‘Poor accountability, legal compliance dog State entities’

A STATE-OWNED Enterprises (SOEs) performance and compliance survey has revealed poor accountability and legal compliance by the entities.


The survey looked at how far SOEs were complying with the country’s regulations, Parliamentary Committees and Auditor-General (AG)’s audit recommendations, .

The survey, which was unveiled at a Harare hotel, was conducted by the Southern African Parliamentary Support Trust (Sapst) and the Zimbabwe Coalition on Debt and Development (Zimcodd), and it was presented to legislators from different committees, captains of industry and a few representatives of parastatals that attended.
The survey looked at the years 2013 to 2018.

A Sapst official, Henry Ndlovu, said it was imperative that SOEs report to Parliament in order to enhance accountability, as well as serve as a baseline in terms of monitoring their performance as most of them had been making losses when they are supposed to be the engines that drive the country’s economic growth.

One of the researchers, James Jowa, said the baseline study interviewed 31 State enterprises and parastatals between July and August 2019, and they discovered that the majority of these entities were established under specific Acts of Parliament, while those more commercially-oriented were established under the provisions of the Companies Act (Chapter 24:03).

“However, constitutional principles on sound public financial management were not fully understood by the SOEs, with more than 80% of them unaware of section 298 of the Constitution, which guides aspects of public finance management, transparency and accountability in finances and public borrowing on all transactions involving public debt,” Jowa said.

“The 10 most prevalent findings were inadequate documentation of SOEs (44,7%), poor management of assets (44,7%), poor revenue management (42,6%), going concern status (40,4%) and poor regulatory compliance (36,2%), poor receivables management (29,8%), operational inefficiencies (27,7%), poor corporate governance (25,5%), management override of controls (23,4%) and failure to comply with policies and procedures (21,3%) were also highlighted as key issues in SOEs,” he said.

Jowa said the study also revealed that more than 80% SOEs had not appeared before the relevant portfolio committees of Parliament to discuss their budget proposals for the succeeding financial year, in contravention of sections 299 and 323(2) of the Constitution.

“Furthermore, slow implementation of recommendations from the Auditor-General and Public Accounts Committee (PAC) was noted as a trend with many of the entities. Out of the 435 recommendations made in the preceding year by the AG, only 24,8% were fully implemented, while 19,5% were partially implemented. The majority of the recommendations, at 55,6%, were not implemented at all. There were no robust instruments to track and monitor the implementation of recommendations,” he said.

Some of the recommendations in the study were that Sapst should support activities by MPs aimed at providing more scrutiny and oversight of SOEs that have been declared insolvent by the AG, with examples being Air Zimbabwe, National Railways of Zimbabwe, National Handling Services and TelOne, which are highly indebted.

“We recommend that Parliament should have a bigger role in monitoring the use of funds extended to bail out SOEs that have been failing to deliver their mandates. SOEs should facilitate economic growth and development, hence the enterprises must not impose a sustained burden on the government’s finances. Examples include Zesa on the procurement of (electricity), National Oil Company on the procurement of fuel and petroleum products, and the Grain Marketing Board,” the study said.

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