AfDB avails US$5,32 million grant

THE African Development Bank (AfDB) has availed a US$5,32 million grant to Zimbabwe to finance the Institutional Support for State Enterprise Reform (ISSER) project.

The principal objective of the project is to strengthen governance and management of public entities thereby reducing fiscal risks and facilitating economic recovery.

In a recent update, AfDB said: “The Government of Zimbabwe (GoZ) has received a grant, an amount of UA4,0 million from the African Development Fund (ADF) to finance the Institutional Support for State Enterprise Reform (ISSER) project.

“This project aims to strengthen good governance and enhance accountability through supporting interventions regarding public administration, improved service delivery and financial management (PFM).”

AfDB noted that the project will enhance Zimbabwe’s capacity to effectively translate into action and implement the existing corporate governance and PFM provisions.

This will include designing electronic systems for reporting and monitoring the Public Entities Corporate Governance (PECG) Act, the Public Finance Management (PFM) Act and the Audit Act.

The project will also support implementation and roll-out of the hybrid ownership model for SEPs, it added.

The modes of procurement to be used in the project include Open Competitive Bidding National (OCB-N), Quality and Cost-Based Selection (QBCS), Least Cost Selection (LCS) and Individual Consultants.

The update noted that components of the project include the strengthening financial performance of State Enterprises.

“Through this component ISSER will primarily support the Government of Zimbabwe in strengthening financial performance of State Enterprises and Parastatals (SEPs) through the implementation of centralised SEPs management system and in undertaking performance reviews.”

The aim of this component will be achieved through two sub-components that include institutional capacity building for SEPs centralised administration and sub-component and support SEPs restructuring and reviews.

The other component is that of enhancing corporate governance and financial oversight.

“This component through two sub-components aims to strengthen the oversight functions of the Corporate Governance Unit and Treasury on corporate governance and financial reporting of SEPs.”

In 2018, Government adopted the SOEs reform agenda which entailed various options including liquidation, full or partial privatisation, transformation of some of the entities to assume regulatory roles, merging and de-merging, as well as departmentalisation into line ministries.

Under the initial phase, the Government targeted the privatisation of 11 SOEs including six subsidiaries of the Industrial Development Corporation and 17 Zimbabwe Mining Development Corporation subsidiaries.

It also proposed liquidation and merging of 11 entities and departmentalisation of some SOEs into line ministries.

The reforms also entailed the centralisation of the ownership model for SOEs to eliminate inconsistencies in governance and ministerial interferences.

Zimbabwe has a decentralised SOEs ownership model, where the Government shareholder function is spread across different line ministries.

The ownership model has been associated with several challenges including inconsistencies in governance practices, ministerial interferences, delays and or reversal of the Government approved state enterprises reforms due to vested interests within some line ministries, and generally weak and passive oversight function, among others.

The reforms were meant to enhance the viability of SOEs and reduce government spending through bailouts. -chronicle