Harare – Finance and Economic Development Minister, Professor Mthuli Ncube on Wednesday officially launched the Public Entities Corporate Governance Act (PECG) as Government embarks on tightening governance of state-owned enterprises to ensure efficiency and improve their contribution to economic development.
The Act which was prepared with support from the Zimbabwe Reconstruction Fund (ZIMREF) and the World Bank will among others, introduce some consistency in the conditions of service of members of boards of public entities, regulate the conditions of service of chief executive officers and other senior staff members and will allow their remuneration to be limited as well as give effect to the National Code on Corporate Governance (Zimcode) to the extent that it applies to public entities.
Most state enterprises and parastatals in Zimbabwe are operating below capacity and some have completely shut down largely due to corrupt activities, mismanagement and lack of investments. National Railways of Zimbabwe (NRZ) is one example of these companies at the brink of collapse due to mismanagement.
Government has started implementing the State enterprise reform exercise in a bid to revive these and or boosts operations of these entities.
Back in the 90s, SEPs contributed about 40% of the country’s Gross Domestic Product (GDP) which is the total value of goods produced and services provided in a country during one year. The figure has since dropped to below 10% highlighting the extent to which the state enterprises have been under utilised.
Zimbabwe’s GDP averaged 7.37 USD Billion from 1960 until 2018, reaching an all-time high of 31 USD Billion in 2018 and a record low of 1.05 USD Billion in 1960.
Zimbabwe faced some of its worst recession periods in 2003 and 2008 recording a GDP contraction of -16.995% and -17.669% respectively.
The country’s GDP growth in 2019 has since been confirmed to be headed towards recession to between -6.5 to -11%.
In his speech, Professor Mthuli Ncube stressed that the country’s prospects to economic prosperity is to a larger extent dependent on the capacity of the SEPs.
“Given the importance of SEPs to the economy, ensuring that they are accountable, transparent, efficient, effective and economically viable is important and key to the country’s efficient allocation of resources, competitiveness, economic development and poverty alleviation,” Professor Ncube said.
He added that good management of these entities is key to public accountability and a precondition for creating trust in the Government.
“The SEPs therefore need to operate in an environment which requires compliance with good corporate governance performances.”
Meanwhile, European Union ambassador to Zimbabwe, Timo OIkkonen who stood as the ZIMREF representative, said the Act can be a game changer for Zimbabwe whilst Chief Secretary in the Office of the President, Dr Misheck Sibanda said Government hopes the Act will mark a change for the better in practices which have proved problematic in the management of public funds.
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Raynold Mhotseka is a Journalism and Media Studies student at the University of Zimbabwe. He serves as a news writer at financial research firm, Equity Axis where he is currently on attachment. He can be contacted through the following email links, email@example.com and firstname.lastname@example.org.