Ministry of Finance and Economic Affairs has unveiled plans to dissolve, merge or align non-performing State-owned enterprises (SOEs) to their line ministries to curb their over reliance on government subvention.
Minister of Finance and Economic Affairs Simplex Chithyola Banda made the announcement yesterday in Lilongwe during a ceremony where shareholders signed expectations letters with SOEs, a week after the passage of the K8 trillion 2025/26 National Budget in Parliament.
He said government has noted that some SOEs performed below expectations; hence, it shall undertake further assessment so that there is value for money it invests in such State entities.
Said the minister: “The assessment will determine how best to position such SOEs for improved efficiency and effectiveness and determine whether to merge, dissolve or re-align to parent ministry.”
He said going forward; Treasury plans to develop a framework to guide investment in SOEs and other statutory bodies.
However, he praised Umodzi Holdings and National Economic Empowerment Fund (Neef) for performing well in the 2024/25 financial year.
On his part, Secretary to the Treasury Betchani Tchereni said his office will prioritise funding parastatals that are satisfying their mandates instead of allocating money for luxurious vehicles and lifestyles of chief executive officers at the expense of quality service delivery.
He said the underlying factors for performance in SOEs include failure to utilise assets or generate money from the assets, inability to utilise the debt that they acquire and other operational issues.
Comptroller of Statutory Corporations Peter Simbani said his office will be monitoring how each parastatal board is implementing the key performance indicators (KPIs) that are meant to address the three outlined underlying factors.
He said: “My office is there to monitor the implementation of these KPIs that are going to be developed. So, what is expected of them is that they are going to come up with KPIs so that they will be assessed in line with what they agreed with the Treasury.”
In a separate interview, corporate governance expert Jimmy Lipunga, a former chief executive officer of the Public Private Partnership Commission (PPPC), attributed the dismal performance of some SOEs to lack of clarity of mandate, adding that for a turnaround, there is need to institute strong leadership that operates on a commercial basis.
“What essentially is needed in public entities is the operation model. There should be a board of directors that could develop good strategies,” he said.
Corporate governance expert James Kamwachale Khomba said some parastatals underperform or fail to implement reforms because they are headed by boards that are usually recruited for political expediency.
