By John Chola
Although Sate-owned enterprises (SOEs) play a vital role in Zambia’s economy, contributing across sectors like banking, finance, energy, transport, and infrastructure, these entities also pose significant fiscal risks, according to a World Bank report presented at the Zambia Public Finance Review this morning at Lusaka’s Mulungushi Conference Center.
In his presentation, World Bank Senior Economist Albert Pjuan highlighted that Zambia’s SOEs incurred an annual fiscal cost of US$113.5 million between 2018 and 2022, primarily driven by government capital injections to address financial challenges.
This financial burden stems largely from losses reported by several SOEs, which leads to ongoing government support.
In 2019 alone, the government allocated US$124 million for the recapitalization of SOEs, with ZESCO, the national power utility, being the largest recipient.
Pjuan noted that in 2020, the total assets of SOEs were valued at US$8.8 billion, equivalent to 49 percent of Zambia’s GDP.
However, he also pointed out the fragmented regulatory framework governing SOEs, which complicates
financial monitoring and increases fiscal risks.
The report underscores the lack of profitability among many SOEs, especially in the energy sector, which
remains heavily reliant on government financial support.
Weak corporate governance and insufficient accountability mechanisms further exacerbate the
situation.
In response to these challenges, the World Bank has proposed comprehensive reforms, including the
introduction of a unified law to regulate all SOEs and the establishment of an independent body to oversee their operations.
Speaking during the launch of the Zambia Public Finance Review, Secretary to the Treasury, Felix Nkulukusa, commended the World Bank for the report assuring that the findings and recommendations will help government in resolving the highlighted challenges faced by SOEs.
And Minister of Finance and National Planning, Dr. Situmbeko Musokotwane in a speech read for him by Dr Nkulukusa also commended the World Bank for its role in strengthening Zambia’s fiscal governance
and public finance management.
He acknowledged that SOEs present considerable fiscal risks but emphasized that the government is committed to addressing these challenges through fiscal adjustments and improved project
prioritization.
The Minister noted that the upcoming 2025 national budget would focus on stabilizing energy production, fostering economic growth, creating jobs, and safeguarding vulnerable communities.
He also emphasized the importance of attracting private capital through public-private partnerships and innovative financing mechanisms like green bonds and carbon trading.
Dr Musokotwane expressed confidence that the recommendations from the World Bank’s review would support the government’s efforts to strengthen fiscal governance and promote inclusive economic growth.
