The latest Auditor General’s report on parastatal bodies has painted a worrying picture of Zambia’s state-owned enterprises, with Zamtel standing out as one of the most financially troubled institutions. As of December 31, 2023, Zamtel owed a staggering K2,995,504,146 to various local and foreign suppliers as well as other institutions.
According to the report, K1,189,428,482 of this debt was owed to local creditors, while K692,478,323 was owed to foreign creditors. These figures highlight Zamtel’s growing financial burden, compounded by consecutive years of operating losses.
Mounting Losses at Zamtel
The report further disclosed that Zamtel has been recording significant operating losses for three consecutive years. In 2021, the company incurred a loss of K391,898,000. This figure increased to K430,255,000 in 2022 and further ballooned to K599,504,000 in 2023. These consistent losses underline the urgent need for restructuring and strategic intervention to address the telecommunications company’s financial instability.
IDC Subsidiaries’ Asset Valuation and Liabilities
While subsidiaries under the Industrial Development Corporation (IDC) portfolio were reported to have assets valued at K24.8 billion, the financial health of several key parastatals remains dire. Four companies—Zambia Daily Mail, Superior Milling Limited, Zamtel, and ZCCM-IH—were reported to have negative balance sheet statuses, with total liabilities exceeding their total assets.
The negative balance sheets of these entities raise concerns about their long-term sustainability and the potential implications for Zambia’s economy.
Implications and Recommendations
Zamtel’s financial challenges are symptomatic of broader systemic issues facing many parastatal bodies in Zambia. The significant debt and recurring losses not only threaten the viability of these entities but also place a heavy burden on the government, which often steps in to bail out failing state-owned enterprises.
To address these challenges, experts suggest the following measures:
- Operational Restructuring: Zamtel and other underperforming parastatals may require strategic reforms, including cost-cutting measures, enhanced efficiency, and improved governance.
- Debt Management Strategies: Proactive steps must be taken to renegotiate terms with creditors and develop sustainable debt repayment plans.
- Increased Oversight: Enhanced transparency and accountability in the management of parastatal bodies can prevent further financial mismanagement.
- Public-Private Partnerships: Exploring partnerships with private investors could inject much-needed capital and expertise into struggling entities like Zamtel.
The Broader Picture
The financial struggles of parastatal bodies like Zamtel are reflective of the challenges Zambia faces in managing its state-owned enterprises. With mounting debts, recurring losses, and negative balance sheets, these companies risk becoming a drag on the economy rather than a catalyst for growth.
The findings of the Auditor General’s report underscore the need for urgent and decisive action to reverse these trends, ensuring that parastatals fulfill their intended roles as drivers of development and economic prosperity. Without intervention, the continued financial instability of these entities could have far-reaching consequences for Zambia’s fiscal health and economic trajectory.