Cabinet mulls agency to run State entities

(Last Updated On: November 17, 2022)

PHILLIMON MHLANGA

 

Cabinet is considering creating a centralised agency to efficiently run State Owned Entities (SOEs) that observers say have become havens for corruption and needs cleansing.

Currently, SOEs are being run by line ministries with most of them making perennial losses prompting calls by the Auditor General in her reports to privatize them.

SOEs mainly rely on Treasury bailouts, to sustain operations.

Deputy chief secretary for policy analysis, coordination and development planning in the Office of the President and Cabinet, Willard Manungo, said placing the SOEs under a centralised agency would give line ministries more latitude to focus on policy issues.

Zimbabwe has 107 SOEs, which are contributing less than 10% to the gross domestic product (GDP). In the 1990s, SOEs contributed more than 40% to the GDP.

“Currently, we have a decentralised framework where the various line ministries establish various State Owned Enterprises, and they represent the government as the shareholder.

“And what the President (Emmerson Mnangagwa) has said, let’s look at the best practices within the region, let’s also look at the best practices beyond our region in terms of how other jurisdictions are administering the shareholding function of SOEs,” Manungo told Business Times.

He said China and Singapore have benefitted from moving away from the decentralised arrangement and have a situation where the shareholding function is centralised. Manungo said China and Singapore have adopted a “hybrid ownership framework” which then allow the exercise of the shareholding function especially the strategic SOEs to be held centrally.

“That way, you then you free line ministries to then focus on policy initiatives, the policy drives that envelope the various SOEs that they have. So, this is still being considered (by Cabinet),” he said.

“We have the support of various cooperating partners. A study was undertaken and the Cabinet is considering that.

“Hopefully, we should be able, through the direction by the President and the way we are moving in terms of reorienting towards  the exercise of shareholding ownership in a manner that is supportive of increased performance of various SOEs so that they represent themselves as champions of transformation towards vision 2030 of upper middle income economy.”

He added: “You then have the line ministry pursuing the policies and policy thrust and that guide performance of the various entities. But, there are some that are regulatory and in some of these jurisdictions, the regulatory entities have remained operating under the line ministries.”

“But, strategic ones tended to be operated under centralized agencies. The Cabinet, through the leadership of the President, is considering this model. Once it reaches finality, the nation will be told which way we will go.”

Manungo said the government was also courting the private sector to partner the administration through public private partnership (PPPs).

The PPPs are based on recognition by the government that “our pockets”, financially, are not deep enough to provide the financial resources that the SOEs require for their transformation to become meaningful champions of economic transformation in the economy, he said.

“So, for that perspective, we have reviewed our legislation through the ZIDA Act to try and create an attractive framework and an attractive environment where those that are in the private sector, it could be within Zimbabwe or come from outside Zimbabwe, will see value in partnering us in terms of undertaking investment initiatives across the various identified SOEs,” Manungo said.

SOEs have become the breeding ground for corruption and an arena for “jobs for the boys”.

 

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