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Full Statement From Finance Minister: Parastatal and State Enterprises Reform

1. Government has been consistent in emphasizing the critical contribution expected from the State Enterprises and Parastatal (SEP) sector towards the revival of Zimbabwe’s economic fortunes and in this regard has for some time been pursuing a programme of SEPs reform designed to enhance performance, improve service-delivery and to bring more order, discipline and rationality to the sector as a whole. This includes (i) promoting good corporate governance in the SEPs sector, (ii) undertaking an overall Strategic Portfolio Review, (iii) individual SEPs Performance Reviews and, (iv) conducting Forensic Audits where the need arises in some SEPs.

2. The 24th November, 2017 Inaugural Statement and the more recent State of the Nation Address delivered by His Excellency, the President, Cde. E.D. Mnangagwa, together with the 2018 National Budget have served to inject additional weight and greater urgency to this programme of reform, and have underlined the need for Government to significantly accelerate development of a SEPs Short and Medium Term Reform Framework (SEPs-SMTRF) that would guide the implementation of the National SEPs Reform Framework.

3. This Framework has been developed by the arms of Government mandated to oversee SEPs governance, performance and reform, namely the Corporate Governance Unit (CGU) within the Office of the President and Cabinet (OPC), the Ministry of Finance and Economic Development and the State Enterprises Restructuring Agency (SERA) on the basis of a comprehensive diagnostic analysis of the overall sector.

4. In order to facilitate this task and so as to lay a sound, evidence-based foundation on which to conduct the analysis and to develop effective reform strategies, the Office of the President and Cabinet (OPC) issued Cabinet Circular No 19 of 2017, which directed Line Ministries to produce detailed self-assessment and proposed turn-around strategies for all SEPs under their respective purview.

5. Line Ministries have since responded to this directive, providing relevant data which, in turn, has used to develop a memorandum recommending State Enterprises Reforms. The Memorandum was considered by Cabinet on the 10th of April 2018and came up with the following decisions:

Table A: State Enterprises and Parastatals whose Reform Initiatives are already at various stages of Implementation
Name of Parastatal Decisions of Cabinet
1. Cold Storage Commission (CSC) Finalise consideration of joint venture proposals by the Swiss and United Kingdom investors by 30th April 2018

2. Grain Marketing Board The Grain Marketing Board is expected to complete work on delinking the Strategic Grain Reserve and the GMB’s commercial operations. The Grain Marketing Board will continue to manage the Strategic Grain Reserve on behalf of Government. All costs directly related to the management of the Strategic Grain Reserve will be borne by Government.
The expenses will include storage costs which will be provided for under the fiscus.

3. Agriculture and Rural Development Authority (ARDA) Proceed on current trajectory with identified strategic partners.

4. Civil Aviation Authority of Zimbabwe (CAAZ) Promulgation of the Civil Aviation Amendment Bill to provide for the unbundling of the authority into a Regulatory and Airports Authority

5. National Railways of Zimbabwe (NRZ) Current recapitalisation Programme to proceed

6. Zimbabwe Electricity Supply Authority (ZESA) A single ZESA Board will be established to take charge of ZETDC, ZPC and ZESA Enterprises. The Boards of ZETDC, ZPC and ZESA Enterprises to be dissolved. The Board will be allowed to engage strategic partners under ZPC operations where necessary.The strategic and ZESA-specific activities of Powertel will be incorporated under ZETDC whilst excess telecommunication capacity will be included in the merger between Zarnet and Africom.

7. Zimbabwe National Road Administration (ZINARA) The Zimbabwe National Road Authority will remain under the Ministry of Transport and Infrastructure Development but with a focus on revenue collection and not on technical road construction activities. The Ministry is challenged to ensure that there is improved transparency and accountability in the operation of ZINARA

8. Allied Timbers To seek strategic partner.

9. Agribank To seek strategic partner.

10. Small and Medium Enterprises Development Corporation (SMEDCO) To be merged with Empower Bank and establish the Empowerment and Development Bank that will have a unit focusing on small and medium scale enterprises and Youth Development programmes. A separate Women’s Bank to be established.

