Zim shelves centralisation of State firms control
Zimbabwe will continue with the current ownership model of State-owned entities where shareholder function is spread across different line ministries, Treasury sources have said.
Last year, the Government approved a centralised ownership model for SOEs to eliminate inconsistencies in governance and ministerial interferences. This was supposed to be implemented in the first half.
In adopting the centralised system, it had noted that the current ownership model had been associated with a number of challenges, including inconsistencies in governance practices, ministerial interferences, delays and or reversals of Government approved SOEs reforms due to vested interests within some line ministries, and generally weak and passive oversight function, among others.
Under the centralised ownership model, a single Government institution carries out the role as shareholder in all companies controlled by the State.
“It is a very complex matter and that might have been overlooked and for now the status quo remains,” said an official who declined to be named because he is not permitted to talk to press.
Many countries in the region, such as South Africa, Mozambique, and more recently, Namibia and Zambia; as well as those on the continent and beyond, such as China, Malaysia, France, have migrated from the decentralised ownership model in favour of centralised or dual ownership models.
“It remains on the agenda and we continue engaging . . .It’s not like the plan has been struck off,” said the official.
Calls seeking official comment from the Minister of Finance and Economic Development Professor Mthuli Ncube went unanswered.
The centralised ownership model was part of the broader agenda to reform SOEs, which have been underperforming owing to several factors including lack of capital and mismanagement.
The reforms included the re-engineering of the parastatal sector, which used to contribute 40 percent to the Gross Domestic Products (GDP) to reduce costs to the fiscus, enhancing service delivery and improving accountability.
About 70 percent of these entities are technically insolvent, presenting an actual or potential drain on the fiscus, owing to weak corporate governance practices and ineffective governance control mechanisms.
In almost every sector where they operate, SOEs are facing a number of challenges including lack of capital, low productivity and unsustainable debt.
Services have deteriorated substantially and even the welfare of their own employees is often in jeopardy.
The reform agenda entailed options including liquidation, full privatisation, transformation to regulator, merging and de-merging and departmentalisation into existing ministries.
This was to happen between 2018 and 2020.-ebusinessweekly.co.zw
