By Prince Kurupati
Revenue figures for the government of Zimbabwe have been dwindling since the turn of the millennium and one of the chief reasons cited by experts for this relates to loss-making state enterprises. The government of Zimbabwe controls 92 state enterprises and parastatals, a huge number that no doubt affect the revenue flows if they perform below expectations.
According to the last official report released by the Office of the President and Cabinet covering the majority of the state enterprises in 2016, 38 state enterprises in 2016 alone ran losses totalling $270 million. The report also highlighted some ballooning debt incurred by some state enterprises. The national airline, Air Zimbabwe had a $300 million debt while the Cold Storage Commission (CSC) had a $25 million debt. These figures have likely risen in the past couple of years.
The net result of the poor financial performance of state enterprises has had adverse effects on the country’s budget. Since 2000, Zimbabwe has had budget deficits that have been increasing year on year. While presenting the 2018 budget, Zimbabwe’s minister of Finance, Patrick Chinamasa acknowledged that in 2017, the budget deficit rose from an initial target of $400 million to a high of $1.82 billion. That meant the budget deficit accounted for 11.2 percent of the country’s Gross Domestic Product.
Zimbabwe’s new government has since taken note of this and in the 2018 national budget, the minister of Finance said the government is committed to shutting down all technically insolvent state enterprises. The minister stated that if all 92 state enterprises fail to record better performances in the first quarter of 2018, the government would not hesitate to privatise all of them.
Staying true to the 2018 budget, the government issued a directive this past week that listed the priority list of companies the government would be willing to receive bids for as early as this opening quarter of 2018.
These companies include Zimbabwe Development Company (ZDC) and subsidiaries, CAPS Pharmaceuticals, Agribank, Olivine Industries, Industrial Development Corporation of Zimbabwe (IDCZ) and subsidiaries, Finhold (ZB Holdings), Posts and Telecommunication Corporation (Telone, POSB Bank, Zimpost and Netone), Zimbabwe Electricity Supply Authority (ZESA), Cold Storage Commission (CSC), National Railways of Zimbabwe (NRZ), and Air Zimbabwe.
The government’s priority list of companies includes both entities wholly owned by the government such as ZESA, IDCZ, and Agribank and those in which the government holds the controlling stake.
There are already some investors who have expressed interest in moving into some of these state enterprises. South African based company, Transnet has already concluded a deal in principle with the government to recapitalise NRZ. Transnet is working in partnership with the Diaspora Infrastructure Development Group, a grouping of Zimbabwean investors living in the diaspora.
Among other things, Transnet is expected to increase NRZ’s capacity to move goods, upgrade signalling systems and the company’s information communication and technology, and the refurbishing of the company’s wagons.
Another investor eagerly waiting to inject some capital in one of Zimbabwe’s struggling parastatal; CSC is the National Social Security Authority (NSSA), Zimbabwe’s state-run pension fund. NSSA is expected to recapitalise CSC to the tune of $18 million meant at upgrading and replacing some of the company’s obsolete equipment.
During the 2018 budget, the Zimbabwean government also announced a raft of other measures meant at slashing the government expenditure. Measures taken include retiring all civil servants above the age of 65, cutting the posts of youth officers, and trimming down diplomatic missions.