Business / Economy
Restructuring of Zimbabwe parastatals slow: Moyo
09 Dec 2011 at 06:16hrs | Views
THE restructuring process of identified public enterprises has been slow partly because of lack of commitment from the line ministries and management of the enterprises, a Cabinet Minister has said.
Last year, under the first phase of the restructuring programme, the Government prioritised the privatisation and commercialisation of 10 entities as part of its efforts to improve operational efficiency.
The Cold Storage Company, Agribank, National Oil Company of Zimbabwe (Noczim), Zisco (now New ZimSteel), NetOne and the National Railways of Zimbabwe are some of the entities the Government identified under the first phase of the restructuring exercise.
In the 2011 restructuring progress report, State Enterprises and Parastatals Minister Gorden Moyo said Government had approved the framework for restructuring of the entities, but the exercise had been slow except for Noczim and New ZimSteel where there is notable progress.
"It is important to note that the Government has already approved a framework for the restructuring of State enterprises incorporating privatisation, commercialisation and restructuring.
"The Ministry of State Enterprises and Parastatals consulted all line ministries of the 78 parastatals in order to come up with the categorisation which was adopted by Cabinet after the recommendations of the Inter-Ministerial Committee on Commercialisation and Privatisation of Parastatals (IMCCPP).
"Unfortunately, the restructuring process for identified public enterprises has been slow, with the only notable progress being that of Zisco and Noczim," said Minister Moyo.
He said the slow pace of restructuring was largely the result of line ministries' and enterprises' management's lack of commitment.
Minister Moyo said fear of the unknown and resistance to change had seriously affected the decisions on options to be presented to IMCCPP and Cabinet.
He said memoranda on the restructuring of the Grain Marketing Board (GMB), Olivine Industries, Zimbabwe Grain Bag and Zimbabwe Power Company were deliberated on by IMCCPP and recommendations were yet to be considered by Cabinet.
He noted that the implementation of the restructuring programme did not entirely depend on the Ministry of State Enterprises and Parastatals but it was guided by the decisions of the line ministries as they govern the Acts of the parastatals under their portfolios.
"The regular convening of the IMCCPP meeting also determines the pace of the reform."
Minister Moyo said Government had been cautious on the public entities in the strategic sectors of the economy because privatisation was viewed as not the panacea of solving their challenges.
"In this regard, restructuring will entail implementing turnaround strategies augmented by Public Private Partnerships. It is however, encouraging to note that the Working Party of Officials and the
IMCCPP has been able to meet regularly over the year to discuss the restructuring memoranda presented by line ministries.
"Sadly, it is noted that there have been few meetings at the IMCCPP than at the Working Party of Officials," he said.
The Minister said the State Enterprises and Restructuring Agency had prepared the Restructuring Procedures Manual with guidelines to ensure transparency, accountability and fairness in the restructuring programme. These guidelines have since been considered and adopted by the IMCCPP.
He said the performance of State entities continued to be dogged by challenges that included undercapitalisation, antiquated infrastructure, low capacity utilisation, low working capital caused by low debt collection, outstanding long-term loans, non-compliance with good corporate governance and the existence of huge inter-parastatal debts causing a payment gridlock, and high wage bills not commensurate with capacity utilisation.
Meanwhile, Minister Moyo said the Technology Transfer Agreement for the manufacturing of switches that will culminate in the transfer of technology to the Zimbabwe Electricity Supply Authority by a South Korean company had been approved.
He said a memorandum on Public Private Partnerships on Chitungwiza Hospital was awaiting consideration by the Cabinet Committee on Investment and Development.
Last year, under the first phase of the restructuring programme, the Government prioritised the privatisation and commercialisation of 10 entities as part of its efforts to improve operational efficiency.
The Cold Storage Company, Agribank, National Oil Company of Zimbabwe (Noczim), Zisco (now New ZimSteel), NetOne and the National Railways of Zimbabwe are some of the entities the Government identified under the first phase of the restructuring exercise.
In the 2011 restructuring progress report, State Enterprises and Parastatals Minister Gorden Moyo said Government had approved the framework for restructuring of the entities, but the exercise had been slow except for Noczim and New ZimSteel where there is notable progress.
"It is important to note that the Government has already approved a framework for the restructuring of State enterprises incorporating privatisation, commercialisation and restructuring.
"The Ministry of State Enterprises and Parastatals consulted all line ministries of the 78 parastatals in order to come up with the categorisation which was adopted by Cabinet after the recommendations of the Inter-Ministerial Committee on Commercialisation and Privatisation of Parastatals (IMCCPP).
"Unfortunately, the restructuring process for identified public enterprises has been slow, with the only notable progress being that of Zisco and Noczim," said Minister Moyo.
He said the slow pace of restructuring was largely the result of line ministries' and enterprises' management's lack of commitment.
Minister Moyo said fear of the unknown and resistance to change had seriously affected the decisions on options to be presented to IMCCPP and Cabinet.
He said memoranda on the restructuring of the Grain Marketing Board (GMB), Olivine Industries, Zimbabwe Grain Bag and Zimbabwe Power Company were deliberated on by IMCCPP and recommendations were yet to be considered by Cabinet.
He noted that the implementation of the restructuring programme did not entirely depend on the Ministry of State Enterprises and Parastatals but it was guided by the decisions of the line ministries as they govern the Acts of the parastatals under their portfolios.
"The regular convening of the IMCCPP meeting also determines the pace of the reform."
Minister Moyo said Government had been cautious on the public entities in the strategic sectors of the economy because privatisation was viewed as not the panacea of solving their challenges.
"In this regard, restructuring will entail implementing turnaround strategies augmented by Public Private Partnerships. It is however, encouraging to note that the Working Party of Officials and the
IMCCPP has been able to meet regularly over the year to discuss the restructuring memoranda presented by line ministries.
"Sadly, it is noted that there have been few meetings at the IMCCPP than at the Working Party of Officials," he said.
The Minister said the State Enterprises and Restructuring Agency had prepared the Restructuring Procedures Manual with guidelines to ensure transparency, accountability and fairness in the restructuring programme. These guidelines have since been considered and adopted by the IMCCPP.
He said the performance of State entities continued to be dogged by challenges that included undercapitalisation, antiquated infrastructure, low capacity utilisation, low working capital caused by low debt collection, outstanding long-term loans, non-compliance with good corporate governance and the existence of huge inter-parastatal debts causing a payment gridlock, and high wage bills not commensurate with capacity utilisation.
Meanwhile, Minister Moyo said the Technology Transfer Agreement for the manufacturing of switches that will culminate in the transfer of technology to the Zimbabwe Electricity Supply Authority by a South Korean company had been approved.
He said a memorandum on Public Private Partnerships on Chitungwiza Hospital was awaiting consideration by the Cabinet Committee on Investment and Development.
Source - zimpapers
