UPDATED: Zimbabwe to invite bids for parastatals in big sell-off

UPDATED: Zimbabwe to invite bids for parastatals in big sell-off

HARARE, January 3 (The Source) – Zimbabwe is inviting bids to buy stakes in 24 parastatals and will sell off its shareholdings in other firms in a bid to plug its ballooning budget deficit.

The Deputy Minister of Finance and Economic Planning, Terence Mukupe told The Source in an interview that government was currently assessing over 24 parastatals and is willing to totally divest from some of them.

“Yes, privatisation of parastatals is ongoing as it was mentioned in the budget. SERA (State Enterprises Restructuring Agency) is selling off some companies,” said Mukupe.

In the 2018 National Budget, Finance Minister Patrick Chinamasa said that government will shut down technically insolvent enterprises.

“There is a lot more that is going on, we are diluting our shareholding in those entities and our shareholding might go to zero percent in some entities,” added Mukupe.

“We are working on those entities which have been put on the public domain. Some other institutions will be added in the current list.”

The southern African country has 92 SOE or parastatals, most of which have been making losses for years due to mismanagement, high operating costs and old equipment. In 2016, 38 parastatals ran losses totalling $270 million according to a report released by the Office of the President and Cabinet last October.

Government spending ballooned under former president Robert Mugabe, with more than 90 percent of the budget going on civil servant salaries, leaving precious little for the investment needed to boost growth.

The new government of Emmerson Mnangagwa has promised to slash spending by selling off or privatising its loss making companies. Zimbabwe’s budget deficit hit $1.82 billion or 11.2 percent of GDP in 2017 from an initial target of $400 million.

To cut a budget deficit projected at about 10 percent of GDP this year, finance minister Patrick Chinamasa last month said the government would retire all civil servants aged over 65 and close some overseas diplomatic missions.

The state-run pension fund, National Social Security Authority (NSSA) will invest $18 million in meat processor, CSC, in exchange for 80 percent equity. CSC has debts amounting to $25 million.

Air Zimbabwe has debts of more than $300 million and recently has been looking to lease aircraft from Malaysia.

Government owns 51 percent of Olivine Industries while 49 percent is jointly owned by Singapore-based Wilmar International and Midex Group.

In August last year, South African logistics group Transnet won a $400 million tender to recapitalise the government-owned NRZ after a joint bid with Diaspora Infrastructure Development Group, a consortium of Zimbabwean investors living abroad.

Negotiations are yet to take place but Transnet is expected to provide funding to acquire and refurbish wagons, upgrade the company’s information communication technology and signalling systems and increase NRZ’s capacity to move goods.

Editors Note: This is a corrected repeat.