eBusiness Weekly
Hebert Zharare
Companies owned by Government should conduct their businesses viably and abide by generally accepted standards of good corporate governance as stipulated by the Constitution if they are to contribute meaningfully towards economic turnaround.
Zimbabwe has 108 parastatals,and State-owned enterprises which at full capacity, can contribute around 40 percent towards the country’s Gross Domestic Product (GDP), but majority of them are bleeding the Treasury by posting loses, demanding bail outs while others are corruption riddled.
These companies are expected to efficiently supply water, electricity, bulky transport system among others to oil the operations of industries.
However, legal and economic analysts argue the inefficiency in State run companies is taking a toll on the operations of private sector companies as cost of corruption, nepotism and flawed tendering process are eventually factored in the cost of production resulting in ordinary consumers paying for the vice.
It is against this background that legal experts, said all commercial ventures Government enters into should be implemented in accordance with the provisions of Sections 194 and 195 of the Constitution that spell out how Government companies should be run including transparency and accountability that wades off cronyism.
Section 194 among other things stipulates that Government companies must be governed by the democratic values and principles enshrined in the Constitution, including the following among others:
(a) A high standard of professional ethics must be promoted and maintained;
(b) Efficient and economical use of resources must be promoted;
(c) Services must be provided impartially, fairly, equitably and without bias;
(d) Public administration must be accountable to Parliament and to the people;
(e) Transparency must be fostered by providing the public with timely, accessible and accurate information;
Section 195 weighs in stating among others: “ Companies and other commercial entities owned or wholly controlled by the State must, in addition to complying with the principles set out in section 194 (1), conduct their operations so as to maintain commercial viability and abide by generally accepted standards of good corporate governance.
“Companies and other commercial entities referred to in subsection (1) Must establish transparent, open and competitive procurement systems.”
However, analysts this week lamented the majority of these provisions lacked in state companies and the rot had serious ramifications in the operations of the private sector and their efforts to grow the country’s exports.
University of Zimbabwe Economic Professor Ashok Chakravarti, said in as much as the issues raised had been captured in the Constitution, there has been much interest by the authorities to come up with enabling legislation to enforce the statute on parastatals.
“The national Constitution sets up the principles, but for regulation purposes, there should be laws in insistence and that has been missing. That is why we now have the Public Entities Corporate Governance Bill. All these issues being raised are covered, they will be statutory matters.
“This is a positive development and with the new dispensation, parastatals reforms will be hotly pursued. The Office of the President is on it. Like (Finance and Economic Planning Minister Patrick) Chinamasa said, most of these parastatals are loss making and that is why some of them should be privatised, others encouraged to form joint ventures and in some cases forced to close shop,” said Chakravarti.
Commercial law expert, Itai Ndudzo, said all commercial ventures by Government were supposed to be negotiated according to principles, policy and national laws.
“We, however, have a challenge where at times Government wants to get into business but do not want it to follow statutory provisions. All parastastals report to ministers but in Zimbabwe 99 percent of all ministers are not businesspeople or are failed businesspeople and cannot superintend over Government companies.
“So it’s better for Government to enter into business through companies. In parastatals, there is corruption and cronyism, while the other side is transparent,” said Ndudzo.
A parastatal head who declined to be named for professional reasons, said they expected a new approach to business and the composition of state companies’ management and boards following the new economic order.
“I have over 20 years’ experience working in parastatals and as long as there is no law that spells out the extent to which ministers and directors in ministries interfere with the operations of parastatals management, then we are yet to start. These institutions will remain a source of wealth for people in Government and the parastatals themselves, while industries and general members of the public continue to receive raw deals,” he said.
Major state companies which provide key services to industries, but have been found wanting include Zesa, National Railways of Zimbabwe and local authorities among others.
