Finance Minister Professor Mthuli Ncube, yesterday officially launched the Public Entities Corporate Act, which will provide for the corporate governance of public entities.
The Act is launched at a time when the performance of public entities, which used to contribute over 40% to the country’s Gross Domestic Product (GDP) in the 1990s, dropped to 10% in more recent years according to the Finance Minister.
“Studies conducted show that misgovernance took over and some of the mischiefs led to poor performance of the entities,” Ncube said.
“The new dispensation or the 2nd republic requires SEPs, some of whom may be key enablers to businesses as well as both domestic and foreign investment to play a pivotal role towards the realisation of vision 2030’s aspiration of a proper middle-income economy and empowered society. It is no secret that well-managed state enterprises and parastatals can contribute to economic growth and improved service delivery. “
Chief Secretary to the President and Cabinet Dr Misheck Sibanda, who also spoke during the launch said the act mandates the appointment of properly qualified boards for state enterprises and parastatals and requires them to establish codes of conduct and ethics as well as board charters.
“It also requires entities to publish annual records on progress made in the implementation of their set priorites and mandates,” Sibanda said.
“The act also regulates the tenure of office for board members to two four years terms and that of chief executive officers to two five year terms.”
“Among other provisions, it also legislates for board members to declare their assets and specify how potential conflicts of interests if any should be there too,” Sibanda explained.
The Chief Secretary also said the act was introduced as a reform initiative aimed at ensuring that state enterprises and parastatals which had been operated suboptimally are able to fulfil governance.
“Most of the public entities have become increasingly burdensome to the economy and the national fiscus, often constantly seeking out government financial bailing out at the expense of other socio-economic development obligations. in the process, liberal goods and public services also suffered wound the citizenry experiencing the resultant negative outcomes,” he said.