Parastatal reforms take shape - Zimbabwe Situation

Parastatal reforms take shape

Source: Parastatal reforms take shape | Sunday Mail (Business)

Africa Moyo and Fradreck Gorwe

GOVERNMENT’s desire to find strategic partners for State-owned enterprises (SOEs) is gathering pace, with three of the five firms earmarked for immediate reforms having either identified transactional advisors or optimistic of meeting the fourth-quarter deadline to partially privatise.

Five companies, namely TelOne, NetOne, Telecel, Zimpost and the Peoples’ Own Savings Bank (POSB), have been lined up for immediate reforms.

Government believes it can generate up to US$350 million from the reform process.

TelOne managing director Mrs Chipo Mtasa told The Sunday Mail Business last week that meetings to finalise the engagement of PriceWaterhouseCoopers (PwC) as transactional advisors are at an advanced stage.

“We have been having meetings as a technical committee where we were finalising our engagement of PwC (as transactional advisors),” said Mrs Mtasa.

“We had a recent technical committee (meeting and) we will finalise issues pertaining to PwC as well as discussing modalities of warehousing of the legacy loan.

“So there are engagements that are currently underway so that we can then start finalising on those loose ends.”

TelOne has legacy loans of US$383 million and warehousing them is seen as critical in making the company attractive to potential investors.

Mrs Mtasa said once transactional advisors have been engaged, they will handle “everything” pertaining to the reform process.

“Even if there could be companies that have expressed interest in partnering us, they will then be directed to our transactional advisers as and when they do their work.

“There will come a time when they will call upon bids so that people will come up to show their interest, get to be shortlisted and elected and then be part of shareholding,” said Mrs Mtasa.

Similarly, Agribank, which is also set for reforms to ensure it increases operational efficiencies, has already engaged Ernst & Young as transactional advisors.

The bank’s CEO, Mr Sam Malaba, told The Sunday Mail Business recently that the engagement of advisors heralds the beginning  of serious work.

“The process has already commenced with the setting up of a technical committee, which will prepare a roadmap for the engagement of a strategic partner for the bank,” said Mr Malaba.

“This represents a major opportunity for the bank. The strategic partner will inject long-term equity capital and access to international lines of credit for expanded support towards agriculture financing.

“We have only just got approval for the engagement of Ernst & Young. So we have not yet sat down with the sub-committee to work out in terms of the term-sheet and agree on a timeframe for when we would now want to go to the market to seek for a strategic partner.”

Mr Malaba said he was “at least happy” that the process had gained traction.

Government believes that once Agribank finds a strategic partner who will inject long-term funds, opportunities for growth would become limitless for the bank.

Agribank is wholly owned  by Government and has been given the green light to secure a strategic partner in line with reforms proposed by the TSP.

The reforms are aimed at removing the burden of funding the firms from the fiscus.

POSB board chairperson Mrs Mathilda Dzumbunu could not give the exact status of the reform process, only indicating that: “Under the Transitional Stabilisation Programme, Government has decided that POSB can meaningfully contribute towards the revival of Zimbabwe’s economic fortunes if it is partially privatised.

“Government ultimately earmarked the bank for partial privatisation by the end of the fourth quarter in 2019.”

POSB has recently shown nascent signs of generic growth and increased capital.

The bank closed last year with US$70 million capital, which is US$30 million shy of the capitalisation threshold set by the Reserve Bank of Zimbabwe (RBZ).

Finance and Economic Development Minister Professor Mthuli Ncube recently said Government had approved the implementation framework for 43 SOEs and parastatals.

The Grain Marketing Board (GMB) has already been de-merged into a commercial business unit and the Strategic Grain Reserve.

There are also plans to improve the governance, leadership and operational efficiency at Allied Timbers; re-bundling the Zimbabwe Electricity Supply Authority (ZESA) into a single corporate entity to improve governance; rationalisation of Industrial Development Corporation (IDC) units and partial privatisation, and a number of other reforms.

The tough decisions come on the back of reports that 70 percent of State-owned enterprises are technically insolvent after most of them incurred a combined US$270 million losses, according to the Auditor General’s 2017 report.

Government said an institutional support for parastatal reform framework was being put in place to ensure deserving entities get funding under the US$3,2 million grant from the African Development Bank.

 

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