Cabinet sets new rules for appointment of boards and CEOs of state enterprises

Cabinet yesterday set a new policy on the appointment of boards and chief executive officers for state enterprises under which board members will now be required to declare their assets before taking office.

Board members will also be required to serve not more than two terms of four years each.

Permanent secretaries will no longer be allowed to sit on boards and no board members will be allowed to sit on more than two boards.

CEOs will be required to sign performance contracts and will serve four-year contracts which are renewable. Their performance will, however, be reviewed every quarter.

Yesterday’s cabinet decision seemed to have pre-empted recommendations by parliament which is currently debating a motion that called for better corporate governance.

Several legislators who have so far contributed have called for harsher punishment, including capital punishment, for corrupt CEOs and wanted a parliamentary committee to have oversight over the appointment of boards and CEOs.

This role was given to a cabinet committee yet legislators complained that some of the ministers were corrupt and were responsible for the rot in the state enterprises.






THE MINISTER OF FINANCE (MR. CHINAMASA): Mr. Speaker Sir, I thank you very much for allowing me to make this Ministerial Statement on corporate governance and remuneration policy framework for Chief Executive Officers of parastatals, state enterprises and local authorities.

Mr. Speaker Sir, it is common cause that the state of malaise that is widespread in most parastatals, state enterprises and local authorities has become a matter of intense public interest. This is particularly so in connection with issues of corporate governance and remuneration levels of Chief Executive Officers of these entities.

Under the direction of His Excellency the President, Cde R. G. Mugabe, Government has since 26 November, 2014 (2013), been seized with the task of uprooting the malaise that is bedevilling parastatals, state enterprises and local authorities. Government’s commitment is to ensure that all forms of corruption in the management of state institutions and agencies are redressed in a manner that leaves no stone unturned.

In this connection, Cabinet has today taken measures to bring corporate sanity in the governance of parastatals, state enterprises and local authorities. The measures address:

  1. Boards appointments, management and performance;
  2. CEO appointment and performance.
  3. Subsequently measures will be taken to deal with the more complex issues of salaries, allowances and procurement practices of public enterprises and local authorities.

Mr. Speaker Sir, with regards to board appointment management and performance, Cabinet has taken the following decisions:

  1. That board members be selected on grounds of merit, based on a clearly defined capability matrix and skills mix, in areas such as legal, finance, marketing, audit, technical, human resources, strategic and economic planning
  2. That a 50:50 gender representation and regional spread be factored into the selection of board members.
  3. That a Corporate Governance and Delivery Agency be established within the office of the President and Cabinet to coordinate and monitor compliance with the Corporate Governance Framework and the National Code of Corporate Governance in Zimbabwe (ZIMCODE).
  4. That a systematic programme for the induction and training of board members be carried out under the auspices of the Corporate Governance and Delivery Agency.
  5. That line Ministries should, at the time of appointment of the board, clearly spell out the mandate of the board for the period of its office.
  6. That board members be required to declare their assets and sign a code of conduct upon appointment and to declare their interests before commencement of discussion of any agenda item in which they have an interest.
  7. That all boards be appointed for a four year term which is renewable once.
  8. That no Permanent Secretary should be a member of a public enterprise board but that Ministers should appoint appropriately qualified and experienced persons from their ministries to sit through deliberations of the board and to report to the Ministry the gist of the board’s deliberations.
  9. That a member of the management or board of a Holding Company may sit on the board of a subsidiary company;
  10. That boards should meet on a quarterly basis, while any extraordinary board meetings are to be cleared first by the relevant Permanent Secretary.
  11. That all resolutions of the board should be submitted to the Minister and must be signed by the board’s Chairperson, CEO and Corporate Secretary.
  12. That all State Enterprises should hold annual general meetings, which should be attended, on the Government side, by representatives from the Office of the President and Cabinet, Treasury, the parent Ministry, Comptroller and Auditor General and other stakeholder ministries.
  13. The Corporate Governance and Delivery Agency should compile and maintain a data bank of all potential board members on a parastatal to parastatal basis, reflecting the regional spread from which the ministers should pick nominations for approval by His Excellency the President when the need arises.
  14. That Board Chairpersons should keep the line Ministers regularly briefed on major decisions after every Board meeting and before the next board meeting and through face to face meetings with the Minister and prompt submission of reports and board minutes.
  15. That line Ministers should meet full boards under their jurisdiction at least twice a year.
  16. That all decisions on the conditions of service of the Chief Executive Officer must be made by a resolution of a properly constituted board meeting.
  17. That all external audit reports must be submitted by the auditors directly to the Ministry in addition to the submissions made to the board.
  18. That no person shall sit on more than two boards of a Public Enterprise. Membership of a board of an Enterprise in exofficio capacity is not considered as relevant for purposes of this limitation.
  19. That the office of the President and Cabinet should, at the appropriate time gazette all current appointments to boards and their tenure of office and should regularly, through the Gazette update such information.
  20. That every board should have separately constituted an Audit Committee, a Finance Committee, a Human Resources Committee and a Remuneration Committee.

