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Parastatals to be privatised in six months, says official

by Staff reporter
12 May 2019 at 05:25hrs | Views
The government expects to find investors for state enterprises earmarked for partial privatisation and tie up the deals in the next six months, an official has said.

Zimbabwe has 107 state-owned enterprises and parastatals, which contribute a paltry 2% to the country's gross domestic product (GDP) from a peak of 40% in the 1990s.

In 2016 alone, about 38 of these firms ran cumulative losses of $270 million, indicating poor management, weak corporate governance and a deep-seated rot in public enterprises.

As of July 2018, the state enterprises and parastatals owed the taxman $491 million.

But as part of an economic reform agenda, government announced a restructuring exercise of up to 47 state enterprises and parastatals in order to improve efficiencies and reduce reliance on treasury.

Some will be partially privatised through the engagement of strategic partners and/or listing on the Zimbabwe Stock Exchange, while others will be merged, fully privatised and/or liquidated.

"We expect in the next six months or so quite a number of strategic partners for those state enterprises earmarked for partial privatisation.

"There is a lot of progress (on the restructuring of parastatals).

"As you may know, already on April 1, Silo Foods, which was a commercial operation, was already separated from GMB (Grain Marketing Board)," State Enterprises Restructuring Agency (Sera) executive director Edgar Nyoni told Standardbusiness.

"So that one we have achieved already and we are now at a stage where we are looking for partners, strategic partners, for the recapitalisation of Silo Foods, so that one has been achieved."

The 15 state enterprises earmarked for partial privatisation are National Handling Services, Petrotrade, Zimpost, People's Own Savings Bank, Zimbabwe Mining Development Corporation, and Infrastructure Development Bank of Zimbabwe.

The others are Road Motor Services, TelOne, NetOne, Telecel, Zupco, Willowvale Mazda Motor Industry, Chemplex Corporation, Deven Engineering, and G & W Minerals.

"We have finalised the engagement of a transitional advisory which was a process done under the Procurement and Public Disposal Act, so some of our advisors are now in contract negotiations, then they will be resuming the work of doing advisory services," Nyoni said.

"We expect in the next two or three months we will be in the market with invitations of expressions of interest."

 This past week, the Industrial Development Corporation of Zimbabwe (IDCZ), a government investment vehicle, put notices seeking investors for two of its assets Willowvale and Devon Engineering.

The reform programme is being funded by a grant from the African Development Bank amounting to US$4,2 million.

Since the grant was approved, US$1 million was disbursed to procure consultancy services for parastatal performance to review and assess activities with US$1,8 million set to be disbursed this year.

Source - the standard