‘Relook at state-owned enterprises’
ZIMBABWE has a total of 107 SOEs which currently contribute less than 2 percent of the country’s Gross Domestic Product (GDP).
In the mid-1990s, SEOs accounted for more than 40 percent of the country’s GDP and employed thousands of employees.
Poor corporate governance in the running of state entities has contributed to their declining performance and escalation of debts.
As of July 2021, SOEs owed Zimbabwe Revenue Authority (ZIMRA) over US$491 million. Currently, government is making frantic efforts to offload underperforming state entities but its efforts are being thwarted by high consultancy fees, bureaucracy, and a heavy debt overhang that chases away potential investors.
Chartered Accountant Marcia Chapwanya said, “The underlying corporate governance challenges are not just technical or implementation problems, but more often about the problem of paradigms governing approaches and the orientation of corporate governance systems, in which are deeply ingrained poor work ethics and business morals.”
She said as a result, there is less commitment from those charged with corporate governance to implement legislation and for shareholders to hold directors accountable for their actions.
There is need to rationalise board appointments, as some people have become career directors whose interest is primarily in the emoluments that come with the board seat.
Minister of State for Presidential Affairs in charge of Implementation and Monitoring, Dr Joram Gumbo, in an interview with Zimpapers Television Network (ZTN) said the boards are selected on merit and are monitored vigorously. “You just do not change boards willy nilly, there should be a reason but what happens is that regarding any SOE, people with relevant knowledge are the ones that are being interviewed and given the mandate to steer these enterprises,” Minister Gumbo said.
Consensus is there that the SOEs should perform at their highest as they should benefit the citizens as a whole and not individuals through corruption.
Minister Gumbo said, “The ideal thing is that enterprise is supposed to come up with the required outcome to benefit citizens as a whole, it is not for the minister but for the people to benefit from that SOE. Hence, it is important to get people of integrity and of diverse qualifications should be appointed in order for citizens to derive benefit from the enterprises.”
Despite the monitoring and implementation done by the Minister and his office, he said there is also oversight by parliament to identify underperforming enterprises that should be dealt with.
“At the end of the day, Parliament through its function of oversight will be able to supervise and interrogate activities of that enterprise, which is why we have some reports of underperforming SOEs. This is when we start to look at the management and the board itself,” Minister Gumbo concluded.
Multiple board sitting has also been blamed on the poor performance of these boards in steering the enterprises to a profitable position that benefits citizens and the country at large.
Corporate law expert Tinashe Nhemachena said, “Decision-making is compromised when sitting on many boards prevents one attending scheduled meetings or executing one’s mandate fully. The director’s effectiveness should be measured and evaluated regularly.”
Given the prevailing highly competitive operating environment characterised by value-realisation, good corporate governance has ceased to be just a buzz word spoken only when convenient. Worldwide questions are being asked by governments, shareholders, investors and taxpayers concerning issues of accountability, transparency, value addition, legitimacy
and the overall credibility of organisations.
“Lack of corporate governance makes a country’s landscape uneven. It may be affected by a number of factors, including socio-economic factors, morals and the level of corruption in the country. The biggest challenge being faced by professionals is how to balance good
corporate governance and the economic survival of the business,” Ms Chapwanya added.
At the end of the day, both the citizens and government are in agreement that SOE boards need to be monitored more and perpetrators need to be punished heavily to make them examples in the society.