4 parastatals to be listed on ZSE

The Chronicle

Oliver Kazunga, Senior Business Reporter

GOVERNMENT has identified four parastatals for listing on the Zimbabwe Stock Exchange (ZSE) in line with the Public Enterprises Reform Programme which seeks to enhance efficiency and effectiveness of public entities.

As explained in the Transitional Stabilisation Programme (TSP), the reform framework seeks to improve efficiency and the effectiveness of public entities in the delivery of goods and services by among others, mobilising private sector capital, technology and expertise.

In his report on Key Milestones and Progress on Policy Reforms for October, Finance and Economic Development Minister, Professor Mthuli Ncube, revealed that the four public enterprises earmarked for ZSE listing are Petrotrade, Willowvale Mazda Motor Industries (WMMI), Chemplex and Deven Engineering.

Among other strategies, the Government has also embarked on privatisation, mergers and acquisitions, as well as partial privatisation to turn around the public enterprises and parastatals.

“Government has embarked on a programme to reform public enterprises in order to improve efficiency and governance, that way, increasing their contribution to the economy,” said Prof Ncube in the report.

Under the TSP, Government aims to cut expenditure by scaling down on unsustainable fiscal intervention in public enterprises and parastatals.

As part of the reform agenda, in March this year, Government announced that it would reduce its stake in WMMI and Deven Engineering to not less than 26 percent under the Public Enterprises Reform Programme.

Cabinet has also approved that Government procures the bulk of its motor vehicle requirements from local assemblers as part of an initiative to support the Zimbabwe Motor Industry Development Policy (2018-2030).

For this year, Prof Ncube said the Government has also targeted five public enterprises among them, TelOne, NetOne, Zimpost and People’s Own Savings Bank for immediate reforms with significant progress having been made.

For example, progress so far made on POSB, which was set for partial privatisation; adjudication of bids was done on June 15, and contract negotiation with KPMG who were awarded the tender has begun.

On the implementation of the Special Economic Zones (SEZs) in towns and cities that were earmarked for the programme’s pilot project, Prof Ncube said: “Government is moving with times in accelerating the implementation of this important investment programme capable of increasing exports, creating employment as well as transferring technology and managerial skills.”

Bulawayo, Harare, Mutare and Victoria Falls are the areas that the Government has designated for the SEZs initiative and pilot projects under the concept in the aforesaid areas are underway.

Under the SEZs programme, Bulawayo has been designated as an industrial hub of the country focusing on manufacturing sector value chains, and Victoria Falls as the hub for Zimbabwe’s tourism industry as well as financial services.

Harare and Mutare will be established as hubs for high technology and diamond cutting and polishing respectively. 

In support of the above initiatives, Government has gazetted incentives for SEZs investors. 

Such incentives include zero-rated corporate income tax for the first five years of operation with a corporate tax rate of 15 percent applying thereafter, duty free importation of capital equipment, special initial allowance of 50 percent of cost from year one and 25 percent in the subsequent two years as well as exemption from non-residents tax on fees for services that are not locally available.

In the Mid-Year Budget Review statement presented in August, Prof Ncube said non-exporting companies will not be entitled to benefit from tax incentives under the SEZs concept unless they meet conditions prescribed in the Income Tax Act.

“Government notes with concern that some non-exporting companies have been designated as Special Economic Zones (SEZs) in order to benefit from the existing preferential tax regime.

“Notwithstanding operating in a Special Economic Zone, companies are, however, not automatically entitled to benefit from the existing tax incentives unless they meet the conditions prescribed in the Finance or Income Tax Act,” he said.

As at the end of last July, the Zimbabwe Special Economic Zones Authority announced that the country had received about US$900 million worth of investment proposals that were at different stages of implementation under the SEZs cluster. — @okazunga