09 Nov 2021

Government is reliant on parastatals to achieve NDP 11 objectives and Vision 2036 aspirations of transitioning to a high income economy with export led growth underpinned by high levels of productivity, diversified economy, inclusive and sustainable growth.

This was said by Minister of Investment, Trade and Industry Mr Mmusi Kgafela at the shareholder compacts signing ceremony to ratify objectives set for improved performance of respective parastatals recently.

Mr Kgafela said government introduced performance contracting as an instrument for monitoring performance to improve transparency and accountability as well as inform decision making.

Through such initiative, he said government and parastatals were thus expected to subscribe to good corporate governance practises and strive to adhere to the governance principles of fairness, responsibility and transparency.

It is anticipated that the signing of the shareholder compacts will also assist in monitoring performance, reinforce accountability and provide oversight, he said. He added that shareholder compacts would also provide a road map for parastatals to deliver their mandates, enhancing service delivery, promoting good corporate governance and proper utilisation of state resources.  

In view of the predicaments brought by COVID-19 pandemic on the local economy, Mr Kgafela stressed that parastatals were therefore critical in revenue generation, especially those that collect revenue, hence the importance of the signing ceremony.

He added that shareholder compacts were designed to enhance oversight and governance of parastatals through an effective relationship between their boards and the shareholder. 

“Ministry parastatals are expected to provide periodic performance reports covering key issues as dealt with by the various parastatals’ boards, in addition to the annual report to be provided,” he said.

Again, he said parastatal boards would evaluate their performances on a yearly basis to aid the shareholder to determine their performance and way forward. 

Meanwhile, Public Enterprises Evaluation and Privatisation Agency (PEEPA) acting chief executive officer, Mr Ishmael Joseph said performance of parastatals had been a cause for concern in terms of their contribution to the Gross Domestic Product (GDP), total industrial output, effectiveness and contribution to employment creation, among others.

Mr Joseph said recent statistics showed that state-owned enterprises accounted for up to 30 per cent of the GDP. 

“This therefore calls for deliberate effort to apply active ownership principles by government as the main shareholder of parastatals,” he said.

He thus urged the ministry as an active owner of the state-owned enterprises to support PEEPA’s efforts to obtain reports and other documents needed to complete performance assessments twice a year. 

“The entities signing here today happen to have very good opportunity to operate with minimum financial dependence on government,” he added.

Further, Mr Joseph highlighted that in effort to quickly address the parastatal performance concern, government had setup a Cabinet sub-committee on the performance of state-owned enterprises and came up with cross cutting measures which may include merging, restructuring or even closure of some parastatals.

“The sub-committee has reviewed and approved high level recommendations from PEEPA regarding rationalisation of state-owned enterprises and is awaiting Cabinet decision for the exercise to move to the next and most intensive phase,” he said. ENDS