New Zimbabwe.com

Parastatal: Govt plans sale of state-owned businesses to cut spending

Business Reporter & Agencies


THE government will part-privatise or sell 35 state-owned companies and close at least two others as it seeks to revive the economy and cut government spending.

Since taking over from Robert Mugabe in November, President Emmerson Mnangagwa has sought to end almost two decades of economic decline and reduce a debt burden of at least $11bn that it owes to lenders such as the African Development Bank.

He told ministers in January that they must prove the viability of businesses under their control ahead of a comprehensive reform of state assets.

The country’s postal service Zimpost, landline operator TelOne Corporation and 17 mines are among businesses that will be subject to “partial privatisation,’’ Finance Minister Patrick Chinamasa told reporters in Harare last Friday.

Some may be listed on the Zimbabwe Stock Exchange (ZSE), he said.

At least two state-owned companies, one a glass-maker and one that wasn’t specified, will be liquidated, Chinamasa added.

Shares in 17 government-run mines would also be sold.

Like most parastatals, the mines, which mainly produce gold, have struggled over the years due to lack of capital and mismanagement, forcing some to close.

Chinamasa said the parastatal reform was “designed to enhance peformance, improve services delivery and to bring more order, discipline and rationality to the sector as a whole.”

Government ministries would present privatisation plans to cabinet for each entity within 100 days, Chinamasa said.

Some state regulators will become government departments while others will merge to save costs and minimise bureaucracy.

The Special Economic Zones Authority will merge with three others, including the Zimbabwe Investment Authority to provide a one-stop shop for investors, Chinamasa said.

“It is the right thing to do but the government should go a step further and say ‘we are moving out altogether’ out of these companies.

“When government is a shareholder they are seen by investors as a source of difficulty rather than assistance,” John Robertson, a Harare-based economic analyst told Reuters.