Honourable Ministers from the host country the Republic of South Africa and those from the region and beyond
Senior Government Officials here present
Board Chairpersons, Chief Executive Officers, and Senior Management of State Owned Enterprises and Parastatals here present
Invited Guests
Ladies and Gentlemen
1. I am very delighted to have been invited, not only to be part of this special occasion but also to be given an opportunity to address this workshop. This workshop comes at a time when debate on corporate governance issues has gained worldwide prominence. The subject has also received wide publicity due to the negative, if not disastrous, impact it has had on multinational corporations across the world as well as national economies.
2. Distinguished Guests, Ladies and Gentlemen, let me begin by pointing out that State Owned Enterprises/Parastatals (SOEs) in developing economies are the engine that drives national economic growth, and have an important role in macroeconomic development and stabilization. It is important to note that most of the major SOEs are economic enablers for the growth of other sectors in that they provide utilities such as electricity, water, communication and transport networks. Efficient and reliable supply of the public utilities naturally should ensure an increase in capacity utilization across all sectors of the economy, most importantly the private sector.
3. Governments in the region therefore are firmly convinced that it is critically important that the full potential of SOEs be realized in order to spur economic growth and development. In Zimbabwe, SOEs should normally contribute up to 40% of the GDP. Also of note is that in its economic recovery programme the Inclusive Government has rightfully identified and entrusted SOEs to spearhead recovery, especially in ensuring food security, infrastructure rehabilitation and improved social services delivery. These are the top most priorities of Zimbabwe’s Inclusive Government not of course excluding political stabilization and democratization.
4. Ladies and Gentlemen, while it is common knowledge that the last decade registered a significant decline in the operations of SOEs, I shall pay particular focus to Zimbabwe whose situation was very unfortunate and quite challenging. The combined effect of political and economic challenges had a severe impact on almost all SOEs in the last decade and the consequences could yet be far more devastating for the country in future unless appropriate measures are put now. The challenges faced by SOEs were characterized by some of the following:
• huge debt overhang;
• serious deterioration of infrastructure due to limited maintenance;
• lack of new investments;
• shortages of working capital which have constrained the procurement of essential spares;
• limited access to external lines of credit; and
• human capital flight.
Equally significant to note is that civil strife in Zimbabwe has had a serious negative impact on the economy.
5. Given this state of affairs and bearing the developmental role to be spearheaded by SOEs, the Government of Zimbabwe has enunciated a policy of restructuring, commercialization and privatization of SOEs on a case by case basis. Skeptics in our midst, and they are many and in this case with justifiable concerns, would claim that this is not new. Such policy pronouncements have been made before and nothing happened. As Government we are very much aware of and appreciative of such concerns. Even before the Zimbabwe crisis, there was criticism that:
“The framework for public enterprise restructuring in Zimbabwe is a minefield, characterized by a multiplicity of pieces of legislation, institutions, and at times contradictory policies, and even policy reversals’
6. The current Inclusive Government of Zimbabwe has unanimously agreed on a paradigm shift and I can emphatically state that my ministry as responsible for this important mission will ensure the end of ad hoc approaches to policies resulting in contradictions and counter production. The process of harmonizing the process has admittedly been slow but is coming on very well so far. Our kingpin in turning around the fortunes of SOEs is adopting the Global Best Practices, especially Corporate Governance.
7. The Corporate Governance Framework we are working on should factor and ensure the following:
a. More disclosure by SEPs
b. Clarify objectives and secure an explicit mandate
c. Management Autonomy in operational decision making
d. Running State-Owned Enterprises Purely on a Commercial Basis
e. Performance Management
f. Restructuring through social dialogue
g. Staff Motivation
8. To achieve these ideals Ladies and Gentlemen we need not re-invent the wheel, we are drawing lessons from experiences in the region, and throughout Africa particularly lessons from other emerging economies. I strongly believe that lessons from Middle, Eastern Europe, the Far East, Brazil and other South American countries, are useful in developing strategies for successful governance of SOEs in general. Lessons and experiences on restructuring programmes with special reference to privatisation of SOEs are particularly useful to us Zimbabwe and I believe to us all here.
9. Ladies and Gentlemen, Principal Stakeholders in the exercise of good Corporate Governance include Governments, Boards of Directors, Chief Executive Officers of companies and SOEs, other stakeholders, Senior Management and Auditors. Other stakeholders with a part to play include suppliers, employees, creditors, customers and communities at large whose actions or inactions have an impact on the seven pillars of good corporate governance which are:
• fairness,
• responsibility,
• accountability,
• transparency,
• discipline,
• independence; and
• social responsibility.
It is only when an organization observes these principles that it can be said to be practicing good corporate governance, therefore it remains the onus of Boards of Directors to ensure proper governance in the organizations they lead.
10. It is therefore important to understand and appreciate the role that each stakeholder plays in the governance of SOEs and Government Agencies. Boards of Directors, as custodians of Corporate Governance are entrusted with ensuring the adherence to good business ethics in their respective organizations. Boards of State Enterprises and Parastatals should therefore have the necessary authority, competencies and objectivity to carry out their function of strategic guidance and monitoring Performance of senior management and the organization as a whole. Members of Boards are expected to act with integrity and should be held accountable for their actions.
11. Zimbabwe is, as I have already noted, at an advanced stage of developing a Corporate Governance Framework for State Enterprises and Parastatals not only to provide guidelines on best practices, but also to provide a revised Institutional Framework that addresses issues of reporting lines, responsibilities and relationships among key stakeholders in the management and administration of State Enterprises and Parastatals. There is no more room for indecision and policy vacillations on our part and therefore SOEs managers have no excuse either. The inclusive Government of Republic of Zimbabwe therefore stands to benefit immensely from the outcomes of workshops like this one.
In conclusion, it is my sincere hope that as we deliberate on matters of governance of SOEs, we will not only come up with strategies for successful management of these entities, but also be able to link the strategies to concepts of Performance management.
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