The government has unveiled parastatal reforms which will see the liquidation, merging, privatisation and recapitalisation of the state-owned utilities.                            

According to the reforms, 12 parastatals including Cold Storage Company, Grain Marketing Board and National Railways of Zimbabwe will be recapitalised through several initiatives while the boards of ZETDC, ZPC and ZESA will be dissolved to pave way for a single ZESA board.                                  

The Minister of Finance and Economic Development Cde Patrick Chinamasa who unveiled the reforms on Friday said four state-owned utilities including Zimglass, Motira and Kingstones will be liquidated in line with the cabinet resolutions on parastatal reforms.   

Five parastatals including Allied Insurance, Surface Investments will be privatised.                          

Petrotrade, ZUPCO, IDBZ, and POSB are among the 13 state-owned firms targeted for partial privatisation.          

Mergers also loom with POTRAZ and BAZ being expected to amalgamate, ZimTrade, ZIA and SEZA will also merge, according to the reforms.                   

Seven state enterprises will also be absorbed as ministerial departments.                  


Reforms way to go

The reforms have been hailed as a shot in the arm for the economy as they will reduce waste, restore business confidence and accelerate economic growth.

Zimbabwe currently has more than 108 parastatals falling under various ministries.

In the mid 1980s, these parastatals were contributing more than 60 % to the country’s gross domestic product compared to a mere 2% by 2017.

Most of these parastatals have been a cost to taxpayers as they have always been seeking bailouts from the fiscus to fund their operations.

“For the past two to three decades, most of these parastatals have been like ticks drawing blood from the economy. They have been failing to declare dividends to the government and let alone pay salaries of their workers because they are unproductive and saddled with huge debts,” a trade economist, Dr Gift Mugano said.

An economics lecturer at the University of Free State in South Africa, Mr Calvin Mudzingiri said parastatals are supposed to accelerate economic growth by providing services at affordable cost but in Zimbabwe the cost of basic utilities like water and electricity is high compared to those in the region.

The National Railways of Zimbabwe (NRZ) was the biggest transporter of goods but now roads are used for heavy a goods which is expensive to do business.

Also ZESA, which should provide electricity at low prices to drive economic growth, is failing on its mandate and is actually importing power to plug the power deficit in the country.

“Governments need parastatals to function but most parastatals in Zimbabwe were not accountable and always making losses,” said Mr Mudzingiri.

Most parastatals have been overlapping and duplicating roles.

For example, the Zimbabwe Investment Authority (ZIA), Special Economic Zones Authority of Zimbabwe and ZimTrade perform almost similar roles but they all required funding from the government to operate.

Other analysts argue that corporate governance principles were not implemented in the management of parastatals.

President Emmerson Mnangagwa is implementing market-friendly policies aimed at making Zimbabwe a modern economy attractive to foreign investment, hence the reforms the government is proposing.