State parastatals have been albatross around our neck - Mukupe

Deputy Minister of Finance and Economic Development Terence Mukupe has said some government parastatals which were expected to boost the economic situation in the country have of late become the albatross around the neck of the national economy.

Mukupe made the remarks in parliament on Tuesday.

"Section 195 of the Constitution of Zimbabwe provides that all companies and commercial interests in which the State has a significant interest must conduct their business in order to ensure commercial viability and they must abide by generally accepted standards of good corporate governance.Hitherto, our State entities which could otherwise have been, amongst other things, playing a vital role in contributing to the revenue realised by Government, presenting employment opportunities to our citizens, producing export receipts as well as products for domestic consumption  have been instead the proverbial albatross around the neck of our national economy," he said.

"The vicious and costly cycle of underperformance plaguing the parastatals sector requires an urgent and focused intervention and this, in part, has informed the reason behind the development of the Public Entities Corporate Governance Bill. Previous efforts to encourage compliance with sound corporate governance principles such as the Corporate Governance Framework for State Enterprises and Parastatals in 2010 and more recently, the National Code on Corporate Governance in 2015 have been largely unheeded by most public entities and in equal extent by their responsible line Ministers."

He said resultantly, the Auditor General's Report on State Enterprises and Parastatals for the year ending 31 December 2016 once again, revealed ongoing deep-rooted and far-reaching governance problems within the State enterprises sector and self evidently underlined the continuing failure by line Ministers to meaningfully address those problems.

"That notwithstanding,  Madam President, this Bill signals the latest step in Government's ongoing efforts to bring order and rationality to the parastatals sector and to ensure that such entities once again make a positive contribution to national economic growth. In many instances, management blames poor performance and unsatisfactory service delivery on the prevailing economic situation even where the company they superintend has a virtual monopoly and Government support in the sector in which it operates.  However, upon closer scrutiny, the reality that invariably emerges is that in a good number of the cases, it is the management itself which is the root cause bedeviling the company," Mukupe said.

"While primary responsibility for the management of public entities lies with the boards and management of the public entities, it is also clear that line Ministers, under whose jurisdiction a parastatal falls, have been failing to provide effective oversight over the entities which fall under their purview. Ministers must consider the success of their respective parastatals as a measure of their own effectiveness and should insist on compliance with sound corporate governance principles in order to curtail some of the shocking management excesses which have emerged and have become a defining attribute of the sector.  I speak here in respect of some of the vulgar salary and benefit packages some managers and board directors have awarded themselves during their incumbencies."

He said the Public Entities Corporate Governance Bill is designed to address these issues by bringing order, structure, transparency and consistency to this important sector of our economy.

"It also seeks to further empower line ministries to exercise far stricter oversight of their respective entities and to ensure that those entities operate in line with sound corporate governance principles and practices as enshrined in the Bill. In essence, amongst other aspects, the Bill gives legal force and effect to the National Code on Corporate Governance which is incorporated into the Bill as the First Schedule. I shall now proceed to highlight a few aspects of the Bill for the benefit of the House and in order to add some perspective to what the Bill seeks to achieve," he said.