Monday, July 18, 2011

Keynote Address and Official Launch of the Roll-Out Programme of the Corporate Governance Framework for State Enterprises and Parastatals by Hon. Gorden Moyo (MP), Minister of State Enterprises and Parastatals: Harare, Rainbow Towers Hotel, 18-28 July 2011

The Deputy Minister of State Enterprises and Parastatals, Honourable W.K Chidhakwa


The Permanent Secretary for State Enterprises and Parastatals, Mr E. Mutowo

Chairpersons of Boards of Directors

Members of Boards of Directors

Chief Executive Officers, Managing Directors and Director - Generals of State Enterprises and Parastatals here present today

Representatives of Development Partners here present today

Senior Government Officials

Invited Guests

Ladies and Gentlemen

I am glad to address you today, on this important occasion of the official launch of the roll out of the Corporate Governance Framework.

This programme is being launched at a time when the Government of the Republic of Zimbabwe has prioritised the restructuring of state enterprises and parastatals. A number of reforms of the public entities are already being implemented and these include restructuring, performance monitoring, legislative and regulatory review and corporate governance.

It is therefore noteworthy, that you are gathered here today for the single noble cause of gaining a deeper understanding of the principles of good corporate governance. It has generally been observed, that inadequacies in corporate governance is one of the most serious challenges that threatens the growth of our economy.

Non adherence to Corporate Governance practices by State Enterprises and Parastatals has largely contributed to underperformance by most of these entities. This state of affairs is a major concern to Government. Complicity to issues relating to transparency, accountability, appointment of Boards of Directors, Chief Executive Officers among others, has continued to tarnish the image of most of our State Enterprises and Parastatals. Ultimately, in the eyes of the general public and taxpayers, Government shoulders all the blame.





As a Ministry, our mandate is to maximise performance and shareholder value in State Enterprises and Parastatals and to develop and spearhead the implementation of reform strategies that optimise positive impact of State Enterprises and Parastatals, as well as ensure that they all operate and comply with principles of good corporate governance.

As we have stated before, State Enterprises and Parastatals in Zimbabwe have the potential to contribute about 40% of the Gross Domestic Product. In addition, they are essential enablers, providing the foundation for overall positive performance by the economy. However their general performance is inhibited by inadequacies in corporate governance.



State-owned enterprises are key pillars in constructing a democratic developmental state as they represent a substantial part of GDP, employment and market capitalisation. State-Owned Enterprises are also often prevalent in utilities and infrastructure industries, such as energy, transport and telecommunication, whose performance is of great importance in a democratic developmental state.



Good corporate governance in state enterprises and parastatals will therefore enhance our ability to build a democratic developmental state in Zimbabwe and it will ultimately lead to our country’s overall economic efficiency and competitiveness.



Good corporate governance of state-owned enterprises is also an important prerequisite for effective privatisation, since it makes the enterprises more attractive to prospective buyers and enhance their value.

Corporate governance refers to the way in which Boards oversee the running of a company by its managers, and how Board members are held accountable to shareowners and the company.

Good Corporate Goverance is one of the pillars of the New Partnership for Africa’s Development ( NEPAD ).

Operations of State Enterprises and Parastatals in our country have therefore been below expectation and we are keen to see improvements especially as there in now more intense public scrutiny of State Enterprises and Parastatals.

You will recall that on the 25th of November 2010, we gathered at this venue to witness the launch of the Corporate Governance Framework by the President of the Republic of Zimbabwe, His Excellency Cde.R.G.Mugabe. The Prime Minister of Zimbabwe, The Hon.M.R.Tsvangirai and the Deputy Prime Minister, Hon. A O.G Mutambara also witnessed the event.

Various speakers on that historic occasion emphasized and stressed the need for the implementation of the Framework. Indeed a framework, just like any other code, can be an effective tool, but cannot make people or companies ethical, nor can hammers and saws produce furniture.

In both cases they are necessary tools, which need intelligent design and application, by men and women with a high level of commitment to duty and integrity.



The efficient management of public enterprises, with integrity and due regard to the interests of all stakeholders, is a key priority for the Government. The current thrust of Public Enterprises Reforms focuses on reducing dependence on the fiscus for financial support and enhancing their contribution to the economic turnaround. The implementation of the framework will enhance economic stability and help restore the capacity of SEPs to contribute to the overall economy.

It is also of interest to note that globally, investment flows favor regions characterised by good corporate governance practices over those with poor governance practices. Zimbabwe in particular, is faced with a critical shortage of investment inflows to grow the economy.

Poor corporate governance in State Enterprises and Parastatals generally manifests itself in flouting of tender procedures, conflict of interest in procurement, misuse of public equipment and key appointments that are made unprocedurally.



The implementation of the framework and adherence to good corporate governance by SEPs will, no doubt, correct this scourge and make the entities favorable investment destinations.

It is correct to note that current legislation, that is, SEPs enabling Acts, the Companies Act, the Public Finance Management Act [PFMA], and various other related pieces of legislation on the administration of SEPs, provides a general governance framework for SEPs. Concern however has always been on non-adherence to these by the concerned parties, leading to the belief that even the crafting of a framework that harmonises the principles would be of no effect.

My Ministry has therefore, by tender, enlisted the specialist services of PricewaterhouseCoopers(PwC) in partnership with the Institute of Directors of Zimbabwe(IoDZ) to design and execute a training programme to roll-out the CGF, targeted at ,Board Chairpersons, Chief Executive Officers, Managing Directors or Director-Generals, Finance Directors, Company Secretaries and one non-Executive Director of the public enterprises.

The session beginning today marks the first phase of training, targeted at, at least 450 delegates. Training and exposure to best practices will be an on-going exercise. The target is that all Board members in State Enterprises and Parastatals will receive exposure to the principles of good corporate governance. I know that all of you will champion the awareness and adherence to good corporate governance practices in your respective organizations.

The Corporate Governance Framework document, is not cast in stone, stakeholders are therefore encouraged to periodically review the framework to ensure that it will remain in line with regional and international best practices.

This is in recognition of the fact that, corporate governance is dynamic and that there is no ‘one size fits all model’. I am aware that the facilitators of this roll-out programme have designed a programme that will stimulate active and positive debate from the delegates.

Views and comments generated from this engagement, will be of use to the Government and the Ministry as we endeavor to improve the framework and keep it relevant to prevailing conditions at any given time.



May I conclude by saying that, all over the world, companies with well managed governance structures, starting from the shareholders, Boards of Directors, Management and operational levels, are almost always more likely to portray an outlook that reflects integrity, fairness, transparency and will also command respect from stakeholders in as much as they have a higher likelihood of achieving success than failure.

Allow me to quote from Philippians 4: 8, It says “ 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 ( and I will add act ) on these things.”







With these few words I therefore wish you successful deliberations during the six days of training commencing today. I now declare the Roll-Out programme of the Corporate Governance Framework duly and officially launched.

I thank you

Siyabonga

Tatenda

Taboka

Reaboka



Hon.Gorden Moyo (MP),

Minister of State Enterprises And Parastatals