Zim to list struggling parastatals

via Zim to list struggling parastatals – DailyNews Live 30 March 2015

HARARE – Zimbabwe is planning to list its struggling parastatals on the stock exchange in an effort to raise capital and unlock value, Finance minister Patrick Chinamasa has said.

Chinamasa said parastatals were sitting on idle assets whose potential and value could be unlocked through listing on the Zimbabwe Stock Exchange (ZSE).

“It is my strong view that the Zimbabwe Stock Exchange can play a role in adding value to these assets if we go the route of listing a substantial part of the assets of these enterprises on the stock exchange for local participation,” he said.

Zimbabwe’s parastatals, such as the Cold Storage Company, Industrial Development Corporation,  Zimbabwe Mining Development Corporation, Grain Marketing Board and many others, used to contribute 40 percent of the country’s gross domestic product in the 1990s. However, they are now weighing down Treasury by constantly drawing money from government.

Recent reports by auditor-general Mildred Chiri indicate that 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.

Parastatals are grappling with high overheads, inter-parastatal debts, mal-administration, under-capitalisation, corruption and lack of good corporate governance which have negatively impacted on their operations.

Chinamasa said in an effort to plug the holes that have hindered State-owned entities from operating viably, solutions lie in reforms and public listing.

“In principle I do not see any policy objection to listing on the stock exchange 49 percent of State enterprises which are sitting on idle assets.

“So my invitation to you today is to ask you to proffer us ideas about it and what we need to do to achieve that objective,” he said.

Government once came up with strategies to restructure and dispose shareholding in some State-owned enterprises, but has failed to implement these measures over the years.

Once, several entities were earmarked for restructuring or privatisation and these included the National Railways of Zimbabwe (NRZ), Zesa Holdings, Air Zimbabwe, Agriculture Development Bank of Zimbabwe, the GMB, Zimre, POSB, Zimbabwe Grain Bag, NetOne and TelOne.

NRZ requires in excess of $2 billion to turnaround its fortunes by replacing antiquated infrastructure, including railway tracks, telecommunication signals and wagons, which have outlived their lifespan.

Its resuscitation would increase the movement of goods by rail within Zimbabwe and in the region, earning significant revenue in the process and helping in efforts to grow the economy.