11. Forestry Commission To remain as a regulatory authority

12. ZISCO Steel Current efforts to resuscitate it to proceed

Table B: State Enterprises Targeted for Liquidation
Name of Parastatal and Decisions of Cabinet
1. National Glass Industries – To be liquidated
2. Motira – To be liquidated
3. Zimglass Given the worldwide movement towards the replacement of plastics with glass, National Glass is expected to urgently seek a strategic partner as IDC retains its current shareholding in the company.
The identification of a strategic partner is urgent as the company currently faces litigation that could lead to dissolution or liquidation
4. Kingstons (Pvt) Ltd – To sell/dispose of its assets but to retain its two Radio Licences.
The Line Ministry should seek ways of maximising the company’s interests in the radio licences Capital Radio and Nyaminyami FM

Table C: State Enterprises Targeted for Privatisation
Name of Parastatal Decisions of Cabinet
1. The National Handicrafts Centre No privatisation. To be transferred to Ministry of Women Affairs, Gender and Community Development for market promotion
2. Allied Insurance IDC should retain its current 10% interest in Allied Insurance
3. Surface Investment To retain current shareholding at 10% in the national interest
4. Zimbabwe Grain Bag To be privatised but IDC to retain a percentage of the strategic bag company in the national interest
5. Ginhole Investments To be privatised

Table D: State Enterprises and Parastatals Targeted for Partial privatisation through engagement of Strategic Partners and/or Listing on the Zimbabwe Stock Exchange
Name of Parastatal – Decisions of Cabinet
1. National Handling Services – No privatisation
2. Petrotrade – Government to retain majority shareholding in the national interest
3. ZIMPOST – Partial privatisation
4. POSB Partial – privatisation
5. 17 ZMDC Subsidiary Mines: Jena, Sabi, Elvington, Golden Kopje, Alaska Mine, Mhangura, Sanyati, Kamativi, Lutope, Kapata, Sandawana, Lynx, Mumburume, Shabanie, Gaths Mine, Mbungu and Gwayi – Partial privatisation
6. Infrastructure Development Bank of Zimbabwe (IDBZ) – Partial privatisation
7. Road Motor Services (RMS) – To be privatised in tandem with NRZ Programme
8. Tel-One, Net-One and Telecel – Partial privatisation
9. ZUPCO – Partial privatisation
10. Willowvale Mazda Motor Industry – Partial privatisation
11. Chemplex Corporation – Partial privatisation through a strategic partner that can ensure the provision of fertilizers to the country at affordable prices.
12. Deven Engineering – Partial privatisation
13. G & W Minerals- Partial privatisation

6. Where partial privatisation is to take place, Government will explore opportunities for using the Stock Exchange to promote involvement and ownership by the public/population through share ownership schemes.

Table E: State Enterprises and Parastatals earmarked for Mergers
Name of Parastatal – Decisions of Cabinet
1. SMEDCO, Empower Bank and Women’s Microfinance Bank SMEDCO and Empower Bank to be merged into Empowerment and Development Bank. Women’s Microfinance to remain as a separate Bank.
2. Powertel, Zarnet and Africom – Merge.
3. Competition and Tariff Commission and National Competitiveness Commission – No merger. Competition and Tariff Commission remain as it is. National Competitiveness Commission to become a Department in the Line Ministry with the support of the private sector
4. Postal and Telecommunication Regulatory Authority of Zimbabwe (POTRAZ) and Broadcasting Authority of Zimbabwe (BAZ) – Merge
5. The Boxing and Wrestling Boards – Merge.
6. Special Economic Zones Authority, the Zimbabwe Investment Authority, Zimtrade and the Joint Venture Unit The Special Economic Zone should be merged with the Zimbabwe Investment Authority, Zimtrade and the Joint Venture Unit to establish a One Stop Shop for potential business investors

Table F: State Enterprises and Parastatals to be Absorbed as Ministerial Departments
Name of Parastatal – Decisions of Cabinet
1. New Ziana – To become a Department in the Ministry of Information, Media and Broadcasting Services
2. National Indigenisation and Economic Empowerment Unit – To become a department in the Ministry of Industry, Commerce and Enterprise Development
3. National Arts Council – To remain as a regulatory authority
4. National Library and Documentation Services – To become a Department in the Ministry of Primary and Secondary Education
5. National Liquor Licencing Authority – To be returned to the Ministry of Local Government, Public Works and National Housing as a regulatory authority
6. Board of Censors – To become a Department in the Ministry of Home Affairs and Cultural Heritage
7. Lotteries and Gaming Board – To become a Department in the Ministry of Home Affairs and Cultural Heritage

7. Cabinet resolved that all Research Institutes will remain as they are.

8. Detailed implementation modalities for each of the Cabinet decisions will be provided in the form of a Memorandum to Cabinet by each respective Line Ministry, including indications, where relevant or necessary, for the engagement of technical, financial or legal advisors in order to facilitate the reform or restructuring process agreed by Cabinet.

Hon. P.A. Chinamasa, MP
Minister of Finance and Economic Develop

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