AfDB grants Zim US$5.32m for SOE recapitalisation

Zim Now Writer

As efforts to improve the governance and accountability of State-owned entities continue, Zimbabwe has received a US$5.32 million grant from the African Development Bank.

The grant is part of the Institutional Support for State Enterprises Reform project, which aims to strengthen the governance and management of public entities, reduce fiscal risks, and facilitate economic recovery.

The project, which began in August 2022, will run until September 2026.

In its procurement notice released on Thursday, the AfDB said:

“The Government of Zimbabwe has received a grant, an amount of UA4 million (US$5,3 million) from the African Development Fund, to finance the Institutional Support for State Enterprise Reform project.

“This project aims to strengthen good governance and enhancing accountability through supporting interventions regarding public administration, improved service delivery and financial management. The project will enhance Zimbabwe’s capacity to effectively translate into action and implement the existing corporate governance and PFM provisions,” the statement read.

The grant, which comes from AfDB’s African Development Fund, supports economic and social development in 38 least-developed African countries through concessional funding for projects and technical assistance.

The funds will be used to enhance accountability, improve public administration, service delivery, and financial management. The project will also support the implementation of the hybrid ownership model for State enterprises and parastatals.

Zimbabwe’s State enterprises, most of which are technically insolvent, have been accused of weak corporate governance, corruption, poor financial performance, and ineffective monitoring and evaluation among other deficiencies that compromise their ability to deliver services.

The AfDB grant aims to address challenges of SOEs, which include outdated technology, inadequate working capital, and huge debt overhang and at the same time, support their recapitalisation.

Government has come up with a cocktail of measures, which include partial or full privatisation of SOEs as part of the reform process with the AfDB grant expected to contribute to strengthening governance and management practices, reducing fiscal risks, and promoting economic recovery in the country.