ACTING Finance and Economic Development Minister, Walter Chidhakwa, has described State enterprises and parastatals boards as “visionless”, saying the majority of them lack foresight.
Chidhakwa said these directors behaved like politicians instead of directing and controlling policy, a situation that has led to losses. He said this continued to undermine economic recovery through perennial dependence on the fiscus.
He was speaking at a workshop for parastatal heads organised by his ministry and sponsored by the World Bank.
“Chairmen of State enterprises and parastatals boards…. are the people we should rely on. They have the responsibility to direct and control policy in State enterprises,” he said.
“Their role is not to manage day to day operations. But they are leaders. It’s about visioning the companies and being able to say, ‘should it exit because there is nothing, or should it remain in its current form, is its mandate right? Should it have the same mandate today in the current circumstances?’
“These are the questions that boards of directors should ask because they have to think about how to transform the organisation, think about the vision. If it means getting people out of the job, they must do that. They must do something significant.”
State enterprises and parastatals are grappling with high overheads, inter-parastatal debts, maladministration, under-capitalisation, corruption and lack of good corporate governance which have negatively impacted on their operations.
Chidhakwa said the State-owned enterprises had the potential to contribute 40 percent to the country’s economy but were now essentially draining it.
“Your are the representatives of the shareholder. I hope that you sit down with permanent secretaries and think about organisations entrusted to you. You should ask these questions and get answers.
“If I look at the State enterprises critically, I think we are at a stage where we should ask you why you don’t want to be technical people?
“Why do you want to be politicians yourselves? Sometimes you fall into the trap of saying we can’t make this recommendation. Leave us the politicians to carry the responsibility to say well, we hear you but it affects the communities in this manner.
“You are supposed to be factual. Say it as it is and then make the recommendations.”
Chidhakwa warned that government would no longer be funding State enterprises and parastatals without detailed information on the operations of the entities.
“State enterprises and parastatals make perennial losses and under normal circumstances require bailout from fiscus, consuming funds which would have otherwise been used in other areas. Zimbabwe cannot afford this kind of risk anymore. As you are aware, we have a large pool of parastatals and like any portfolio manager, I need to know how these are performing.
“Particularly, we need to know what income can we expect from these companies, what losses can we expect. We want to know the liabilities that we carry. But the problem is that government does not have up to date, complete information about these parastatals,” Chidhakwa said.
He indicated that continuously bailing out these firms was “not acceptable”.
“As (acting) Minister of Finance, I don’t have the intention to interfere in the day to day running of the State enterprises and parastatals but as a way of fiscal discipline, we should not continue to make transfers unless we have baseline data on those parastatals assets, liabilities, incomes and expenditures,” he said.
Government once came up with strategies to restructure and dispose shareholding in some State-owned enterprises, but has failed to implement these measures over the years.
Once, several entities were earmarked for restructuring or privatisation. These included the National Railways of Zimbabwe (NRZ), ZESA Holdings, Air Zimbabwe, Agriculture Development Bank of Zimbabwe, the Grain Marketing Board, ZIMRE Holdings Limited, POSB Bank, Zimbabwe Grain Bag, NetOne and TelOne.
NRZ requires in excess of US$2 billion to turnaround by replacing its old infrastructure, including railway tracks, telecommunication signals and wagons, which have outlived their lifespan.
Its resuscitation would increase the movement of goods by rail within Zimbabwe and in the region, earning significant revenue in the process and helping in efforts to grow the economy.
Air Zimbabwe has also been a chronic loss-maker.
Former energy minister, Dzikamai Mavhaire, in 2014 reversed the Electricity Amendment Act passed by Parliament during the inclusive government. The Act was meant to restructure ZESA and its units to make them profitable. The power utility was meant to be dissolved and the National Grid Services Company (NGSC) formed in its place, with the Zimbabwe Electricity Transmission and Distribution Company being unbundled and its transmission functions transferred to NGSC while the distribution functions were to go to a new company called Zimbabwe Distribution Company.
CSC, once the leading meat supplier in Zimbabwe and the region, including the European Union, is also facing collapse due to mismanagement, corruption and lack of innovation.
Chidhakwa called on the CSC to resume beef exports to support economic growth.
“CSC must be re-configured to be an export company of beef. Its job must be to go out there and look for beef markets everywhere in the world, and sell beef everywhere in the world. This is probably where it belongs given the quality of our beef and the natural nature of our meat. It is about thinking about what to do, no one is going to think for us.”
Chidhakwa said the increase in private abattoirs who offered cheap meat had affected the State-owned company which is currently choking from debts of up to US$30 million.
There were intentions to unbundle the company into three entities based in Masvingo, Bulawayo and Chinhoyi as part of efforts to make it viable.
CSC chief executive officer, Ngoni Chinogaramombe, last year told C&M that the move would make it easier for investors to finance the plan, given that the financial requirements in each of the areas would be minimal.
He also revealed that the parastatal was working towards increasing livestock at farm level so that more cattle were slaughtered at their abattoirs.
The parastatal, reportedly operating at less than 10 percent capacity, owns abattoirs in Bulawayo, Masvingo, Chinhoyi and Kadoma and several ranches across the country.
The majority of the abattoirs are currently derelict with only the Bulawayo unit functional.
The farms have a carrying capacity of 8 533 animals of which 7 741 are owned by tenants.
But, CSC is left with about 700 cattle on its farms across the country.
CSC used to be the largest meat processor on the continent, handling up to 150 000 tonnes of beef and associated by-products per year, raking in over US$50 million.
However, it has fallen on hard times owing to a myriad of challenges that include difficulty in raising adequate working capital, cattle disease outbreaks, decline in the commercial herd, huge debts and an aged transport fleet.
CSC stopped exporting beef in 2007 because of serious uncontrolled outbreaks of the foot and mouth disease.
The European Union stopped importing from the country after it failed to meet the international standards required when exporting beef.
Since the ban of beef exports, CSC has been on a financial free fall.
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