GOVERNMENT has commencedthe baseline data collection as a step towards reforming loss making State enterprises and parastatals (SEPs).
BY TARISAI MANDIZHA
The proposed reforms come on the back of calls by Treasury for SEPs to reform and generate adequate resources, as government has no money to continue spoon-feeding parastatals.
Speaking at a breakfast meeting in Harare yesterday, acting Finance and Economic Development minister Walter Chidakwa said the country has a large portfolio of SEPs and like any portfolio manager, the government, needs to know how these are performing.
“In particular, we need to know what income we can expect from State enterprises and parastatals’ dividends, or what losses we may need to cover in the coming year. The government also needs to know what contingent liabilities we carry in the portfolio. All this is essential if we are to plan the National Budget credibly and manage it consistently during the year,” he said.
Yesterday’s meeting was coordinated by the Ministry of Finance and Economic Development and the World Bank under the auspices of the Zimbabwe Reconstruction Fund (Zimref).
Chidakwa said government does not yet have up-to-date or complete information on SEPs and fundamentally, it was not acceptable to continuously make transfers to State Enterprises and parastatals, unless there is baseline data on their assets, liabilities, incomes and expenditures.
“Getting the baseline data is an essential first step. We have, of course, developed a corporate governance framework for State enterprises and parastatals and the ZimCode, our own National Code for Corporate Governance, which is closely in line with best practices as recognised by, among others, the Organisation for Economic Co-operation and Development (OECD). Bringing together this data is, therefore, another important step in giving reality to CGF and ZimCode,” he said.
State enterprises and parastatals used to contribute 40% to the gross domestic product, a figure that has almost been halved over the past years, Chidakwa said.
“…any weakness in the state enterprises and parastatals sector has significant negative effects on the National Budget. This is against the background that those State enterprises and parastatals that make perennial losses would, under normal circumstances, require a bailout from the fiscus, thereby, consuming funds, that we could otherwise use for investment in our economic infrastructure and social services,” he said.
Speaking at the same event, deputy chief secretary in the Office of the President and Cabinet Justin Mupamhanga, said under the Zimref programme, support to State enterprises and parastatals reform is one of the major key components, with emphasis on performance monitoring, corporate governance and performance enhancement.