in 2015.

Zim­babwe has 107 SEPs, and about 85 are record­ing losses an­nu­ally, with per­for­mance fig­ures for 2015 show­ing a worse po­si­tion com­pared to two years ear­lier.

Man­agers at SEPs are draw­ing huge salaries and perks while the com­pa­nies they are pre­sid­ing over are per­form­ing badly for a sus­tained pe­riod of time.

In the 1990s, SEPs were con­tribut­ing 40 per­cent to Gross Do­mes­tic Prod­uct, but due to as­set strip­ping and un­der­per­for­mance, the con­tri­bu­tion has come down to about 11 per­cent from year 2000. Six SEPs are cur­rently in­sol­vent.

Dr Sibanda said the role of SEPs and the con­tri­bu­tion they were ex­pected to make to­wards eco­nomic growth were “con­sid­er­able”.

“With­out ef­fec­tive per­for­mance and ef­fi­cient ser­vice de­liv­ery by the sec­tor, most es­pe­cially the ma­jor­ity util­ity providers and com­mer­cial en­ter­prises, the am­bi­tious goals and de­vel­op­ment ob­jec­tives un­der Zim-As­set may re­main be­yond reach, cer­tainly within the ex­pected time­frames.

“For some time now, Gov­ern­ment has been seized with the need for re­form­ing and re­struc­tur­ing the SEP sec­tor, and, in par­al­lel, the need for con­sid­er­able tight­en­ing-up with re­gard to com­pli­ance or, more ac­cu­rately, non-com­pli­ance by much of this sec­tor with the ba­sic tenets of sound cor­po­rate gov­er­nance.

“It is deeply re­gret­table that pre­vi­ous ef­forts by Gov­ern­ment to ad­dress th­ese is­sues have been largely ig­nored by both the SEPs them­selves and, of equal con­cern, by line min­istries whose con­sti­tu­tional re­spon­si­bil­ity in­cludes ef­fec­tive su­per­vi­sion and over­sight of the State en­ti­ties which fall un­der their po­lit­i­cal and ad­min­is­tra­tive man­dates,” said Dr Sibanda.

He added that Cab­i­net de­ci­sions to re­struc­ture some key and strate­gic SEPs had taken “ex­ces­sively” long to be im­ple­mented while progress re­ports had ei­ther been er­rat­i­cally pro­duced or not at all.

About 22 SEPs have never pro­duced fi­nan­cial re­sults since 2009 while oth­ers were last au­dited in 2010, di­rectly con­tra­ven­ing good cor­po­rate gov­er­nance prin­ci­ples.

Dr Sibanda said the 2010 Cor­po­rate Gov­er­nance Frame­work for SEPs had been re­garded as a “doc­u­ment of sug­ges­tions”, in­stead of a set of rules to be re­li­giously fol­lowed by SEP man­agers.

SEP man­agers have also de­lib­er­ately flouted the 2014 Cab­i­net di­rec­tive on lev­els of re­mu­ner­a­tion.

The di­rec­tive came af­ter Premier Ser­vices Med­i­cal Aid So­ci­ety (PSMAS) salary scan­dal.

PSMAS chief ex­ec­u­tive of­fi­cer Dr Cuth­bert Dube, was re­port­edly earn­ing $230 000 with other head hon­chos also net­ting hu­mon­gous salaries at a time when ser­vice providers were turn­ing away the med­i­cal aid so­ci­ety’s mem­bers be­cause of non-pay­ment.

This saw Gov­ern­ment cob­bling a re­mu­ner­a­tion guide, which or­dered paras­tatal man­agers to take salaries of $6 000 and be­low, de­pend­ing on the vi­a­bil­ity of their en­ti­ties, but are re­port­edly still earn­ing up to $30 000.

Dr Sibanda said while bosses took ob­nox­ious salaries; fi­nan­cial and op­er­a­tional per­for­mance, cor­po­rate gov­er­nance com­pli­ance and gen­eral ser­vice de­liv­ery within SPEs con­tin­ued at “less than sat­is­fac­tory lev­els or have even de­te­ri­o­rated fur­ther”.

He said if any­one doubted Gov­ern­ment’s se­ri­ous­ness to “defini­tively” ad­dress the SEPs un­der­per­for­mance lev­els, “such doubt should have been com­pletely erad­i­cated by the very tar­geted and spe­cific” re­marks made on the is­sue by Pres­i­dent Mugabe when he met pri­vate sec­tor play­ers at State House last week.

Pri­vate sec­tor play­ers com­plained about the medi­ocre per­for­mance of many SEPs, es­pe­cially those man­dated with sup­ply­ing en­abling util­i­ties such as elec­tric­ity, wa­ter, telecom­mu­ni­ca­tions and trans­porta­tion in a con­sis­tent, ef­fi­cient and cost-ef­fec­tive man­ner.

The er­ratic and high cost of ser­vices con­tinue to make lo­cally pro­duced goods un­com­pet­i­tive on the ex­port mar­ket, ef­fec­tively re­vers­ing the gains made by Statu­tory In­stru­ment 64 of 2016. Min­is­ter of Pol­icy Co­or­di­na­tion and So­cio-Eco­nomic Ven­tures in the Of­fice of the Pres­i­dent Si­mon Khaya Moyo, who of­fi­cially opened the work­shop, said SEP bosses have “crossed the line” in terms of poor cor­po­rate gov­er­nance struc­tures. He said fail­ure would no longer be tol­er­ated at paras­tatals. “Ei­ther im­prove on per­for­mance and ser­vice de­liv­ery to the peo­ple of Zim­babwe, or face the con­se­quences,” said Min­is­ter Moyo.

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