TINASHE MAKICHI
Top chefs in government including ministers are said to be blocking the plan by the Treasury to move all State entities to a centralised system, a move meant to improve efficiency. The plan to move the State entities to a centralised system will minimise the influence of ministers from the day to day running of government owned companies.
The Treasury has been pushing to have management of state entities under a centralised system.
The Treasury’s plan comes after investors raised disquiet over what they described as “too much power” given to ministers in the running of parastatals.
In the past few years, Zimbabwe has experienced cancellation of several State-entities deals each time there was a change of a minister. The new ministers would usually change both the boards and the management of the parastatals upon appointment.
Zimbabwe has over 107 such enterprises, with most of them critical and with a potential to contribute over 40% of the country’s Gross Domestic Product.
Corporate governance experts have since identified failures with the current decentralised model in which State enterprises and parastatals are controlled by line ministries.
Some of the challenges identified include poor and inadequate skills within boards and management of State enterprises and parastatals, resulting in poor performance.
Multiple government sources this week told Business Times that several bigwigs in government, who are trying to protect their turf, are against the proposal by the Treasury.
“Government is seriously divided over this initiative being driven by the Ministry of Finance and Economic Development. A number of ministers are baying for Mthuli Ncube’s head over this initiative that is likely going to whittle down their influence in the running of parastatals,” a source said.
“There are serious divisions on how this initiative must be carried out with a certain section of ministers and government bureaucrats actually employing dirty tactics to block this move.”
It is also understood that the Ministry of Industry and Commerce and that of Lands, Agriculture, Fisheries, Water and Rural Resettlement clashed over the control of the Cold Storage Commission.
Most parastatals have become feeding troughs for government officials and ministers where some of their foreign jaunts have on several instances been funded by parastatals.
Last year, Zesa Holdings executive chairman Sydney Gata accused former Energy and Power Development Minister Fortune Chasi of meddling in ZESA affairs and for allegedly spending thousands of dollars donated by the parastatal on his foreign trips.
Recently, the Diaspora and Infrastructure Development Group’s US$400m deal with the National Railways of Zimbabwe was cancelled following the appointment of a new minister.
There have also been threats to cancel the CSC/ Boustead Beef Zimbabwe’s US$400m deal following the arrival of a new minister after the death of Perrance Shiri.
Analysts said a scenario where the appointment of a new minister leads to the cancellation of deals and contacts has sent a wrong signal to international investors.
Head of State Enterprise Reform and Corporate Governance Unit Willard Manungo said the implementation of the National Development Strategy 1 over 2021 – 2025 will see the government considering and determining an appropriate model which will create effective shareholder ownership, accountability, quality corporate governance as well as delivery of quality services at competitive prices.
“In this regard, Government would be reviewing the current decentralised ownership model for state enterprises, also drawing from other countries’ successful experiences with migration to a more centralised ownership model, which facilitates state enterprises’ operational independence of line ministers. This has been central, in such countries, to overcoming challenges associated with cultures of vested interest- based decision making, as well as institutionalised resistance to state enterprises’ reform,” he said.
Manungo said the government has established and mandated the Enhanced Cabinet Committee on Public Enterprises Reforms and Development to spearhead the processes towards development of a new ownership model for the consideration of Cabinet, demonstrating the level of political will and intensity of commitment of the new administration.
He said the Cabinet Committee has realised a number of notable key milestones, chief among them being the successful conclusion of the Options Paper: Review of the State Enterprises and Parastatals Ownership Model in Zimbabwe.
The Committee has subsequently submitted the recommendations of the Options Paper to Cabinet whose deliberations led to a follow-up Seminar being held. The Seminar afforded all the Cabinet ministers an opportunity to interrogate experts findings and recommendations, Manungo said.
“Government is now considering various critical activities which are at an advanced stage of conclusion. These include the development of the Institutional and Legal Framework and related Transitional Measures, as well as the identification of entities that would form the first batch to be considered ready for review of shareholding structure,” he said.
“Once the Institutional and Legal Framework is finalised, Government will then embark on the process of establishing and capacitating proposed institutions, with a mandate to exercise the State shareholding functions for all the identified public entities. This process of establishing and actual transfer is expected to take a while, as it requires some amendment or promulgation of relevant pieces of legislation.”
He said holding a view that the adoption of the new ownership model was supposed to be a short-term policy target may, therefore, lead to the incorrect perceived conclusion that the process has evidently delayed. This is against the background that a significant proportion of all the processes leading to the development and adoption of a new ownership model require intensive studies and reviews, as well as stakeholders’ consultation, Manungo said.
