Performance Management Guidelines for State Enterprises & Parastatals in Zimbabwe

In common with many other countries, in Zimbabwe, State Enterprises and Parastatals (SEPs) play a major role in the provision of infrastructure and services like water, electricity, telecommunications, transportation, health, education, etc. In some cases SEPs are involved in advancing state policy. Ensuring that SEPs are accountable, transparent, efficient, effective, and viable is important for the country’s efficient allocation of resources, competitiveness, economic development, and poverty alleviation. SEPs are assets owned by the state on behalf of the public. In terms of the Constitution of Zimbabwe, state controlled commercial entities are expected to maintain commercial viability and adopt generally accepted standards of good corporate governance in their operations. Ensuring they create value for society through effective professional and transparent management and oversight is critical to good public accountability and a precondition for creating public trust in the state. Additionally, it is generally acknowledged that adoption of sound corporate governance practices contributes to SEPs enhancing their performance and viability. Sound SEP Performance Management systems are one of the ways to improve corporate governance practices of SEPs and they contribute to improved SEP performance. By the same token, there is increasing recognition that poor corporate governance practices in SEPs significantly contribute to their underperformance. Evidence from many countries demonstrates that effective SEP performance management can lead to improved financial and non-financial performance. A strong SEP performance management system sets objectives and targets that provide clarity to SEP boards and management on the expectations of government as owner. Clear goals, accompanied by accountability, transparency and high quality reporting and disclosure requirements, establish a framework in which the SEP board can set and execute strategy while providing government with sufficient assurance that the SEP will be held accountable for its performance.