Zimbabwe’s government were recently furnished with the latest data showing the rot at parastatals. While these state owned entriprises (SOEs) are well known perennial money-pits that gobble hundreds of millions of US dollars each year they continue to contribute less and less towards the country’s Gross Domestic Product (GDP). Their contributions have shrunk from about 40% during the good times to a sad 12%.
…the parastatals used to contribute 40% to GDP in the past and now we are down to 12%. If you look at 2017, we were expecting them to make a profit of over US$200 million, but we got a loss of over US$340 million.
Clearly, it’s quite clear that there is something wrong that needs to be fixed. But then, we are migrating to this new model that we are looking into which is much more centralised, where we expect to then exercise better and more effective control on these state enterprises.What the experts had to say
Nobody is surprised really
Problems at parastatals are not new really. In fact the biggest problem is that fact that these entities are considered to be parastatals as opposed to State Operated Enterprises that need to be commercialised. The government has stubbornly resisted reforms that would improve transparency and efficiency at these entities. It all starts from the top really as the experts noted:
The current model is what you call a ‘decentralised model’ where the parastatals or SOEs are controlled or owned through the line ministry.
They (experts) have highlighted that perhaps what is happening here is that the line ministries do not have the adequate resources to even exert the right level of oversight on these parastatals and then the boards as well.
Often boards are appointed based on political affiliation rather than actual management experience. Even decent entities like NetOne are often not spared from the chaos with boards hired in the morning and fired in the evening. Entities are often used as pork-barrelling instead of the purpose for which they are created. Executive often award themselves perks that do not reflect their value or performance. The tender process are flouted, capitalisation deals scuppered…. We could go on but you get the picture.