Prime Minister takes greater control of SOEs

CHAMWE KAIRA

Prime Minister Elijah Ngurare will assume expanded powers over the governance of state-owned enterprises (SOEs), including setting directives on board appointments, chief executive officers’ employment and remuneration, under amendments to the Public Enterprises Governance Act.

The National Assembly has passed the Public Enterprises Governance Amendment Bill [B. 10 – 2025], which shifts direct oversight of individual public enterprises to the ministers responsible for their respective sectors while centralising key governance directives under the Prime Minister.

The amendment changes the Public Enterprises Governance Act of 2019 by removing the provision for a single minister responsible for public enterprises.

Instead, each entity will fall under its relevant line minister, defined as the minister responsible for the sector in which the entity primarily operates.

The Prime Minister, acting in consultation with Cabinet, will be empowered to issue binding directives published in the government gazette on employee remuneration and benefits, board appointments and removals, and the appointment, suspension and dismissal of chief executive officers and senior management.

The directives will also cover integrated strategic business plans, budgets, investment plans and corporate dividend policies.

Under the amended framework, line ministers will represent the state’s ownership interests in the entities under their portfolios.

Their responsibilities will include appointing and removing board members in line with the Prime Minister’s directives, approving annual business plans, entering into performance agreements with board directors and submitting annual reports to the National Assembly.

For commercial public enterprises, the relevant ministers will also exercise the government’s shareholder powers.

These include approving major corporate transactions, significant changes to capital structures and the acquisition or disposal of material assets.

Such decisions will require the concurrence of the minister responsible for finance and the approval of Cabinet.

The amendment also introduces term limits for board members. Directors will serve three-year terms and may be reappointed for one additional term.

A third consecutive term will only be allowed in exceptional circumstances where the board faces a severe shortage of the required skills, following consultation with the Prime Minister.

Commercial public enterprises will also be required to establish formal dividend policies.

These policies must be submitted to the Prime Minister for scrutiny before approval by the relevant minister, with the concurrence of the finance minister.

The legislation further provides for the retrospective validation of actions taken by the relevant line ministers, the finance minister or the Prime Minister in relation to commercial public enterprises from 21 March 2025 until the new law comes into operation.

The Public Enterprises Governance Amendment Act, 2025, will take effect on a date to be determined by the Prime Minister through a notice published in the government gazette.