Parastatals or State owned enterprises are companies and businesses that carryout revenue generating activities on behalf of the government. These State owned enterprises are established through Acts of Parliament and they are controlled and run by a Boards of Directors appointed by a government minister with a portfolio linked to that enterprise. Corporate governance challenges in state owned enterprises have manifested themselves in internal and external factors in Zimbabwe. Internally or within the parastatals, challenges such as decreased ethical standards, bureaucracy, corruption, weak internal monitoring systems and State monopoly of delivering goods and services are of concern and externally, socio-cultural, economic and political factors come into play building barriers for sound public sector corporate governance in Zimbabwe.
Notably the rigid conservative traditional structures and policies that are resistant to change in modern times which are largely bureaucratic especially in the case of Zimbabwe has been an impediment to good governance in public-sector enterprises. A new model of Public management has taken over from the traditional Public administration model of managing owing to the development of modern concepts and the subsequent coming together of the world into one global village under one international system. However Public Enterprises in Zimbabwe and other developing nations are yet to adopt much more modern measures to enable them to be much more competitive in national and global economy that is why is has been difficult to revive parastatals like the National Railways of Zimbabwe NRZ and Air Zimbabwe owing to obsolete systems of management.
Weakness of internal monitoring and management systems such as audit systems that standardise the conduct of employees and the organisation of business procedures. In the Zimbabwean Public Sector enterprises, the Audit function is ineffectual in combating mismanagement as most reports will be years behind and are ignored. This almost brands it impossible to make individuals and companies accountable for their transactions. As a result of the lack of these monitoring mechanisms scandals hit ZBC and PSMAS. Public Service Medical Aid Society was paying its Chief Executive Officer half a million dollars a month in salary and benefits which is unheard of even in developed countries where individuals occupy the same positions, by the time of the exposure PSMAS was in a debt of $38 million this is because of the lack of swift action to audit reports by the Auditor general’s office.
Monopoly in the delivery of services by the state is a disadvantage in the long run for good corporate governance practices. The government may introduce laws giving its enterprises sole exploitation of the market share, this most probably will result in the poor performance i the loss of that market share and therefore no profit. An example is that of ZBC-TV which has enjoyed the monopoly of being the sole nationwide television broadcaster since independence, the dismal performance of ZBC and its failure to upgrade and provide quality TV channels has led to most of the public buying satellite dishes in order to have an alternative and quality entertainment thus , ZBC losses millions of dollars of potential or should be revenue because of the monopoly that meant lack of competition that could have positively encouraged it to introduce more modern systems to make it competitive.
External to the State owned Parastatals are challenges such as the economic environment they are operating from. The national economic performance governs the performance of State Owned Enterprises. Even though Parastatals are supposed to be self-sustaining, most of them are heavily relying on funding from the Government because of the state of the economy. In countries like Russia, State owned enterprises such as GAZPROM are free of government funding. In addition, the state of the global economy (recession) also plays a role in determining the challenges that come with corporate governance however most of the challenges in public sector corporate governance in Zimbabwe are not linked to the global economic crisis.
The challenge of socio-cultural factors in ethical and corporate governance pose a challenge in the promotion of sound corporate governance practises. Most of the current models of ethics and corporate governance owe their origination from the West which is different from Africa in terms of culture. In the Western culture, the young are a valued resource and are given positions of influence whereas in Africa, it is a different case. African customs demand respect for seniority and the vibrant young innovative youth is often played down and the ideas rarely if not implemented. This factor presents an ethical and corporate governance challenge in that it remains stagnant and the generational transition of roles is delayed by the older generation who value experience over innovation offered by the younger generation hence there will be no continuity, it is impossible to see a 30 year old CEO of a Public Sector enterprise in Zimbabwe.
Ethical and corporate governance challenges in state owned enterprises also include those of a political nature. Parastatals do not operate within a vacuum but are rather victims of political manipulation which hinders their capacity to deliver basic goods and services. Partisan influence in the case of Zimbabwe is that of the manipulation of ZUPCO by ZANU PF during election campaigns or rallies and the use of the ZimDef funds to fund ZANU-PF activities. Some of the buses are personalised and inserted pictures of the First lady. And yet ZUPCO is a public entity tasked with providing affordable transport .
Shingirai Nyahwa is a social and political analyst ,freelance writer and also a blogger.
The article appeared on http://theobserver.co.zw/the-challenge-of-ethical-coporate-govenance-in-the-public-sector-in-zimbabwe/
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