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Govt warned against bailing out struggling parastatals; debts surpass US$1 billion

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By Alois Vinga 

TRANSPARENCY International Zimbabwe (TIZ) has warned President Emmerson Mnangagwa’s government against assuming debts accrued by under-performing state owned enterprises.

The 2018 Auditor General’s report revealed that defunct Zisco Steel debts amounted to US$494,8 million with external debts standing at US$217,9 million with the remainder being owed to local financiers and utility services providers.

The report also revealed that the Air Zimbabwe debt exceeded US$334 with liabilities exceeding assets by US$104,4 million.

The Civil Aviation Authority of Zimbabwe (CAAZ) liabilities stood at US$266 million.

The figures indicate that if parastatal debts are combined, they are likely to be well above US$1billion.

Addressing delegates at the just ended African Conference on Debt and Development Zimbabwe in Country Session, TIZ executive director, Tafadzwa Chikumba warned authorities against assuming debts accrued by the parastatals arguing that a huge chunk of it is acquired for reasons which are outside national development.

He argued that in the 1990s, state enterprises and parastatals in Zimbabwe accounted for over 40% of the country’s Gross Domestic Product (GDP) before bad governance issues which transformed the entities into economic “blood suckers”.

“In recent years, however, the sector’s contribution to the GDP has been declining gradually due to a myriad of factors. Crisis of State enterprises is a historical problem. They have been run below sub-optimal levels for a long time.

“People who run these institutions were recruited on political patronage. In the end, this has compromised public service delivery and for instance viable parastatals like the Grain Marketing Board can no longer guarantee food security,” he said.

Chikumba said the other challenge is that these parastatals have been over subsidised for some time yet, the culture of poor management which permeated state enterprises and the maladministration which transcends the operations of such institutions including procurement remains in place.

The TIZ leader urged authorities to address governance issues dogging the parastatals before moving in to bail them out, warning that if such precaution is not exercised, they are at risk of sinking taxpayers’ monies into a bottomless pit.

“To improve parastatals performance efficiency, competent and autonomous management bodies to oversee day-to-day operations must be appointed. Such bodies should set clearly delineated, realistic, and time-bound goals.

“Unlike private enterprises, performance evaluations must entail their profitability as well as social benefits and management must encourage a competitive work culture by hiring and retaining talented individuals through competitive compensation packages and performance-based bonuses,” he added.