State enterprises are poorly capacitated to operate profitability, as a result, their contribution to the nation’s GDP has crumbled from around 40% to a mere 12%, The Standard reports.
The matter came to light during a meeting that was organized by the government that was meant to discuss the operations of state enterprises.
Speaking after the meeting Finance Minister Mthuli Ncube said experts have identified key areas that needed to be improved. Said the treasury boss:
The current model is what you call a ‘decentralised model’ where the parastatals or SOEs are controlled or owned through the line ministry.
They (experts) have highlighted that perhaps what is happening here is that the line ministries do not have the adequate resources to even exert the right level of oversight on these parastatals and then the boards as well.
Perhaps they are not adequately trained, I don’t know. We have not been able to exert adequate oversight in terms of governance work on these parastatals and this shows in their performance.
In some cases, we have got some managerial challenges and it shows in the performance which has not been up to scratch.
Really, the parastatals used to contribute 40% to GDP in the past and now we are down to 12%. If you look at 2017, we were expecting them to make a profit of over US$200 million, but we got a loss of over US$340 million.
Clearly, it’s quite clear that there is something wrong that needs to be fixed. But then, we are migrating to this new model that we are looking into which is much more centralised, where we expect to then exercise better and more effective control on these state enterprises.
When the publication spoke to one of the moderators of the discussion a lawyer called Canaan Dube, Dube said the government might opt for dual ownership on the country’s 107 state enterprises:
From all the discussions that took place today, I think the likely migration will be towards the dual ownership model where you take the two extremes and moderate and see what is done to adapt to our situation.
More: The Standard