Govt must crack the whip now on underperforming parastatals

Dr Ignatius Chombo

Dr Ignatius Chombo

President Mugabe last month said non-performing parastatals and State enterprises must be dissolved as they are stifling economic growth through their perennial dependence on the fiscus. He said some ailing parastatals deserved to be “buried in coffins” as they were grappling with high overheads and under-capitalisation coupled with corruption and lack of good corporate governance.

The President made the remarks while addressing captains of industry at State House during an interface meeting meant to exchange views on the economic turnaround process. Cde Mugabe told the captains of industry that before his meeting with them, he had addressed Cabinet on the same subject and had made it clear that non-performers must be dissolved. He said while he agreed with the argument that there are certain ones that are very important which should be kept, those that have caused Government immense expenditure should go.

President Mugabe said State enterprises and parastatals had the potential to contribute 40 percent to the country’s Gross Domestic Product (GDP) but at the moment their contribution was only 12 percent. The Minister of Finance and Economic Development Dr Ignatius Chombo said on Wednesday that in response to President Mugabe’s remarks at the historic interface meeting with the private sector, all ministries were directed to provide updated status reports on all State entities within their respective portfolios.

Dr Chombo however said the response to the directive has been slow. “Relevant heads of ministries together with the respective management structures of the entities which fall under them are advised to devote more time and attention to fulfilling the terms of the directive” said Dr Chombo.

What is clear from President Mugabe’s remarks is that there is rot within parastatals and State enterprises which needs to be addressed. The failure by ministries to respond to the directive to provide updated status of the State entities within their respective portfolios is a confirmation that the ministries are part of this rot. Government resources, as rightly pointed out by President Mugabe, cannot continue to be drained by these underperforming State entities.

President Mugabe and Dr Chombo are both agreed that the contribution of State enterprises to economic growth has dropped dramatically due to under- performance. We want to call upon line ministries to urgently act on the directive so that Government can make an informed decision regarding the future of some of the State enterprises.

Dr Chombo noted that despite the underperformance, management at most State enterprises continue to enjoy huge salaries and other benefits and as such are bleeding the fiscus. The issue of underperforming State enterprises and parastatals has been discussed for too long and it is time to act. Dr Chombo should just crack the whip on those ministries taking their time to respond to the directive to provide updated status reports of entities under them. This could be a ploy by the respective ministries and the management of the enterprises under them to continue enjoying huge salaries and other benefits while underperforming.

We need to clean up the State enterprises so that only those that contribute to the GDP and a few key ones that we cannot do without, remain. We want to once again implore Minister Chombo to give a deadline to ministries to submit the required information to enable Government to act before it is too late.

Article Source: The Chronicle