Chairperson, Organisers of the workshop, Caiptains of the Business Sector, Ambassador of Zimbabwe in the United Kingdom, Collegues from Zimbabwe, Distinguished Guests, Ladies and Gentlement.
It is a great pleasure to be invited to this important occasion to present this crucial topic which comes at an opportune time for our country as we are forging ahead with the aims of improving the performance of SEPs as part of our efforts to turn around the economy.
The Global Political Agreement (GPA) which saw the formation of a Government of National Unity (GNU) ushered a new era characterised by renewed appetite to revive the economy through the need to attract investment. This turn of events has been further cemented when the Government adopted more realistic and prudent policies which have seen the country record GDP growth for the first time in a decade, although coming from a very low base. Official GDP growth of more than budget statement of 8 percent is forecast for the year 2011 which strengthen the needs of foreign investment.
This landmark political situation has seen Zimbabwe emerging from a decade of economic challenges which were characterised by high unemployment, negative Gross Domestic Product (GDP) rates, low capacity utilization, low savings and investment levels among other challenges. This economic situation did not spare the operations and viability of the public enterprises in the country.
Given the role of public enterprises in steering the turnaround of economies emerging from economic challenges like Zimbabwe, the Government has made an unwavering commitment of promoting and implementing public enterprises reforms. The adoption of restructuring strategies of public enterprises as one of the key economic reforms will strengthen the role played by the public enterprises sector in economic growth and development. The vision of Government with regards to restructuring is guided by the following principles:
• enhancing the efficiency and effectiveness of public enterprises;
• attracting foreign direct investment;
• mobilizing capital and expertise from the private sector;
• ensuring wider indigenous participation in the economy;
• reducing the public sector borrowing requirements;
• accessing globally competitive technology; and
• creating export market for newly restructured entities
Distinguished Guests, ladies and Gentlemen, the under performance of our public enterprises over the past years can not be rectified without religious adherence to international best practices in restructuring of state owned enterprises tailored to the environment prevailing in the country. The current thrust world over has shifted from whole sale privatization to a more conservative government shareholding dilution through strategic partners, engagement of joint venture partners, listing on capital markets and Public Private Partnerships (PPPs).
The initial phases of the privatisation in Zimbabwe were fairly successful as evidenced by the restructuring success stories that saw successful completion of privatisation of Commercial Bank of Zimbabwe (CBZ), Dairiboard Zimbabwe Limited, AICO (formerly Cotton Company of Zimbabwe), Caps (Pvt) Ltd and recently Ziscosteel.
It should however be noted that when the relative stability in the economy was achieved in 2009, the Government renewed its commitment to the implementation restructuring inline with its policy on public enterprise reform. In line with the Three Year Macroeconomic Policy and the Budget Framework for 2010-2012 (STERP 11) the Government unveiled restructuring policies crafted to turnaround the performance of State Enterprises and Parastatals (SEPs). As part of these efforts the Government approved procedures for the SEPs reform process which subsequently led to the identification of ten (10) major public enterprises that have been prioritized as first candidates of focus for restructuring on a case by case basis after Cabinet approval. The entities included in the priority list are;
1. ZISCOSTEEL
2. Cold Storage Company (CSCL)
3. National Oil Company of Zimbabwe (NOCZIM)
4. Air Zimbabwe
5. National Railways of Zimbabwe (NRZ)
6. Agribank
7. Zimbabwe Electricity Supply Authority (ZESA)-(ZPC)
8. Grain Marketing Board (GMB)
9. NetOne
10. TelOne.
These entities targeted for restructuring dominate the sectors they are operating in particular: power, steel production, beef processing, banking petroleum/ infrastructure and distribution, grain distribution, rail, air, and telecommunications.
In the energy sector there are opportunities to partner the Zimbabwe Electricity Supply Authority (ZESA) in power generation and distribution. The current generation capacity does not meet the national demand for power but Zimbabwe is endowed with a wide variety of conventional energy sources for electricity generation, of which the main ones are coal, hydro and coal-bed methane. There are also opportunities for Independent Power Generation for rehabilitation of existing infrastructure and new projects altogether.
There is even greater scope for serious investors that can partner National Railways of Zimbabwe (NRZ). In the past decade, the capacity of the railway network to provide the services has been severely eroded. Track infrastructure, signalling and telecommunication system deteriorated over the years due to lack of regular repairs and maintenance because of financial constraints of NRZ. Rehabilitation of the network and rebuilding the services offered by the rail network is therefore a major priority of the country with a strategy of allowing private players.
