Parastatals increasingly bleed economy

via Parastatals increasingly bleed economy – The Zimbabwe Independent February 27, 2015 by Fidelity Mhlanga

Despite the auditor-general’s numerous reports exposing maladministration and ineptitude in loss-making parastatals, government has failed to plug the holes that have hindered state-owned entities from operating viably.

Zimbabwe had 97 state owned enterprises which used to contribute 40% of the country’s gross domestic product in the 1990s. Currently, the enterprises are receiving various forms of financial support from government.

Reports by auditor-general Mildred Chiri indicate state -owned enterprises and government departments operate in the red, continuously bleeding the fiscus and in most instances failing to adequately provide the service for which they were set up for.

The auditor-general’s recent report noted that the Grain Marketing Board (GMB)’s failure to timeously pay farmers for maize deliveries was one of the reasons the parastatal is failing to maintain the strategic grain reserves as some farmers preferred selling to private buyers.

The report noted that laid down procedures in the management of the grain reserves were not being followed, resulting in weevils devouring grain at depots.

Poor hygiene, poorly stacked maize, bursting maize bags, shortage of tarpaulins, caking and rotting maize in silos were observed at most depots.

In the grain marketing seasons 2009-2010, 2010-2011 and 2011-2012, the physical stocks fell short of the minimum required by 459 649 (91,93%), 277 831 (55,57%) and 201 386 (40,28%) metric tonnes respectively.

An audit of the Central Vehicle Registry (CVR) revealed a backlog of 52 606 unprocessed driver’s licences as at June 30, 2012. Chiri found that driver’s license disc applicants were spending up to three years without the discs whereas they are supposed to be supplied within a month.

CVR also advanced US$11,1 million to Air Zimbabwe and US$160 000 to Civil Aviation Authority of Zimbabwe as interest-free loans between February 2011 and January 2012 to meet operational costs of the two entities.

The Cold Storage Company, which was at one time the largest meat processor in Africa handling up to 150 000 tonnes of beef and associated bi-products a year in 2000 and exporting beef to the European Union, has also been saddled by a debt of about US$22 million.

Economist Godfrey Kanyenze said there is need to bring parastatals on a national agenda with a view to come up with lasting solutions.

“Reforms cannot be done by ministries alone. The state enterprise restructuring agency (Sera) cannot punch above its weight. It lacks political will to expeditiously deal with the issue. In South Africa they used the stakeholder approach but in Zimbabwe it was rejected,” said Kanyenze.

Kanyenze added that there is need to ensure parastatals are not manipulated for political expediency.

According to the 2015 national budget statement, government remains committed to speeding up public enterprise reforms in line with the ZimAsset objectives with prioritisation given to 10 public enterprises.

Last week head of fiscal and investment promotion in the Ministry of Finance, Desire Sibanda said government intends to rope in Swedish National Audit Office to equip the Auditor General, Ministry of Finance, Zimbabwe Revenue Authority and the public accounts committee of parliament with skills to provide effective oversight functions on behalf of tax payers.

The GMB, National Railways of Zimbabwe and Air Zimbabwe are operating below capacity and have huge liabilities on their books. NRZ owes its 6 000 workers about US$55 million and requires US$500 million capital injection to turnaround its fortunes.

GMB is obliged to pay farmers US$52,4 million for the grain delivered in the 2013/2014 summer cropping season as well as six months salary arrears.

Last week troubled GMB workers protested at the parastatal’s office demanding their salaries.

Kanyenze argued that government is aware of the challenges bedevilling parastatals, but lacks the will power to address them.

“Corruption remains a deep seated issue but no action has been taken. Since 1991, almost every budget talks about parastatal reform but no action is taken. Parastatals have been examples of good corporate behaviour but all of a sudden they have been hijacked by political elites,” he said.

Another Economist Kipson Gundani said rampant corruption and mismanagement was a product of poor working systems and models in most parastatals.

“There is need to realign parastatals and make them more efficient and affective. We need to disbundle some parastatals to make them leaner, because some of them are over bloated, they are too big and difficult to manage,” said Gundani.

Gundani said there is need for complete overhaul of the human capital in parastatals.

Econometer Global Capital head of research Takunda Mugaga said parastatal boards were littered with political appointees with no intention to deliver but line their own pockets.

Mugaga said parastatals failure was aggravated by ministers’ incompetence.