HARARE – Zimbabwe’s auditor general has issued an adverse audit opinion on several of the country’s state-owned corporations, some of which South African investors have interests in, flagging their uncertainty to continue as going concerns and raising concerns over governance issues and practices.
Finance Minister Mthuli Ncube is desperate to wean off a number of loss-making parastatals through merging, privatisation and commercialisation of others. This will help lower government expenditure in an economy battling to contain deficits and to fund social services and infrastructure.
Experts said the report would deter international investors.
“The adverse audit report on parastatals and the evidence of lax management is not good for those prospects to attract investors. But it can still be done as investors will have to do their own due diligence exercises, which will be thorough and wide-ranging,” said audit and accountancy expert Trust Chikohora.
The government has invited bids for some mining companies under the Zimbabwe Mining Development Corporation and it is expected that winning bidders will be announced in the next few weeks. Industry sources say bidders include South African investors as well as international investors.
The auditor general Mildred Chiri said the National Railways of Zimbabwe (NRZ), in which South Africa’s Transnet has invested alongside the Diaspora Infrastructure Development Group, was in a “net current liability position of US$256.5 million (R3.6 billion)” as at the end of 2017. During the period, NRZ incurred a net loss of US$51.9 million, translating to an “accumulated loss” of US$388 million.
“This accumulated loss and net current liability position, along with other matters indicate the existence of material uncertainty that may cast significant doubt over the company’s ability to continue as a going concern,” said Chiri in the report.
She also observed that most state-owned parastatals lacked “due diligence when procuring goods and services” and highlighted that this had “resulted in cases of payments being made without the subsequent delivery of goods” and services.
Chikohora said if the loss-making state-owned enterprises were privatized, it would help change the work ethics and culture.
Zimbabwean state-owned airline, Air Zimbabwe – which flies to Johannesburg – has now been placed under administration while the government has also invited bids from interested investors. However, Chiri said a countability issues had continued to affect Air Zimbabwe, with the most notable oversights by management being unable to provide supporting documentation for transactions entered into.
“My audit revealed entities, which are facing challenges in providing services suitably. I reported 23 of such cases and these include the Zimbabwe Electricity Supply Authority, NRZ, Air Zimbabwe, Zimbabwe National Parks and Zimpost among others. The Minerals Marketing Corporation, the government’s strategic mineral marketer had been operating without a general manager for the past six months.”