AGMs display transparency

Source: AGMs display transparency | The Herald September 16, 2016

Enacy Mapakame: Business Reporter

FOR many, State-owned enterprises and parastatals, operations appear to be on auto pilot. Most of them do not even know what it means to hold an Annual General Meeting — a key review meeting on the institution’s operational and financial life, and if applicable, where approval of the company’s board of directors is made.According to the World Bank’s review of the country’s corporate governance in SEPs, there is lack of transparency in these entities and this creates a fertile ground for corruption and unaccountability.

Of the 39 SEPs that were reviewed it was established some have never held a single AGM since inception while others do not produce annual reports.

In addition to that, most of them also fail to meet the financial reporting statutory deadline. For the purposes of the review, the consultants had to settle for the 2014 financials as most SEPs were not up to date in their financial reporting.

Others only had financials for 2010 and 2011 — five to six years down the line.

In line with the Public Finance Management Act, SEPs are required to produce annual reports to enhance disclosure and accountability.

An annual report is a comprehensive report that gives shareholders and other interested parties vital information on a company’s activities and financial performance thorough the preceding year.

Of the SEPs that have been producing annual reports, some of them were not at liberty to publish the documents on their websites, shrouding them in secrecy as “confidential” information.

“In most cases, management said they were not aware of such requirements as outlined in the PFM Act,” said World Bank consultant Mr Sonny Mabheju.

“Some said they could not publish annual reports and financials because they are private and confidential. Yet these should be more public than publicly listed companies,” he said.

Zimbabwe has a huge portfolio of SEPs that could make significant contribution to the GDP if properly managed. Their contribution to gross domestic product has halved over the past years from around 40 percent historically due to economic challenges and malpractice.

Some have been making perennial losses and requiring bail out from the fiscas thereby consuming funds that could be used to improve social services.

Accountant general Ministry of Finance and Economic Development Mr Daniel Muchemwa said a lot still needs to be done to improve transparency, accountability and disclosure in SEPs.

He said SEPs can start off by producing monthly financial statements to enhance their accountability.

“We can do better especially with the new technology available and make sure monthly financials are produce. This will be easier when it comes to year end,” he said.

State enterprises also have a key role in ensuring an enabling environment conducive for investment and overall business growth especially those responsible for providing electricity, water, telecommunications as well as road and rail infrastructure.

Erratic utilities supplies, poor road and rail infrastructure are some of the factors identified by industry for frustrating business growth and increasing the cost of doing business in the country.

In line with this, Government launched an initiative to re-engineer SEPs by reducing costs to the fiscus, make them profitable and enhance service delivery as well as accountability.

One of the steps towards this was prioritising 40 parastatals and began to undertake audits. Some of the parastatals include the Industrial Development Corporation, Grain Marketing Board, National Railways of Zimbabwe, Air Zimbabwe, the Zimbabwe National Water Authority and the Zimbabwe Revenue Authority.