THE Office of the President and Cabinet (OPC) says a new law will made performance management contracts mandatory for heads and boards of state enterprises and parastatals in a far-reaching reforms at these entities.
BY FIDELITY MHLANGA
Permanent secretary in OPC Stuart Comberbach told NewsDay last week the Public Entities Corporate Governance Bill would require entities to develop a strategic or business plan that will form the basis for the development of performance contracts between the line ministry and the board chairperson, and between the board chairman and the chief executive officer (and other members of executive management).
“The Public Entities Corporate Governance Bill — shortly to be an Act — seeks to address this lack of conformity and consistency across the SEP sector by making such performance contracting a mandatory requirement under the law,” he said
“The Bill stipulates that performance, by the board, the chief executive officer and other executive management must be assessed on a regular basis—not less than once per annum—and that the results of such assessment must be reported to the line ministry and others mandated to oversee implementation of the Bill, including the OPC.”
Comberbach said the challenge was the mindset or the culture that had been allowed to develop over many years whereby “poor performance is tolerated and carries little if any real consequence for the poor performer”.
“The performance contracting system required in terms of the Bill, along with its many other demanding provisions will, over time, help to migrate us away from that culture,” he said.
Comberbach said the Integrated Results-Based Management system was introduced in government, including State enterprises, and parastatals several years ago.
The system, he said, was based upon agreed performance indicators between various layers of management and a comprehensive system of performance measurement and assessment at regular intervals. When it works, it was an effective management and performance-assessment tool, Comberbach said.
“Several of the larger State entities have indeed introduced some form of performance management system and in most of those cases the system functions reasonably well : but I think it has to be acknowledged that this is certainly not universal, either in format or application, across the entire SEP sector,” he said.
State enterprises and parastatals have been a drain on the fiscus, with Finance minister Patrick Chinamasa announcing a raft of measures on Monday that will see some entities privatised, merged or liquidated.
The inefficient public enterprises have seen its contribution to the economy dipping to 2% from a peak of 60%.
In his 2018 National Budget, Chinamasa said 2016 financial audits indicated that 38 out of 93 public enterprises incurred a combined $270 million loss, as a result of weak corporate governance practices and ineffective control mechanisms.
Presenting at the Zimbabwe Accountants Conference a fortnight ago, former Harare mayor Muchadeyi Masunda said spreading the gospel of good corporate governance was more than just a catch phrase or fashionable thing to do as good corporate governance was the system of rules, practices and processes by which local authorities, State Owned Enterprises and parastatals should be run.
He said it was imperative to make sure that boards of directors had members with complementary and diverse skills, backgrounds and experiences because it was a proven fact that diverse boards made better decisions.