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Saturday 26 May 2018
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Zimbabwe Starts Privatising State Enterprises: Invites Foreign Investors To Claim Their Share

Zimbabwe Starts Privatising State Enterprises: Invites Foreign Investors To Claim Their Share

 

Zimbabwe’s new leadership has stayed true to its word that it would take action with regards to state enterprises especially those that have been recording losses in past years and draining the state coffers for their day to day expenses.

Finance and Economic Development Minister Patrick Chinamasa addressed journalists earlier in April where he outlined the resolutions taken by the Cabinet concerning state enterprises.

When Emmerson Mnangagwa (Zimbabwe’s new leader) gave his inauguration speech in November 2017, he stated that his government was going to reform state enterprises and would look into privatising or liquidating loss-making entities. While many were left disappointed after he failed to initiate the privatisation drive in his first 100 days in office, Mnangagwa has finally taken the step to reform state enterprises and in the process cut government expenditure and remove the unnecessary red tape.

While addressing journalists, Chinamasa said the framework on State and enterprises reforms aim at the dissolution, liquidation, absorption or creating mergers of State-owned entities.

Dissolution

The government of Zimbabwe decided to dissolve two entities that have been viewed to be of no strategic importance to the country at least for now and in the near future. These two are Motira and National Glass Industries. Motira is a tractor assembler company that was founded in 2008 as a joint-venture between the government through Willowvale Mazda Motor Industries and an Iranian company, ITMCo. The company assembled tractors only in its first three years of existence. The National Glass Industries stopped operations a few years after Zimbabwe’s economy started to deteriorate in the early 2000s.

Mergers

With regards to the energy sector, Minister Chinamasa said that there is going to be one board responsible for overseeing and managing ZESA Enterprises, Zimbabwe Power Company (ZPC), and Zimbabwe Electricity Transmission and Distribution Company (ZETDC). This technically means these three have been merged. With regards to the operations of Powertel, a telecommunications subsidiary of ZESA Enterprises, the minister said some specific activities will be incorporated under the new board while excess activities are to be included under the merger between Africom and Zarnet.

In order to make life easier for investors, the government has moved to create a one-stop shop for potential business investors by merging the Joint Venture Unit, ZimTrade, the Zimbabwe Investment Centre, and the Special Economic Zones Authority.

“The Small and Medium Enterprises Development Corporation will be merged with the Empowerment Bank to form the Empowerment and Development Bank that will have a unit focusing on SMEs and youth development programmes.”

Absorption

Under the media and information sector, Minister Chinamasa said New Ziana is no longer a standalone entity but will become a department in the Ministry of Information, Media and Broadcasting Services. The same applies to National Indigenisation and Economic Empowerment Agency which becomes a department under the Ministry of Industry, Commerce and Enterprise.

Other agencies that cease to act as standalone entities becoming departments under their respective ministries include the Lotteries and Gaming Board, the National Arts Council, the National Liquor Licensing Authority, and the Board of Censors.

The Zimbabwe National Road Administration (ZINARA) which has always been a department under the Ministry of Transport and Infrastructural Development will continue to be one but will now focus solely on revenue collection. ZINARA which also doubled in technical road construction will forfeit this role.

Liquidation

Kingstons Pvt Limited has been given a limited timeframe in which it has to dispose of its assets and clear all debts. It is to retain only two radio licenses.

Open opportunities for investors

The decision taken by Zimbabwe’s government opens the doors for investors. Zimglass, a company which supplied the southern African market with different glass and bottling products at its height has been urged to urgently identify a strategic partner. Considering that worldwide, governments are urging industries and consumers to move away from plastic and opt for alternatives such as glass, this is an opportunity for companies that are interested in the glass industry to move in.

The Cold Storage Commission responsible for meat production in the country has also been tasked to expedite its consideration of joint venture proposals by the Swiss and United Kingdom investors by April 30, 2018, or identify other strategic partners.

Other entities that have been urged to look for strategic partners are Allied Timbers, Agribank, Agriculture and Rural Development Authority, and Ziscosteel. The National Railways of Zimbabwe is to continue with its recapitalisation programme while the Civil Aviation Authority of Zimbabwe is to be unbundled into two bodies, one responsible for airports and the other acting as a regulatory entity.

State enterprises that are going to be privatised completely are the National Handicrafts Centre and Ginhole Investments.

State enterprises that are going to be partially privatised include, “National Handling Services, Petrotrade, Zimpost, Post Office Savings Bank, Zimbabwe Mining Development Corporation, Infrastructure Development Bank of Zimbabwe, Road Motor Services, TelOne, NetOne, Telecel and Zupco.”