Govt pushes for centralised system of parastatals

 

Finance Minister Mthuli Ncube

TINASHE MAKICHI

 

Government this week held a high level meeting to deal with the interference of line ministers in the day to day running of parastatals amid revelations Treasury was pushing for a centralised system to improve efficiency.

Well-placed multiple sources told Business Times this week that the Treasury was pushing for the removal of parastatals from line ministries.

Business Times has been informed that Treasury want management of parastatals to be under a centralised system, away from line ministers, to also improve their efficiency.

This means there will be a major transformation in the way these enterprises are run from the existing model where they fall under line ministries to a more centralised system.

“There was a high level meeting held this week to discuss this matter and this issue of line ministers interfering in the running the affairs of parastatals have left most parastatals fighting various litigation cases emanating from uninformed cancellation of investment deals and employment contracts of management. Therefore, such conduct by line ministers has made most parastatals unattractive for investment,” one source said.

Other sources said the government is now piling pressure to remove all parastatals from line ministries as a way of minimising the influence of ministers from the day to day running of state-owned enterprises.

They said there were current efforts to review the ownership models of State enterprises and parastatals aimed at improving their efficiency and enhancing their contribution to the attainment of targets set under Vision 2030.

The latest push by the government is driven by concerns being raised by various investors over what is termed “too much power” given to ministers in the running of parastatals.

This scenario has therefore seen cancellation of various investment deals whenever there is a change of a minister coupled with the now predictable firing of both the boards and management.

For example, the Diaspora and Infrastructure Development Group (DIDG)’s US$400m deal with the National Railways of Zimbabwe (NRZ) was cancelled following a change of the line ministers. The sources also raised as an example the latest threats to cancel the Boustead Beef Zimbabwe’s US$400m, 25-year joint venture agreement which the government entered in January 2019 following the death of the then minister Perrance Shiri.

Such a scenario where the coming of a new minister results in the cancellation of deals has sent a wrong signal to various investors.

Efforts to get a comment from Finance and Economic Development Minister Mthuli Ncube were futile. His mobile phone continuously went unanswered.

Corporate governance expert Tsitsi Mutasa told Business Times that there was a need for a uniform management of parastatals to ensure effective productivity.

“The ownership structure of the parastatals must be reviewed first and I also think that if everyone including line ministers was implementing the Public Entities Corporate Governance Bill we wouldn’t be having these challenges. A review on how parastatals are owned and run will be welcome and a uniform application on how they must be run will go a long way in ensuring productivity of parastatals,” Mutasa said.

Zimbabwe has over 107 such enterprises, with most of them critical and with a potential to contribute over 40% of the country’s GDP.

 

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