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Zimbabwe State Firms Break 10 Year Loss Spell

The government says seven state enterprises and parastatals made profits in 2011 for the first time in 10 years due to improved corporate governance reforms and stabilizing economic situation in Zimbabwe.

State Enterprises Minister Gorden Moyo said financial statements recently released by these entities indicate that TelOne, the People’s Own Savings Bank (POSB), Zimbabwe Electricity Supply Authority Holdings, NetOne, Zimbabwe Power Company, Petro Trade (Pvt) Ltd and National Oil Infrastructure Company of Zimbabwe posted marginal profits.

Moyo said even though several other state entities recorded losses, they showed positive signs of turning around their fortunes.

“The entities that significantly reduced their losses during the period under review include Agribank which improved from a loss of $8,155.315 in 2010 to a loss of $286,409 in 2011,” he said.

He added that the Grain Marketing Board (GMB) also improved from a loss of $18,709.284 in 2010 to a loss of $6,210.184.

According to the minister, capacity utilization in some state enterprises and parastatals has increased from about 30 percent in 2009 to 60 percent this year due to economic stability brought by political stability.

He said despite such substantial developments, the entities have been beset by multilayered challenges which include “amplified liquidity constraints, undercapitalization, debt overhand, recurring power outages, lack of lines of credit and inadequate funding for plant retooling and upgrades.”
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He said the ballooning $1 billion inter-parastatal debt and failure by some of the companies to submit corporate governance compliance reports are a major cause for concern.

“The interparastatal debt has been a major challenge to most state enterprises and this has led to cash flow problems, inability to attract investors and access to lines of credit due to unattractive balance sheets,” said Moyo.

The Zimbabwe Electricity Transmission Development Corporation has been able to clear its arrears with Mozambique Power Company due to improved cash inflows.

Despite such developments, some state enterprises like Air Zimbabwe, National Railways of Zimbabwe, Cold Storage Commission and several others are still struggling to pay debts, including workers’ salaries.

Moyo noted that out of 76 state enterprises and parastatals, only 30 submitted corporate governance compliance reports for the first half of 2012.

“This is unwelcome and militates against government efforts to see state enterprises and parastatals turnaround their fortunes through efficient and effective governance and reporting systems in line with the principles of transparency and accountability.”

He further said that the Grain Marketing Board held its annual general meeting this year – the first time in 81 years.

Moyo said the government is currently looking for strategic partners for Agribank, the POSB, and other state entities.