Government budgets for parastatal privatisation windfall

TREASURY says it expects to raise at least $350 million next year from the privatisation of public enterprises.
Government is undertaking a raft of state enterprise reforms under which 16 entities will be privatised, 13 parastatals merged while others will be liquidated.
The reforms have been necessitated by sub-optimal operations at most of these entities that have led to losses and a drastic decline in contribution to the GDP.
“The 2019 budget proposes the privatisation of at least five public enterprises, namely TelOne, NetOne, Telecel, ZIMPOST and POSB.
“The 2019 Budget assumes proceeds of at least $350 million being raised from privatisation,” finance minister, Mthuli Ncube said in his maiden budget statement last week.
In October, government announced that it had carried out an exercise of categorising all public enterprises according to viability, profitability and balance sheet strength.
“The process of privatisation will be accelerated for those entities that rank highly on privatisation scale.
“This will not only improve their viability but also strengthen the public private partnership character of the enterprises and generate much need revenue to government,” the minister said in his fiscal statement in October.
The minister said the five entities, which have been earmarked for immediate restructuring, will be partially privatised through joint ventures or listing on the Zimbabwe Stock Exchange.
“Government will, however, refrain from taking over all or part of the debts that these entities have accrued, as not all debt is risky to potential investors,” he said.
Privatisation of the other entities on the list is expected to be accomplished in the next two years.
Meanwhile, government says five public enterprises face liquidation in 2019. These include Zimglass, National Glass Industries and Kingstons.
Government also has plans to merge Zarnet, Powertel and Africom to create one company while the Postal and Telecommunications Regulatory Authority of Zimbabwe and the Broadcasting Authority of Zimbabwe will be combined to create one telecommunications regulator.
The Civil Aviation Authority of Zimbabwe is being unbundled into an Airports Company and a Civil Aviation Regulatory Authority.
Commercial state enterprises’ inability to generate profitable returns poses a fiscal risk to the economy in the form of explicit contingent liabilities as well as transfers from the government to the entities.
In 2015, government transfers amounted to $129 million, marking a significant disparity with dividends received during that year which totaled only $7,8 million.
The major challenge that has been cited for the dismal performance of public entities is non-compliance to good corporate governance pra