Over half Zimbabwe’s parastatals are insolvent

About 38 of Zimbabwe’s state-owned enterprises and parastatals ran cumulative losses of $270 million last year alone, an official said today, indicating weak corporate governance and a deep-seated rot in public enterprises.

Reports by Auditor General, Mildred Chiri have in recent years shed light on a culture of impunity and lack of accountability that prevails among parastatals and state institutions who have become fertile grounds for corruption.

The Chief Secretary in the Office of the President and Cabinet, Misheck Sibanda told a meeting to discuss reforms of the public sector, that more than half of the country’s state owned enterprises and parastatals are technically insolvent and rely on bailouts from Treasury.

Zimbabwe has 107 state owned enterprises and parastatals which contribute a paltry 2 percent to the country’s Gross Domestic Product (GDP) from a peak of 40 percent in the 1990s.

“Whereas management, including line ministries attribute the state of affairs to harsh operating economic environment, legacy debt issues and failure by government to adequately recapitalize after the hyperinflationary period, the fact remains that corporate governance weaknesses and ineffective internal control systems identified by the survey and confirmed in many cases by the Auditor General’s annual reports, significantly contribute towards perpetual underperformance of the sector,” said Sibanda.

Finance Minister Ignatious Chombo who was also present at the meeting said government was not in a position to keep on ‘bailing-out underperforming entities or those which have outlived their usefulness.’

Government has targeted 10 key institutions for transformation under a program aimed at restructuring the sector.

A Public Entities Corporate Governance Bill has also been developed to improve the performance of state enterprises and parastatals.

It is expected to become law before the end of this year.- The Source

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