SEPs governance culture improves Deputy Chief Secretary to the President and Cabinet Mr Willard Manungo

Herald Reporter

Zimbabwe’s economy is poised for a major boom after the Office of the President and Cabinet (OPC) noted high levels of compliance to corporate governance principles in previously under-performing State Enterprises and Parastatals (SEPs).

In a report released recently by its Corporate Governance Unit, the OPC said adherence to the Public Entities Corporate Governance Act had greatly increased from 2020, with some SEPS scoring as high as 82 percent rating.

The average compliance was at 60 percent.

According to the report tabled by Mr Willard Manungo, the Permanent Secretary for State Enterprises Reform, Corporate Governance and Procurement in the OPC, the average compliance in SEPs was 60 percent although some scored as low as two percent.

The division to monitor State enterprises was introduced by the Second Republic as a way of ensuring these entities can positively contribute to the growth of the economy, and the maiden report tabled by Mr Manungo is for 2020.

“It is pleasing to note that over 60 percent of SEPs that responded are showing varying, but satisfactory levels of compliance with some of the Public Entities Corporate Governance Act requirements,” said Mr Manungo.

“The Compliance Report for 2020 provides an indicative categorisation of SEPS according to those deemed highest, medium and lowest with regard to compliance. The report further delineates this across commercial, non-commercial and regulatory SEPs.”

The report noted that some entities performed exceptionally well like the Scientific and Industrial Research and Development Centre (SIRDC), Insurance and Pensions Commission (IPEC) and Deposit Protection Corporation (DPC).

Others that also did well include the Minerals Marketing Corporation of Zimbabwe (MMCZ), Infrastructure Development Bank of Zimbabwe (IDBZ), National Pharmaceutical Company (NatPharm) and the Medicines Control Authority of Zimbabwe (MCAZ).

“The compliance assessment framework is a compliance and performance tracking mechanism for SEPs that enables the unit to deliver on its mandate,” said Mr Manungo.

“Compliance assessment is based on a framework that includes the following key elements of effective corporate governance; board appointment and composition; conflicts of interest and declaration of assets; board training; conduct of meetings; performance monitoring; remuneration and benefits; governance documents and strategic planning.”

The  report added: “It is also worth noting that this first compliance assessment exercise was conducted under Covid-19 conditions and this affected the turnaround time for some entities, as well as making it difficult for some entities to complete the assessments within the original timelines which had been provided for guidance by the Unit.

“Therefore, I wish to commend all the State Enterprises and Parastatals that took part in this exercise,” he said.

Mr Manungo said the Government has identified a number of challenges facing SEPs among them, weak financial management and corporate governance systems, resulting in inefficiencies and poor performance.

“Inadequate skills and lack of experience at board and management levels, inadequate induction and ongoing training of board members.

“The enactment by the new dispensation of the Public Entities Corporate Governance Act was aimed at addressing some of the above challenges through improving corporate governance standards across our Public Entities,” he said.

The common areas of high compliance are understanding of entity mandates by board members, development of strategic plans and codes of ethics, preparation of annual reports and minimal un-procedural dismissal of board members.

To their credit the SEPs boards were generally compliant to holding meetings as prescribed in the corporate governance Act, adherence to board remuneration and benefit guidance, conducting annual general meetings, and the appointment of CEOs by boards in line with provisions of the Act.

The report noted that there were common areas of non-compliance across the majority of SEPs, like board composition where most of them were not fully constituted, poor CEO and board performance monitoring and absence of planning systems for executives.

The others included failure to upload governance documents such as strategic plans, board charters and codes of ethics onto entity websites.

There was also general failure of boards to enter into performance contracts with the line Minister as well as the common failure of boards to enter into performance contracts with CEOs and senior management.

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