Mr. Speaker Sir, with regards to Chief Executive Officer’ appointment and performance, Cabinet has decided as follows:


  1. That the board and the Minister must agree on the person specifications for the Chief Executive Officer position and proceed to invite through a press advertisement applications to fill the position. Interviews will then be conducted by the board, with the assistance of professional Human Resource Consultants. The board will then submit three recommended appointees for the Chief Executive Officer position to the Minister, in order of priority. We will then in turn submit these recommended candidates to His Excellency the President for his approval.
  2. That the line Minister should insist on obtaining documentary evidence of compliance by boards with the procedures for the appointment of a Chief Executive Officer as I have outlined above.
  3. That Chief Executive Officers and other Senior Management in State Enterprises, Parastatals and Heads of Local Authorities be put on performance contracts.
  4. That boards in line Ministries should be strengthened in their capacity to negotiate robust employment contracts.
  5. That boards should evaluate the performance of Chief Executive Officers on a quarterly basis and brief the line Minister on the results thereof.
  6. That employment contracts should be entered into at the point of engagement and must clearly spell out what a Chief Executive Officer is entitled to as severance package under the different scenarios of termination of service.
  7. That Chief Executive Officers should enter into 4 year employment contracts which maybe renewable once. The contract should clearly spell out the minimum requirements which, if not met should constitute grounds for termination of service.
  8. That there be strong monitoring and evaluation mechanism to assess the performance of Chief Executive Officers under the performance contracts entered into with their respective boards of directors.
  9. That Chief Executive Officers must report directly to the Permanent Secretary on a regular basis including, with respect to all significant decisions after management meetings.
  10. That the Chief Executive Officer of a Parastatal/State Enterprise should not be a board member of another Public Enterprise.
  11. That the Chief Executive Officer should attend board meetings as an ex-officio member and
  12. That implementation of this policy framework will entail, in certain instances, amendment of the founding statutes for some Parastatals/State Enterprises.

Mr. Speaker Sir, the Cabinet Committee on State Enterprises and Parastatals development is now dealing with the malaise of salaries, allowances of senior managers of these entities and their procurement practices. These issues have been at the centre of public debate and media exposure. Government, Mr. Speaker Sir, is fully committed to ensuring that this matter of immense public and indeed, national interest is resolved in accordance with due process of the law.

In this connection, Government has decided that the Cabinet Committee on State Enterprises and Parastatals development will oversee the forensic audit of all Parastatals and Local Authorities to give them a clean Bill of Health as maybe necessary on a case by case basis.

In undertaking this important and urgent task, the Cabinet Committee on State Enterprises and Parastatals development will endeavour to ensure that the process is objective, transparent for impartial, non political and strictly evidence based. Put differently, the Committee will not superintend over a politicized witch-hunt against any individual or interest.

Mr. Speaker Sir, I thank you for the attention



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