Government Ministers will lose control of state enterprises under new plans in Finance Minister Mthuli Ncube’s 2021 budget, changes that he says are needed to end the “vested interests” and “ministerial interference” that have stalled parastatal reform.
Currently, parastatals report to different ministries. This will now change under the budget, which will see a single government entity owning all state enterprises that will not be privatised.
“Zimbabwe has historically been following a decentralised SEPs (state enterprises and parastatals) ownership model, whereby the Government shareholder function is spread across different Line Ministries. This ownership model has been associated with a number of challenges, including inconsistencies in governance practices, Ministerial interferences, delays and/or reversals of Government approved SEPs reforms due to vested interests within some line Ministries, and generally weak and passive oversight function, among others,” Ncube said Thursday.
Zimbabwe will follow regional peers such as South Africa, Mozambique, Namibia and Zambia who have adopted what Ncube descibed as “more progressive” ownership model of state firms.
“Following approval by Cabinet, implementation of the new ownership model will also be one of the central SEPs reforms to be implemented in the 2021 fiscal year,” Ncube says.
Despite Cabinet approval, this plan may still meet resistance internally, as bureaucrats will not easily want to let go of control. Questions will also be raised as to the efficiency of the new entity that will be granted control of the dozens of companies that the government owns.
In 2018, Ncube announced an ambitious plan to reform or sell over 30 state enterprises. However, the bulk of the proposed sales never took off, with companies unable to pay consultants and the process caught in red tape.
Plans to merge several other state agencies were also resisted internally.
For example, a proposal to merge the Postal and Telecommunication Regulatory Authority of Zimbabwe (POTRAZ) and Broadcasting Authority of Zimbabwe (BAZ) failed, according to a Treasury update, “due to diverging views of the parent ministries in as far as the merger is concerned”.
Beyond removing state companies from Ministries’ control, Ncube is again planning parastatal reforms for the coming year.
- Privatisation of 11 SEPs, 6 IDC subsidiaries, and 17 ZMDC subsidiaries
- Merging of five entities
- Dissolving ZESA subsidiary boards and allowing ZPC to engage strategic partners for its power generation projects
- Recapitalisation of Silo Foods. In the last update, Treasury announced that NSSA would take up a stake
- Implementing turnaround recommendations for ZMDC, ZINARA, SIRDC, Allied Timbers, IDBZ, Agribank, SMEDCO, ZETDC, Zimparks, EMA Forestry Commission, and ZIMRA