Martin Kadzere : Senior Business Reporter
THE external debt of Zimbabwe’s parastatals decreased to $1,22 billion in 2015, from $1,66 billion in the previous, latest statistics from the Reserve Bank of Zimbabwe show. Money owed to bilateral creditors stood at $760 million, down from $1,15 billion in 2014 while money owned to multi-lateral creditors decreased to $460 million from $506 million.At $1,22 billion, the external debt of parastatals translate to 11,3 percent of Zimbabwe total external debt at $10,68 billion as at December 31, 2015. As a ratio of the gross domestic product, foreign debt retreated from 11,8 percent to 8,7 percent over the period.
Zimbabwe has 78 public corporations, which used to contribute 40 percent of the GDP.
The majority of them are underperforming, largely due to mismanagement, corruption, un-competititiveness and huge debts.
For many years now, the reforms of state enterprise have always been on the agenda of Government with an ultimate goal of turning them around to profitability. Economic analysts have said the Government should deal with the debt issue to restore viability of public corporations.
“Let us face it; there is no investor who would like to invest in a company saddled by debts,” economist Dr Gift Mugano said.
“Government of late had been taking over the debts of a number of parastatals which I see as a way of extending the rot particularly if you look at the root causes of that debt.
“In my view, Government must have a paradigm shift in its appointment of board of directors from a status core where people who fail to make it politically are compensated by a board appointment.
“Obviously, most board members have no drive to turn around the parastatals. So, it is a whole lot of issues, which need to be addressed ranging from appointing professional board members, appointment of management on a performance contracts and at some point when the balance sheet is clean Government must privatise the parastatals.”
In 2010, Cabinet approved reforms of state enterprises, starting with
10, nothing much has been achieved.
However, Government recently said it will intensify parastatal reforms, an integral component in achieving targets set in the Zimbabwe Agenda for Socio-Economic Transformation. The scope for efficiency of the sector to drive the growth is immense.
State enterprises are critical enablers of the economy, critical in value chain and they promote competitiveness.
Further they fill in the void of essential service and or products by venturing in territories too risky or unattractive to investors yet essential.