Parastatals bleed broke govt

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By Shame Makoshori

The cash-strapped government is pumping out huge sums of money to prop ailing parastatals, including the troubled National Railways of Zimbabwe and the collapsed Redcliff-based integrated steelmaker, Ziscosteel (Zisco), the Financial Gazette has learnt.

File Picture: Globetrotter Robert Mugabe and his wife Grace using an Air Zimbabwe plane on a trip to South Africa
File Picture: Globetrotter Robert Mugabe and his wife Grace using an Air Zimbabwe plane on a trip to South Africa

Information obtained this week indicates that seven State-owned enterprises received US$110 million between 2012 and last year, draining Treasury which last year failed to pay civil servants’ bonuses until the workers threatened strike action early this year.

In 2013, the Ministry of Transport advanced US$5,5 million to the NRZ, US$11,5 million to Air Zimbabwe, US$4 million to Tel One and US$10,5 million to the Civil Aviation Authority of Zimbabwe (CAAZ), according to details of a 2014 audit on parastatals done by Auditor General, Mildred Chiri.

The Industrial Development Corporation (IDC) and Zisco also received close to US$14 million from the Ministry of Industry and Commerce in 2013.

“The Ministry advanced Zisco US$7,7 million and IDC US$4,8 million to assist them with their loan obligations,” says Chiri.

“No loan agreements were signed between the Ministry and the two parastatals specifically the terms and conditions for the loans. Therefore the legality of the advances could not be ascertained.”

In 2012, government poured US$22,5 million into NRZ and the Civil Aviation of Zimbabwe (CAAZ).

The report also shows that government has been diverting money meant for the production of vehicle number plates towards sustaining Air Zimbabwe, which received US$20 million from the Number Plate Fund in 2013. The Small Enterprise Development Corporation received US$4,2 million between 2009 and 2013.

A Cabinet report last year revealed that State-owned enterprises’ top management staff were taking home obscene salaries and perks ranging from US$20 000 to as high as US$525 000.

The disclosures courted a furore in a country where millions of people live in abject poverty, with most workers taking home incomes below the poverty datum line.

Mismanagement, corruption and fraud in State-owned firms have become corrosive, grossly undermining the country’s economy.

Most of the country’s 80 parastatals had been earmarked for privatisation but government appears reluctant to let go off these institutions, despite the fact that they have become a burden rather than a benefit to the fiscus.

Analysts said government could disband half of the parastatals, commissions and authorities to increase efficiency and save millions of dollars, while re-directing scarce resources towards more important commitments like drugs procurement and support for collapsing health institutions.

Independent economist, John Robertson, said the situation was now desperate and it called for radical measures.

“If you look at 20 years ago when they wanted to privatise, there was money in the system. There is no money now,” he said.

“There were also objections by Zimbabweans for foreigners to buy State firms. So it meant for a company like Air Zimbabwe, it was beyond the reach of many. We need to change the rules and allow foreign investors to own shares in State enterprises. They can handle them well; it does not matter who owns them,” Robertson said.

The National Indigenisation and Economic Empowerment Board (NIEEB) is among the recipients of government funding, as well as the National Incomes and Pricing Commission (NIPC) whose officials are getting good perks thanks to government.

Chaired by controversial politician, Goodwills Masimirembwa, NIPC wreaked havoc in the economy during the hyperinflationary era, cracking down on private sector executives who were arrested and prosecuted for charging viable prices for their products.

After liberalising the economy in 2009, NIPC became redundant. The Ministry of Industry and Commerce said it now wants to transform the NIPC into another obscure outfit called the Competitive Commission.

Another white elephant is SERA, the former Privatisation Agency of Zimbabwe.

First, SERA’s role was to privatise State firms, but after progressing at a snail’s pace since its launch in 1997, its role shifted to restructuring State firms.

SERA has not privatised a single parastatal in the past decade, let alone restructure.

Other State firms bleeding the fiscus include the Agricultural and Rural Development Authority, the Cold Storage Company, the District Development Fund, the Forestry Commission and ZUPCO. Financial Gazette

  • i cannot stop laughing the way this government trys to blame every one but themselves for the poor state of our country and its businesses . you look at a ministers house and then look at the state of our country ,you will see where the money is going into their pockets

  • Mukanya

    Its ZANU PF that is bleeding to death these entities called PARASTATALS!!!