GOVERNMENT has made giant strides in reforming State-Owned Enterprises (SOEs), which entails privatisation, restructuring or dissolution, with most of the targeted entities now either seeking partners or awaiting appointment of a transaction advisor.
Finance and Economic Development Minister Mthuli Ncube revealed this during a National Budget seminar with Members of Parliament at Elephant Hills, Victoria Falls, last week ahead of the presentation of the 2020 National Budget on November 14, 2019.
A total of 43 SOEs have been identified for various reforms in line with dictates of the Transitional Stabilisation Programme (TSP) and these SOEs include the National Railways of Zimbabwe (NRZ), Telecel, TelOne, NetOne, Agribank, Allied Timbers, Smedco, Zinara, SIRDC, IDBZ, Arda, Printflow, Natpharm, Zimpost and IDC.
Since the onset of the economic reforms that began last year, Government took the decision to reform the majority of the State entities to enhance their performance, strengthen them and improve their contribution to economic growth.
The majority of the SOEs have perennially depended on the financially constrained Treasury handouts yet, in the glory days, the entities contributed 40 percent of Gross Domestic Product (GDP). Now, they chip in with just about 2 percent of GDP.
In fact, the Auditor-General’s 2017 report established that about 70 percent of SOEs were technically insolvent after they incurred a combined US$270 million loss for financial year 2016.
Minister Ncube said the latest decision on the issue of SOEs reform pertained to partial privatisation of State-owned oil companies, namely Petrotrade, Genesis Energy Limited and the Central Mechanical and Equipment Department (CMED)’s fuel retail operations.
The finance minister said synergies would enable the companies, which have been merged as a package, ahead of their privatisation, to operate more profitably.
Generally, the minister said, delays on State entities that have been identified for reforms only pertain to public procurement of transaction advisors, which has to follow the laid-down procurement laws and regulations, especially those to be sold.
Minister Ncube said that Government had moved with tremendous speed in terms of identifying and making the decisions on which SOEs needed to be privatised, restructured or where need be, dissolved.
“We are making progress, but we could go faster, we know that ourselves. So, in terms of making decisions to either privatise, liquidate or whatever, we are making those decisions; we are in fact ahead of time.
“The issue now is execution beyond that point, this is when now a transaction advisor should then come on board so that process, which is a procurement process, should not be protracted.
“So, we have tried again to expedite that so that the transaction advisor comes on board and advises in terms of expressions of interest, evaluation, inviting the suitors to invest, adjudicating on that in consultation with the inter-ministerial committee of Government. That process is taking longer, Mr Speaker Sir, we will get there,” the minister said.
Minister Ncube said significant ground had been covered on NetOne and TelOne, which will be privatised as a single package, with a transaction advisor having already been secured to find suitors.
An investor is being sought for de-merged former Grain Marketing Board division, Silo Foods Industries, for which an investor is currently being sought while the bid for POSB transaction advisor was done and soon an interested investor would be sought.
“In terms of rebundling Zesa, that process is underway. We are just waiting for the Ministry of Energy and Power Development to report to us in terms of that progress,” the minister said.