PHILLIMON MHLANGA
Financial experts and investment analysts have raised the red flag over the slow pace towards reforming State-Owned Enterprises (SOEs) which will impair their ability to contribute meaningfully to economic recovery.
Zimbabwe has about 107, which currently contribute less than 10% to GDP.
Consequently, the perennial loss-making SOEs, which in the 1990s were contributing more than 40% to GDP, continue to drain the fiscus through Treasury bailouts to fund their operations.
As part of the agenda, the government in 2018 announced plans to restructure SOEs as part of efforts to improve efficiencies and reduce reliance on fiscus.
The plan also entails partial privatisation of some SOEs through engagement of strategic partners or listing on the Zimbabwe Stock Exchange, while others will be merged or liquidated.
Some of the SOEs earmarked for partial privatisation include NetOne, TelOne, Zimpost, ZUPCO, Chemplex Corporation, POSB, Petrotrade, and the Zimbabwe Mining Development Corporation, among many others.
However, there has been resistance to the proposed move.
Speaking at the 2022 public sector convention in the capital Harare, which was organised by the Institute of Chartered Accountants (ICAZ), State Enterprises Restructuring Agency chief director, Onesimo Musi said there was “resistance to change”.
“The reform agenda started in 2018 for SOEs to be high performers which can contribute meaningfully to the GDP. But, the progress has been slow because there has been resistance to change,” Musi said.
He added: “The other reason is that some balance sheets of SOEs, especially those that are earmarked for partial privatisation, are weak. There has also been conflict of interest arising from the fact that when we want to reform SOEs, we must go through the line ministries. Naturally, they will resist it.”
ICAZ president Davison Charamba said reforming Zimbabwe’s public sector was a critical process to enhance transparency and accountability in the public sector.
“We [ICAZ] are working with PAAB on the professionalisation of the public sector,” he said.
Speaking at the same event, the Zimbabwe Investment Development Agency’s CFCAO, Duduzile Shinya said: “There is a thrust for a new thinking. Its critical, reforming SOEs will stimulate growth. There are multiple models we can use to reform SOEs.
“One area we are looking at is creating linkages with financiers, just to open up finance options for SOEs with African Export Import Bank, AfDB and International Finance Corporation,” Shinya said.
Securities and Exchange Commission of Zimbabwe CEO, Anymore Taruvinga, said the slow pace to restructure SOEs was worrisome.
“Reform has been slow. Reform does not mean taking away ownership from government. But, I think we can learn from China’s model. That model was very successful.
“We are concerned by the slow pace in reforming the SOEs. As the capital markets, we have capacity to fund SOEs. We have financial advisors. We can work together with SERA to restructure the SOEs,” Taruvinga said.
The South African Institute of Chartered Accountants CEO, Freeman Nomvalo weighed in: “When you are driving change, you need to bring yourself into the environment, in whatever policy you are driving. You have to understand the environment.
“Looking at the issue that you are dealing with, understand that in there are people. When you drive change, some stakeholders are going to affected, meaning Some people may lose something. Therefore, its critical to find a way to navigate the challenges. This will be critical on whether you are going to be successful or not.
“Also, ensure there is buy-in. The lack of buy-in has nothing of being afraid of change. It’s the losses that comes with change. There is need to understand those losses and make provisions to deal with these. In all this, it is important that we act ethically.”
The slow pace to reform SOEs comes as all public sector accountants are going through a rigorous training in preparation for the implementation of the International Public Sector Accounting Standards (IPSAS) by 2025, as part of its efforts to improve efficiency, transparency and accountability.
About 15 pilot SOEs have present 2021 accrual based IPSAS dry run accounts to the Auditor General (AG) for review, to gauge the preparedness of the SOEs.
Business Times can report that 11 out of 15 managed to submit IPSAS dry run accounts to AG.
Apparently, government, which has been using a cash accounting system since 1923, roped in the Public Accountants and Auditors Board (PAAB) and ICAZ to help in the revamping of the public sector’s financial management system and professionalisation of the public sector, to enhance performance and overall service delivery.
Central government, urban and rural authorities spend large sums of public funds on a range of services, but the funds have been mismanaged.
A stronger accounting system in the public sector will help government meet taxpayers’ demands for transparency and accountability.
PAAB secretary, Admire Ndurunduru said: “We are the front runners on the continent as far as professionalising the public sector. The call to action is for all of us to participate. Ethics is at the centre of it as we run public finance.”
He added: “IPSAS has been given a national project status. It means we don’t have the luxury of failure. We must give our minds and hearts into it.”