The fixed telecommunication provider Telone is facing an uphill task of rehabilitating the telecommunication infrastructure and to expand the network as well as bringing modern technologies in the sector in line with global trends. In this regard, the fixed network company will be looking for strategic partners.
While NetOne the mobile company needs financial and technological capacitation throug strategic partnerships to catch up with its competetiors in the subscriber base and technology.
In the aviation sector the national carrier Air Zimbabwe has been battling to remain competitive owing to financial constraints that have faced the Airline over the years. The airline requires financial injection to acquire new aircrafts and other operational expenditures, for the airline to raise the needed capital from internally generated resources it has proved to be difficult and therefore the airline requires a strategic partner who comes in with fresh capital injection. In the same sector the Civil Aviation Authority of Zimbabwe (CAAZ) will require substantial additional resources to build a sustainable competitive advantage through provision of world-class facilities and customer service. The work plan will involve the rehabilitation and upgrading of aviation infrastructure at the airports and the restructuring programme to attract much needed private sector funding for rehabilitation and upgrading of airport facilities to accommodate the projected growth in passenger and freight movements.
Given the attractiveness of some of these assets, the Government has considered disposing some of these assets to strategic investors who will assist in strengthening the technological base, access to foreign markets and a stable financial base. With new investment in many of the privatised enterprises, it is expected that entities will improve their performance, realise their expansion drive and create new jobs.
At this point in time, I would like to emphasise that the Government of Zimbabwe does not restructure, in particular privatise as an end in itself, but as a key tool for improving the efficient allocation of resources, for mobilising investment, and for stimulating private sector development. This will be achieved by reducing the role of Government in economic activities thereby creating investment opportunities for the private sector participation and promoting the development of the capital market.
The Government is fully aware of the vast investment opportunities in the public enterprises and hence it has committed itself to unlocking value in these enterprises. The unveiling of new investment opportunities in infrastructure expansion and rehabilitation is one of the key areas where foreign investors are being called to explore through strategic partnerships and Public Private Partnerships (PPPs). The Government is currently crafting Public Private Sector Partnerships Regulatory and Legal Framework that will see the creation of the PPP Unit as a central unit responsible for coordinating, implementation and monitoring of Public Private Partnerships (PPPs) projects in Zimbabwe.
Years of economic decline as I have earlier alluded to, have resulted in a lot of the country’s infrastructure being in need of refurbishment or development/expansion. Inadequate power, telecommunications networks, water supply, rail network, and lack of dual roads are constraining business operations. I therefore call upon interested investors to urgently express their interests in these sectors which together form the economic backbone of our country.
The recently announced indigenization laws have initially somewhat dampened investor sentiment, as they were perceived to be compelling investors to give majority equity in ventures to the indigenous people. However, after much widespread consultation, the Government has adopted a policy to review and revise the regulations through sectoral committees which will make recommendations to the Government. The sector specific recommendations take into consideration concerns from the wider spectrum of stakeholders which include business, investors and society at large. I take this opportunity to assure the safety of new investments will be guaranteed through Bilateral Investment Promotion and Protection Agreements (BIPPAs) signed with a number of countries.
The Government has noted the need to improve the legal, institutional and regulatory arrangements and has therefore started the review of the legal and institutional framework for State Enterprises and Parastatals aimed at improving the effectiveness, autonomy and accountability of these SEPs. In this regard, the Government recently launched a Corporate Governance Framework for State Enterprises and Parastatals which gives the guidelines that spells out how SEPs are directed and controlled by emphasising the need for Boards to adhere to principles of Good Corporate Governance which include the following among others; accountability, transparency, openness, responsibility and fairness.
In conclusion, I reiterate that the Government has once again rekindled its desire to restructure SEPs in order to stimulate economic growth. As the country follows the principles of a democratic developmental state, government promulgated various macroeconomic policies which afford investors, both local and foreign, vast opportunities for investment ready for take-up. I call upon you investors sitted here today to express your interests to the various arms of Government on specific sectors for consideration by the authorities. Let us all unite to revive our SEPs for the restoration of our economic glory and assume our rightful position among progressive nations.
Philippians 4v8 “ Finally, brethren, whatsoever things are true, whatsoever things are honest, whatsoever things are just, whatsoever things are pure, whatsoever things are lovely, whatsoever things are of good report; if there be any virtue, and if there be any praise, think on these things.”
I Thank You
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