Chinamasa: Govt may close parastatals

via Chinamasa: Govt may close parastatals 28 July 2014

FINANCE and Economic Development Minister Patrick Chinamasa has said government is considering shutting down non-performing state-owned companies because they have become a drag on the country’s economic recovery efforts.

State-owned companies have come under the spotlight in recent months after disclosures of executive compensation at several institutions showing that some earn monthly salaries running into hundreds of thousands of dollars.

Chinamasa, who is also chairman for the cabinet committee on parastatals, state enterprises and local authorities, questioned the calibre of managers at the institutions.

“We have started tackling problems at state enterprises and parastatals which used to contribute 40 percent but now are milking the economy as they are not contributing anything,” Chinamasa told the Institute of Chartered Accountants of Zimbabwe (ICAZ) conference at the weekend.

He said companies such as the Grain Marketing Board (GMB), Agricultural and Rural Development Authority (Arda) and the Cold Storage Company among others were struggling adding there was need to establish whether the parastatals should be allowed to continue operating.

“There is no production at all in these entities and the economy can’t grow. The challenge is to restore productivity and that also raises questions whether we have the calibre of managers who can drive them back to their feet.

“This is where we need forensic audit and thorough investigation whether there is a need for them to continue existing or not,” he added.

Early this year, government capped salaries of chief executive officers of state enterprises and parastatals at $6,000 per month following revelations that executives were awarding themselves packages of up to $535,000 per month at a time such entities were underperforming.

It adopted a new corporate governance framework and banned heads of public enterprises from holding office for more than eight years and bureaucrats from sitting on boards of such companies.

The new framework also compels state enterprises and parastatals to hold annual general meetings, which should be attended by representatives from the office of the president and cabinet, treasury, the parent ministry, the auditor and comptroller general and other stakeholder ministries.