On the 20th of June 2019, Mildred Chiri the Auditor General submitted her report for the financial year ended 31st December 2018. The document is a 223-page report on state enterprises and parastatals. Ever since its release, social media has been awash with startling details that emerged from it. Things like undelivered items that were paid for by ZETDC (Zimbabwe Electricity Transmission and Distribution Company) and ZPC (Zimbabwe Power Company) years ago were some of the interesting insights. The other topical one was unexplained expenses (USD28 million) that couldn’t be accounted for at Air Zimbabwe and the lack of board meetings minutes for the period under review. Today, however, I’ll just highlight some other interesting insights that are in the report.
Agriculture used to be very vibrant in Zimbabwe but the sector has significantly declined over the years. Despite the fact that there are climate changes and erratic weather issues at play the sector should be doing better than it is currently. According to the report, the governing authority (AMA – Agricultural Marketing Authority) responsible for ensuring the sector performs well is riddled with issues. The first one is that AMA’s financial statements aren’t a true reflection of their financial performance. This is premised on the fact that their financials weren’t arrived at by diligent factoring in of monetary policy shifts that have occurred over time.
It has also emerged that AMA has only been focusing on cotton and horticulture farming sectors. AMA’s management rationalizes this stance based on the fact that those two areas are contributing to their revenues significantly through levies. However, this isn’t a proper approach because they are neglecting a vast number of other important agricultural sectors.
It was also reported that a USD1 million advance payment for 2467 metric tonnes of maize was made in 2016. We’re now in 2019 and still, the maize hasn’t been delivered.
Minerals Development Pvt Ltd (a subsidiary of ZMDC – Zimbabwe Mining Development Corporation) whose main business is the mining of gold had a lot of expenditure lacking supporting documentation. Interestingly, they couldn’t even provide a list of net salaries payable. Since 2015 the company’s liabilities have far exceeded its assets, a scenario which has worsened over the years. Just to put it into perspective, as at 31 December 2015 the company’s liabilities were already outweighing the assets by close to USD12.5 million. It also emerged that some of the listed assets couldn’t even be physically ascertained to be available. Thus it’s abundantly clear that both funds and assets are being grossly misappropriated.
ZMDC’s (Zimbabwe Mining Development Corporation) mandate is the extraction and selling of minerals. It’s indicated that over the years the corporation hasn’t been complying with International Accounting Standards and the new International Financial Reporting Standards. This then casts a shadow over proper handling of funds and assets. Actually, some assets couldn’t even be located yet is said to be there.
Another point here can be regarding MMCZ (Minerals Marketing Corporation of Zimbabwe). MMCZ is the sole marketing and selling agent for all minerals locally (save for gold and silver). What’s of interest is that MMCZ has been engaged in prospecting and mine pegging for its claims. However, there aren’t any geological maps to corroborate that – MMCZ said the maps were misplaced, quite interesting indeed!
It emerged that there wasn’t prior parent ministry approval of allowances paid to board members. The report indicated that there could have been substantial losses incurred through unapproved board expenditures. It was also stated that there hasn’t been proper compliance with the Roads Act [Chapter 13:18].
It is indicated that the Sports and Recreation Commission (SRC) is currently operating with an old vehicle fleet thus repairs and maintenance costs are too high. It’s also reported the commission prioritized a sports awards event at the expense of recapitalising its fleet. Another issue of concern is that roughly 50% of national sports associations are formally registered with the SRC. This means the commission is incapacitated to realize significant revenue through levies. It was also indicated that the commission is too reliant on government grants and isn’t actively exploring ways of raising funds themselves.
The Small and Medium Enterprises (SMEs) Development Corporation is responsible for providing funding, property letting and investment for SMEs. The corporation has been incurring losses over the years and its assets are presently outweighed by liabilities. This means the corporation is not well-positioned to provide the much-needed help SMEs are looking for. I’ve at times written about the importance of business hubs as a catalyst for business growth. Well, this corporation has had that in mind i.e. coming up with SMEs incubation hub. Unfortunately, the initiative is being stifled by a lack of funding. The major setback for the corporation’s effectiveness is funding and has been encouraged to mobilize resources.
Chitungwiza Central Hospital, United Bulawayo Hospitals (UBH) and Mpilo Central Hospital were the only hospitals cited. I am however concerned that the audit findings aren’t regarding the recent financial year. This indicates that the hospitals are lacking in diligent, accurate and consistent record-keeping. This was exclusively cited as an issue for UBH who aren’t properly filing their records. As for Mpilo some of the issues cited are non-compliance with ZIMRA (resulting in penalties), need for recapitalization and incomprehensive accounts of grants and donations received. For Chitungwiza issues raised span from lack of proper asset valuation, expenditure lacking supporting documentation to susceptibility to fraudulent activities due to a porous IT system.
The overall issue cited across the board is the lack of good corporate governance. The Auditor-General attributed this to the irresponsible handling of public resources on the part of public servants. That is why people really want the Zimbabwe Anticorruption Commission to be given independent and prosecuting powers to deal with these issues.