Eric Bloch Column

Sorting out the parastatal chaos

By Eric Bloch

WHEN the government launched its Economic Structural Adjustment Programme (Esap) at the start of the last decade, an element of the programme was the privatisation of parastatals. But the launc

h was, for a prolonged period, wholly theoretical in nature, for the government had no real inclination to implement that programme and embarked upon it without any substantial sense of commitment.


That was not surprising, for the mainstay of Esap was deregulation of the economy, which was highly unpalatable to the government. An entrenched element of governmental thinking was that the government must be omnipotent, in absolute control of anything and everything. Therefore, the concept of economic deregulation was anathema to the upper echelons of the government.


Only when the economic decline was of such magnitude that it had to be confronted, even if by measures of variance with the government’s fundamental beliefs, was Esap pursued with any real substance. That brought about a very marked upturn of the economy from 1994 to 1997, when the government once again allowed its craving for authoritarianism to override economic need.


When the government belatedly began to carry out the measures which were the key factors of Esap, one of its actions was to commence an exercise of parastatals privatisation, and several highly successful disinvestments by the government were achieved. They included the effective and fruitful privatisations of Cotton Company of Zimbabwe Ltd, Dairibord ZimbabweLtd, Rainbow Tourism Group Ltd and Zimbabwe Reinsurance Company Ltd.

However, although impressively successful and evidence of how beneficial privatisation could be, the government gained no satisfaction from the outcome of those privatisations, for they represented a considerable contraction of the “empires” of various ministers and of their permanent secretaries.


In 1997, determined to dole out gargantuan payments to veterans of the liberation struggle of 1965 to 1979 — in order to preserve the support of those veterans, who had many among their numbers who had not even been part of the struggle — the government negated all the economic gains of Esap. It further counteracted those gains with its dictatorial, racial and destructive land reform programme, instead of following constructive and equitable land reforms.
 
The government did not mind its obliteration of the benefits of Esap, for it revelled in pursuit of re-establishing a command economy. Authoritarian and bureaucratic controls could reign supreme once more!


However, some in the government are now reluctantly acknowledging that all is not well in the plethora of parastatals that feature in almost every economic sector. In fact, many are proving to be such disasters that they are becoming an embarrassment to the government as a whole, and to the relevant ministers in particular.
 
Almost every parastatal is sustaining massive, unmanageable debt, and virtually all are operating with vast losses.
 
Few have any acceptable levels of service delivery, and the term “customer care” is an almost unknown within the parastatal environment. Incompetence is the order of the day for the greater majority of the parastatals, with cataclysmic economic consequences.
 
The number of examples that can be cited is massive, but suffice for purposes of example is Arda and its virtual implosion of the previously highly successful Kondozi Estate. There is also the Zimbabwe Electricity Supply Authority, which can do very little other than hiking tariffs in inverse proportion to availability of reliable supplies.


Most Zimbabweans can recount innumerable other examples of deficient service on the part of almost all other parastatals, inclusive of Tel*One, National Railways of Zimbabwe, Air Zimbabwe, Zimbabwe Broadcasting Holdings, the Mass Media Trust, Cold Storage Company Ltd, Grain Marketing Board, the Tobacco Research Board and all too many others. In his 2005 monetary policy statement, Reserve Bank of Zimbabwe governor Gideon Gono was very outspoken on the catastrophic state of parastatals. In no uncertain terms, he said: “Radical restructuring and re-orientation of the country’s parastatals … sector is an indispensable prerequisite for achievement of the objectives of monetary policy.”


Gono recognised the “pervasiveness and far-reaching tentacles of major parastatals”, and that there is a need for “deployment of a focused, swift and decisive shake-up programme” to key parastatal areas.


He continued: “Operational inefficiencies, generally run-down conditions, and burdens of huge debt overhangs at the country’s major parastatals… are causes of the critical missing link in enhancing quick productive sector supply response to fiscal and monetary policy incentives.” The governor said that decisive interventions must be implemented to steer the parastatals into solid efficiency frontiers.


In the light of the government’s indisputable adherence to relax the reins on parastatals, it is significant that it has issued a statement of policy and guidelines for what it terms “Public Private Partnerships” (PPP). At the outset of the statement, Acting Finance and Economic Development minister Herbert Murerwa says: “Government recognises the critical role of the private sector in the provision of the country’s public infrastructure.”


But as the statement progresses it becomes very evident that primarily all that the government is seeking from the private sector is funding, instead of technological and comprehensive managerial inputs. Certainly there is no detailed indication of an intent to privatise once again, with the emphasis of the statement being upon the
government’s retention of ownership.
Nevertheless, there is some move in the direction of greater private sector involvement, for it is contemplated that the PPP would embrace concessions; management contracts; joint ventures; design, build, finance, and operate schemes; build, operate and transfer; and build, own, operate and transfer schemes.
As a general rule, the government rejects experiences in other countries as guides to possible policies and actions in Zimbabwe, but in this instance it makes an exception, for the minister states that “experience elsewhere can make a significant contribution towards enhancing public infrastructure provision”.


What is of great importance, if there is proper follow-through, is the minister’s contention that the guidelines “offer assurance to potential private investors, current service providers, empowerment groups, labour and other interested groups of government’s commitment to a transparent and predictable Public Private Partnership policy”.


It remains to be seen whether PPP will become a reality, or whether it is yet another governmental delusion of economic deregulation and interaction between public and private sectors. If the intentions are genuine, Zimbabwe may finally witness some resolution of the prevailing parastatal chaos. If not, the chaos will continue and intensify.