By Alfonce Mbizwo | Reuters |
Zimbabwe has invited bids for stakes in up to eight loss-making state-owned enterprises, including its national airline and power utility, to help plug a ballooning budget deficit, its deputy finance minister said on Wednesday.
President Emmerson Mnangagwa, who took over from Robert Mugabe two months ago, is under pressure to deliver on his promises to ease spending pressures on the budget and revitalise the economy, which collapsed especially after violent and chaotic seizures of white-owned commercial farms in early 2000s.
Zimbabwe’s budget deficit hit $1.82 billion or 11.2 percent of GDP in 2017 from an initial target of $400 million, while its economy hardly grew in 2016.
Over the last four years, Zimbabwe has failed to cut its deficit despite promises to do so, mainly due to high government spending on public sector salaries, which accounted for more than 90 percent of the 2016 budget.
“We are diluting our shareholding in those entities and our shareholding might go to zero percent in some entities,” Terence Mukupe told Reuters.
Zimbabwe either partly or wholly owns 92 companies, most of which have been making losses for years due to mismanagement, high operating costs and old equipment.
In 2016, 38 such parastatals ran losses totalling $270 million, according to a report from the president and cabinet office last October.
National airline Air Zimbabwe, which runs four aircraft, is sitting on a more than $300 million debt pile while railway operator National Railways of Zimbabwe recently received a $400 million recapitulation from South Africa’s Transnet.
Power utility Zesa Holdings has struggled since 2000 to generate enough electricity to meet demand and power outages have hurt businesses in recent years, according to the Confederation of Zimbabwe Industries (CZI).
In 2016, Zesa suffered a $224 million loss due to higher electricity import costs and because it is selling power at below cost.
Zimbabwe is also selling off its shareholdings in several other companies, including bankers, ZB Holdings and Agribank as well as insurer, Zimre Holdings, which has operations in several regional countries.