‘State enterprises won’t be sold for peanuts’

Source: ‘State enterprises won’t be sold for peanuts’ | The Sunday Mail

Business Reporter

Privatisation of parastatals and State-owned enterprises (SOEs) will proceed as originally planned, but the Government says it will not dispose the assets for a song, as doing so would be “scandalous”.

Most entities continue to be a drain to the fiscus due to years of making losses, corruption and mismanagement.

Forty-one parastatals and SOEs are targeted under a turnaround programme that will see some being privatised, departmentalised under line ministries, listed on the Zimbabwe Stock Exchange, commercialised or merged.

In 2018, Finance and Economic Development Minister Professor Mthuli Ncube announced far-reaching changes that were meant to wean the entities from Government support.

However, there have been concerns the exercise is taking too long.

Finance and Economic Development Deputy Minister Clemence Chiduwa said where possible the Government would first seek to breathe new life into the State entities to enhance their value.

“On privatisation of parastatals, it may be scandalous to sell some of our assets when they are valueless; we cannot sell them for a song,” he said while responding to questions at the just-ended fourth Annual Zimbabwe Multi-stakeholder Debt Conference in Bulawayo on Friday.

“It is also important to realise that you can’t sell assets when you are down; you won’t benefit. The least we can do is make sure they improve and accrue some value,” he said.

In 2019, the Government said it expected to generate at least US$350 million from reforming TelOne, NetOne, Telecel, Zimpost and the People’s Own Savings Bank (POSB), which were earmarked for immediate restructuring.

Reputable transaction advisers were to be engaged to help in the reform process.

Most parastatals and SOEs are grappling with a myriad of challenges ranging from lack of capital, ballooning wage bills, low productivity and unsustainable debts.

Treasury has had to pick up the tab.

Thirty-eight out of 93 public entities audited by the Accountant-General and Auditor-General in 2016 were found to have incurred a combined US$270 million loss.

Among the expected outcomes of the interventions are enhanced transparency and accountability that could possibly attract suitors. The reforms were initially supposed to run until December 2020.

The Government, Deputy Minister Chiduwa added, had resolved that there would be no new debt assumption for parastatals and SOEs, save for instances where the State entities come up with bankable strategic turnaround plans.

Overall, through the reform programme, telecommunications firms TelOne and NetOne were to be privatised, ZESA was to be rebundled, while Allied Timbers and Zimbabwe Mining Development Corporation were earmarked for partial privatisation.

Parastatals and SOEs used to contribute 40 percent to the country’s Gross Domestic Product, but Treasury believes this has since dropped to below 2 percent.