AfDB extends US $4,2m for parastatal reform

THE African Development Bank (AfDB), an Abidjan, Ivory Coast-based Pan African lender, has extended US$4,2 million to Zimbabwe to facilitate parastatal reforms under the Institutional Support for State Enterprise Reform and Delivery Project (ISERDP).

Government is determined to make state-owned enterprises (SOEs), which are largely viewed as key enablers to economic growth, efficient and effective.

It is believed that AfDB’s institutional support fund will help finance forensic audits for entities that are targeted for transformation. Zimbabwe has 91 SOEs, many of which are currently a drag on the fiscus.

In a statement released by the Ministry of Finance and Economic Development, Minister Patrick Chinamasa said, “The Government of Zimbabwe has received a grant (US$4,2 million) from the African Development Fund to finance the Institutional Support for State Enterprise Reform and Delivery Project (ISERDP).

“The principal objective of this project is to strengthen the result-based management system within Government and improve efficiency of the State Enterprises and Parastatals.

“The project specifically aims at supporting the Government of Zimbabwe in enhancing corporate governance compliance and delivery, and performance review of selected state enterprises, through technical assistance.”

Most parastatals are plagued by working capital challenges, ballooning wage bills and unsustainable legacy debts. Experts say there is need to corporatise, commercialise and unbundle struggling public entities. In 2015, Government launched an initiative to re-engineer SOEs by reducing costs to the fiscus, enhancing service delivery and improving accountability. The first phase is prioritising 10 enterprises that include Industrial Development Corporation of Zimbabwe (IDCZ), Zimbabwe National Water Authority (ZINWA), Civil Aviation Authority of Zimbabwe (Caaz), Agricultural and Rural Development Authority (Arda), Air Zimbabwe, Cold Storage Company (CSC), Grain Marketing Board (GMB), National Railways of Zimbabwe (NRZ), TelOne, Zimbabwe Iron and Steel Company, and Zimbabwe Power Corporation (ZPC).

Audits for GMB and CSC have so far been completed, while turnaround strategies for TelOne, Zinwa and IDCZ have been submitted to Cabinet for approval. Currently, strategic and technical partners for Air Zimbabwe and the NRZ are being sought.

There are also plans to unbundle Caaz into two distinct units - the commercial and regulatory entity. Agricultural concern, Arda, is in the process of forging joint venture partnerships with private sector companies. As part of Government plans to prop up the infrastructure and utility cluster – a key pillar of economic blueprint, Zim-Asset - the 2017 National Budget allocated more than US$188 million which will be complemented by additional resources from statutory funds, development partners and loan financing. Despite demonstrably positive results from privatisation, the process has over the years been bogged down by lack of funding and redtape. Dairibord was successfully privatised in June 1999. The milk processor has become one of the largest counters on the Zimbabwe Stock Exchange (ZSE).

Other companies that have successfully followed the same route are Cottco, CBZ Holdings, Rainbow Tourism Group and diversified financial services group, Zimre Holdings.