Zimbabwe govt to settle parastatal debt

The Ministry of Finance, Economic Development and Investment Promotion says it is intensifying efforts to settle mounting debts owed to state-owned enterprises (SOEs), including telecoms giant TelOne and power utility Zesa, as part of a broader strategy to restore liquidity and operational viability in the public sector.

The move comes as part of a government-wide arrears clearance initiative being developed in collaboration with the World Bank. A consultant provided by the global financial institution is currently supporting the Ministry to create a holistic debt management framework.

Speaking during the TelOne 2024 Annual General Meeting in Harare on Monday, Ministry of Finance Principal Accountant Portia Hamadziripi said all ministries and SOEs have been directed to submit their full arrears stock, enabling the Treasury to properly assess the scale of indebtedness and coordinate payments more effectively.

"We came up with an arrears stock clearance strategy that we are working on with the World Bank. All ministries and SOEs have submitted their arrears, and we held a workshop to discuss them. The numbers are quite huge," Hamadziripi said.

"To ensure accurate figures, we've involved auditors to verify the reported debts. Even with current revenue inflows being tight, we are trying to release money to ministries so they can pay their utilities - TelOne, Zesa, and other key service providers."

TelOne is among the hardest hit by the government's delays in settling dues. According to the company's financial statements presented at the AGM, government debt stood at ZiG517.2 million (approximately US$19.2 million) as of June 30, 2025, up from ZiG325.3 million recorded in December 2024.

TelOne CEO Lawrence Nkala said the persistent liquidity shortages, driven largely by delayed government payments, have severely impacted the company's working capital, increased counter-party risks, and curtailed capital expenditure plans.

"Liquidity shortages persisted throughout the year, negatively affecting our ability to fund critical network upgrades and expansion. We are actively engaging with the Government to explore settlement options and alleviate the pressure," Nkala said.

In addition to unpaid bills, TelOne continues to carry the burden of legacy loans inherited from the former Posts and Telecommunications Corporation (PTC), currently valued at ZiG10.05 billion (about US$389 million). This debt has pushed the company into a net liability position of ZiG32.2 million, as of December 31, 2024.

The company, through its shareholder the Mutapa Investment Fund, is pursuing a debt warehousing arrangement to clean up its balance sheet and attract much-needed capital for digital transformation.

Despite the financial constraints, TelOne is optimistic about its 2025 prospects. It plans to ramp up investment in LTE and Fibre-to-the-Home (FTTH) infrastructure to meet growing demand for data and telecom services.

Meanwhile, the Ministry of Finance reiterated its commitment to the broader debt clearance plan, saying the initiative is crucial for reviving SOEs and ensuring effective service delivery.

The debts owed by government to SOEs have significantly contributed to the country's overall debt stock, undermining the viability of key service providers and weakening the public sector's economic contribution.

While funding challenges persist, the Ministry pledged to continue disbursing funds in tranches to help ministries clear their obligations to critical entities like TelOne and Zesa, even as it seeks long-term financial reforms.