I am pleased to announce this morning, that Government has adopted a priority list of ten parastatals that will undergo restructuring before the end of this year. Government’s decision to produce and adopt a priority list underlines the open, orderly, planned, phased and transparent approach to restructuring, commercialization and privatization.
The restructuring process will be carried out on a case by case basis for each of the listed entities. This reform process is in resonance with Government’s medium to long term economic rehabilitation programme.
The 10 entities included in the priority list are the Cold Storage Company, Ziscosteel, NOCZIM, Air Zimbabwe, Agribank, NRZ, ZESA, GMB, NetOne and TelOne.Line Ministries working together with the State Enterprises Restructuring Agency (SERA) will now be expected to produce business and restructuring plans for consideration by Government.
Let no one remain speculating on the Government’s basis of this prioritization. Understanding and appreciating the rationale by both the public and the parastatals themselves is crucial if our strategies to reinvigorate these State Enterprises are to succeed.
Government took into account the strategic nature of each state enterprise and its potential to attract investors. Fundamentally, it is those enterprises whose successful revitalization could catalyze the recovery of others directly or indirectly and consequently stimulate economic growth.
However some enterprises have been included on the priority list because they are already restructuring and therefore such progress need support.
Since Government recognizes that the State Enterprises and Parastatals (SEPs) are critical catalysts and enablers for the recovery of all key sectors of our economy, due attention and diligence has been invested in this restructuring process.
This realization has provided an impetus for the Government to unveil interlinked restructuring policies, crafted and promulgated in an effort to improve the efficiency and effectiveness of SEPs so as to steer the economy towards sustainable growth and an effective development path.
It should be observed as well that this restructuring is being done on the background of the need by Government to address “funding trap challenges,” fiscal drain, inefficiencies and corporate governance challenges.
On the same note, it should be realized that “Funding traps” which have manifested themselves through the failure by the public utilities to meet their financial obligations are characterized by amongst others:
• Inappropriate operating and financial structures;
• Undercapitalization;
• Serious deterioration of infrastructure due to limited resources for both maintenance and new investments
• A huge debt overhang in a liquidity crunch environment;
• Lack of Credit lines.
These challenges have for some time now constricted SEPs from sustaining their operational requirements and recapitalization needs thereby undermining their capacities for service delivery to the public.
By this initiative, Government has undoubtedly demonstrated its commitment to creating an enabling business environment and leading by example in enhancing a culture of corporate governance.
Notwithstanding the many hurdles to be faced at implementation, the reforms would eventually go a long way in improving the SEPs balance sheets and ensuring their financial independence, so that in the near future they can approach capital markets for their projects and contribute accordingly to the economy and national development. Indeed public enterprises have essentially a social responsibility role, in as much as they should strive for healthy financial performance.
Let us all embrace heartily these reforms and be determined to achieve progress for the good of our country. The time is now and the irreversible process has begun.
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