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Nelson Gahadza

Government says it has made steady progress on the parastatal reform programme, undertaken since 2018, that is meant to improve public service delivery, enhance their contribution to the overall economy and employment creation.

The reform framework which is also part of the broader National Development Strategy 1 (NDS1) seeks, among other reasons, to mobilise private sector capital, technology and expertise to enhance efficiency and the effectiveness of public entities in the delivery of goods and services.

Finance and Economic Development Minister Mthuli Ncube, presenting the Mid-Term Budget review on Thursday said that in undertaking this task, the Government appreciates assistance that has been received from developmental partners.

These include the World Bank (WB), the African Development Bank (AfDB), the French Development Bank (AFD), the European Union (EU), among others.

“Government will follow through to complete the reform framework so as to transform the under-performing public entities into vibrant entities that meaningfully contribute to the national developmental agenda,” he said.

Minister Ncube said that after successful de-merger from the Grain Marketing Board (GMB), Silo Foods Industries is now seeking financial injection for procurement of new plant and equipment for milling and processing, rehabilitation of existing equipment, refurbishment of factory buildings, purchase of distribution fleet.

He said that the recapitalisation of Silo Foods Industries will proceed by way of equity participation by the private sector through the disposal of 26 percent stake.

“A greater stake of the remaining 74 percent is earmarked for acquisition by a local Government owned strategic investor which was identified as an anchor investor given the national strategic importance of Silo Foods Industries,” he said.

Silo Foods was established in July 2018 to produce and distribute value-added agricultural products, food and livestock products. The Government, through a Cabinet resolution in May 2018, directed that all commercial activities of the GMB be separated from its core SGR functions. 

On Petrotrade, Minister Ncube said that in April 2021, a Transactional Advisor was engaged and has since completed the due diligence on Petrotrade and Genesis Energy companies in March 2022 that will inform the merging of the companies.

He said the execution of the envisaged merger of Petrotrade and Genesis Energy is now awaiting necessary approvals from the two Boards of Directors and the approval of Line Ministry level.

For Tel One and Net One, the Minister said discussions are at an advanced stage with the International Finance Corporation (IFC), under the World Bank Group, with a view of engaging them as the transactional adviser.

He said that to date, the International Finance Corporation has concluded the market assessment study for the privatization of NetOne and TelOne which will identify and describe in detail some of the critical success factors which would lead to the realisation of a successful partial-privatisation transaction.

Minister Ncube said that given the huge capital requirements to fully capitalise the National Railways of Zimbabwe (NRZ), the turnaround of the railway carrier would be undertaken in two Phases, namely, the Short-Term Recapitalisation Phase and the Medium to Long Term Recapitalisation Phase.

He said that in the short term, resource mobilization strategies will target acquisition of nine new locomotives, 315 wagons and 5 Diesel Multiple Units (DMU) at a total cost of US$115 million.

“These short-term interventions would enable the NRZ to immediately uplift an additional 2 million tonnes per annum and an additional 5.4m passengers per annum, which would have an immediate impact on ameliorating challenges faced by the ordinary commuters,” said the Minister.

He added that to enable this project to function, infrastructure rehabilitation would be undertaken in order to remove all the cautions affecting the smooth operations.

Minister Ncube said that the government is in the process of coming up with optimal capital raising strategies for Allied Timbers and has engaged IOS Partners, an international transactional advisory firm to advise on the proposed capital raising strategies.

He said that the review by IOS has been completed, and the Government is considering the capital raising options.

“Once approved, the recommended options would start to be implemented in the next half of 2022 and beyond.

“Meanwhile, Allied Timbers is implementing various initiatives that are targeted at reducing operational cost; and enhance efficiency, effectiveness, capacity utilisation and organisational-wide enterprise management systems,” he said.

At POSB, Minister Ncube said Government is currently reviewing the submitted proposed privatisation strategy by the Advisor, KPMG Advisory Services (Pvt).

He said that the findings by the Transactional Adviser will inform the privatisation strategy for the Bank.

The Finance Minister said that the government is working on strategies to recapitalise the Infrastructure Development Bank of Zimbabwe (IDBZ) to enable it to underwrite significant infrastructure projects which are the bedrock for the realisation of Vision 2030.

He said that the Bank is pursuing balance sheet strengthening activities that would culminate in the partial privatization of the entity including ceding land to the Bank for the proposed property development, agricultural production and tourism facilities.

Government is also in the process of re-bundling the ZESA group into a single, vertically integrated entity.

Minister Mthuli said that the Government is in the process of reviewing the proposed new structure, to pave the way for its implementation.