Kelvin Chisanga on Refinement of SOEs policy framework, necessary element to trigger stakeholder’s confidence!

By Kelvin Chisanga

State owned enterprises (SOE’s) form a strong baseline to this economy, and its quite crucial to maintain them as such mainly for purposes of strategic reasons to offer alternative cost provisions on certain critical goods and services as the country gets more engaging private investment sector.

Before going into deeper some sense of this thought, it’s very important to take note that most of the SOEs have operated at losses, making very serious fiscal burden to the national treasury, plugging into unsustainable investments initiatives through government guarantees, and have therefore accumulated huge debts with unpaid dues with unattended cost factors in repayment obligations as well.

As Zambian authority plans to make few concerning changes in regards to the policy guideline of state owned enterprises act, this comes as a result of recommendation by key stakeholders such as international Monetary Fund (IMF) as well as from the World Bank being one of the conditionalities to have been put into consideration in order to create a clear roadmap for sustainable economic growth.

Following the Minister of Finance and National Planning recent budget speech earmarked for upcoming fiscal year of 2025 that was presented in parliament in September, the ministerial speech highlighted key policy reforms on suggestion that the country need to revisit some laws, which will come or came as formidable recommendations to work out in the coming fiscal year of 2025 and this fit closely to state that it will be quite an important exercise to tackle few concerns that present with most SOE operations such as weak financial positions, fragmented aspects of operations, corporate governance issues and the like, lastly on this conflict of interest with political interfaces.

However, it’s very cardinal to state that state owned enterprises have for a long time kept on underperformances due to lack of clear regulatory and institutional framework especially with the requirements to do with mandatory duties of industries and professional demands. Further most of the SOEs have not shown substantial impacts on the economy and do not command a good sense of performances in many aspects such as board appointments, reparation of financial statements, risk management, accountability and transparent in their business conduct especially with public procurement processes.

As indicated in recent information regarding governance and oversight, Zambian government faces an awkward situation of having SOEs whose reporting format has a dual system between Ministry of Finance and Industrial Development Corporation, as this shows an indication of no clear defining relationship to continue with this.

I would personally recommend reduction of fiscal risk factors with downward focus on lowering costs related to operations and governance in view of this, expecting some tight measures with fiscal discipline to be put in place with governing legal structures in order to improve operational efficiency and governance efficacy as well as having appropriate monitoring mechanism and tools.

Last and not the least, introduce a fair portions of tradable shares to be on the stock market for private investment sector to interplay with, for the purposes of building capital formation and buffers, public resource accountability measures and improving on corporate governance systems and patterns especially with a particular interests in key strategic business units that demands of mixed capital requirements which also needs to tap alongside some skills transfer right into public sector through established framework links of private public partnerships.