eBusiness Weekly
Kudzanai Sharara
Government is targeting to make approximately $350 million from five State-owned enterprises (SOEs) that are earmarked for privatisation in the next 12 months, Finance and Economic Development Minister Mthuli Ncube has said.
Presenting his 2019 National Budget yesterday, Minister Ncube proposed the privatisation of Tel-One/Net-One/Telecel, Zimpost and POSB. The five parastatals will be partially privatised through joint ventures and or listings.
Government expects to make at least $350 million (hard currency) from the exercise.
“The 2019 Budget assumes proceeds of at least $350 million being raised from privatisation,” said Minister Ncube.
Government recently embarked on a mission to privatise several SOEs most of which have been making huge losses and required funding from Government for survival. Over the past two years, Government spent $500 million backing the ailing enterprises.
“Government is going ahead to implement the long delayed parastatal reforms as these institutions ought to play a key role in transforming the economy, among the several drivers we need to embrace,” said Minister Ncube.
Economists and analysts are also of the view that it is not sustainable for Government to keep nursing poor performing entities at a time it is battling high costs against limited revenue.
According to University of Zimbabwe economics Professor and Government advisor, Ashok Chakravati speaking at a recent Confederation of Zimbabwe Industries (CZI), “a healthy parastatal sector is key to economic development of the nation, competitiveness and alleviating poverty.”
“Some of the parastatals in Zimbabwe are not doing this. Rather they are draining the country’s resources and not making any recognisable profits,” he said.
Historically, the privatisation of State-owned corporations have seen many of these companies turn around their operations, with an example of Dairibord which has continued to do well since it was privatised. It is expected that the entities up for privatisation will chat this same path. As part of the privatisation plans, Government will also not take up debts from these parastatals as has been the norm in the past. Mid last year, Government committed to take over a $380 million Ziscosteel debt in an effort to attract investors. At that time, it was said parastatals had debts of more than $1 billion in total. Minister Ncube is ,however, convinced, the debts accrued by the five parastatals, earmarked for privatisation do not pose a risk to potential investors.
“Government will, however, refrain from taking over all or part of the debts that these entities have accrued, as not all debt is risky to potential investors,” he said.
Overall there are at least 15 SOEs that are earmarked for privatisation in the next 18 months with eight of them being earmarked for full privatisation. At least 5 State-owned enterprises including Kingstons (Pvt) Ltd are facing liquidation in the next 12 months.
Meanwhile in an effort to support the manufacturing sector, which he said provides scope for diversification, and in the process cushioning the economy from various market risks, Minister Ncube said there are plans to establish a Venture Fund for retooling industry. He, however, did not elaborate on the modalities of the fund.
Minister Ncube allocated $47,6 million for the 2019 financial year for the Ministry of Industry and Commerce.
