Privatisation yet another hollow plan
By Eric Bloch
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AFTER the first decade of Zimbabwe’s independence, which decade included eight years of negative economic policies, government released the Economic Structural Adjustment Programme (Esap). That programme was intended to create a virile economy capable of improving the lot of most, if not all, Zimbabweans.
By Eric Bloch
The initial economic programme espoused shortly after independence, envisaged as a transitional economic development plan had failed to do so, despite having received an immense injection of foreign exchange by way of international aid pledged at a brilliantly executed donor conference known as Zimcord. Billions of US dollars were forthcoming from the international community. Some were very gainfully used in assuring every Zimbabwean child of an extensive education, and in developing the nation’s health care delivery system.
Deservedly, government received much praise and commendation for the astounding success in raising literacy levels almost three-fold within 10 years, and in its magnificent achievement in providing almost all with access to health care (in contrast to the present when most cannot afford medical treatment, hospitalisation, surgery and drugs, even if they be a prerequisite for survival).
But successes were not achieved insofar as economic development was concerned. Driven by unconstructive ideologies which had been formulated in the former Soviet Union, China, Tanzania and other countries that promoted communist-based socialism, the largesse provided by the international community was unproductively dissipated. Much was used for the enrichment of the few and little for the furtherance of the much craved for economic growth. The failure of the transitional economic development plan was but a precursor for a like, if not greater, five-year development programme released in 1985. As a result the end of the first decade showed most Zimbabweans yearning for the improvement of their circumstances as had been loudly promised at independence and again upon the launch of each of the economic development plans.
So government then unveiled Esap, which was markedly different to its predecessor programmes, for it was founded upon the principles and objectives of deregulation, investment stimulation and facilitation, export incentivisation and creation and like concepts, almost all of which were anathema to exponents of Marxist-Leninist economic socialism.
However, a combination of near-total disregard by government for all those components of the programme which were at variance with intensive state control of all major facets of the economy, or which were in conflict with failed ideologies, and two years of severe drought, saw the first three years of Esap as an economic non-event. By 1993 government had little alternative but to implement much of that which it had up until then disregarded, although it did so reluctantly and half-heartedly.
Nevertheless, belatedly Esap began to yield positive results and therefore it was used as the basis for the next programme, intended to be implemented from 1996 — the Zimbabwe Programme of Economic and Social Transformation (Zimprest).
But government’s lack of enthusiasm was such that although the programme was to be embarked upon in 1996, it was only released to the population in general and to investors, financiers, commerce and industry in particular in 1998 and never meaningfully introduced. So in 2000 government announced its Millennium Economic Recovery Programme (Merp). As with Zimprest, that programme proved to be only plentiful words and glossy papers but devoid of any substantive implementation and it was soon cast away into oblivion.
In its stead, government announced a new programme — the National Economic Recovery Programme (Nerp) — in February. However, with virtually the only exception being an “exchange rate adjustment” or “export support exchange rate” (both being euphemisms for “devaluation”), Nerp was as shallow in its application as had been Esap, Zimprest and Merp. The economy has continued to decline to an ever greater extent, with many believing, erroneously, that it is now beyond redemption.
Not only has government shown remarkably consistency in its failure to implement any of its formal economic development or recovery programmes other than with the greatest of superficiality, but it has shown equally great consistency in devising and implementing actions diametrically opposite to those envisaged by the various programmes and plans that it had so proudly placed before Zimbabweans. In so doing, it has brought the economy to its knees. Inflation has reached an astronomic level of 364,5% for the year to June with that month’s inflation at 21,1%, an all-time record.
Never has there been such a high proportion of the population without employment. Never has there been so many suffering and facing malnutrition, if not severe starvation, at incomes far below the poverty datum line, as is now the case. Never has Zimbabwe been as short of foreign exchange, with consequential devastating shortages of fuel, energy, basic foodstuffs, industrial raw materials, agricultural and mining imports, medications, and much else.
Agriculture has been virtually destroyed, the mining industry’s operations heavily reduced, tourism emaciated, and the manufacturing and distributive sectors battling to survive. And never has government incurred deficits of the scale that are now the order of the day.
So great are those deficits that government must now present a supplementary budget to parliament as the national budget tabled in November 2002 and the fiscal out-turn to date have no commonality. As has become a regularity, the spending of almost all ministries is way in excess of the votes approved by parliament.
Compounding the problems created by government’s profligacy has been the differential in governmental revenues received as against those envisaged in the national budget. With a withering economy, it is inevitable that taxation receipts must fall and with limited foreign exchange the extent of imports diminishes with a corresponding reduction in inflows of Customs duties and import taxes.
But another significant non-re-ceipt is that in contrast to expectations in the 2001, 2002, and 2003 national budgets, government has had very little by way of proceeds from the intended privatisation of state enterprises.
The intention to divest itself of all but the most critically strategic businesses owned by government has been one of the major elements of Esap, Zimprest, Merp and Nerp. While government repeatedly failed to pursue many of the elements of those programmes, nevertheless it did effect some privatisations between 1998 and 2002, and with some considerable success.
Effectively and successfully, the Jewel Bank, Dairibord, Rainbow Tourism Group, Cotton Company of Zimbabwe, and Zimbabwe Reinsurance Corporation were privatised. Not only did government realise significant amounts from the sale of its investments but the privatised enterprises rapidly demonstrated substantial growth and enhanced efficiency of operations.
The privatisation programme has clearly ground to an ignominious halt and contrary to detaching itself from commercial and other economic production enterprise, government is increasing its involvement through some of its parastatals.
Enterprises such as the National Oil Company of Zimbabwe, Zimbabwe Electricity Supply Authority, National Railways of Zimbabwe, Cold Storage Company, Air Zimbabwe, Zimbabwe Broadcasting Corporation, the GMB, and many others have become an ever-heavy millstone around the neck of the fiscus.
Evidently, therefore, the inclusion of privatisation in Nerp is yet another hollow economic plan of government — one devoid of substance. Pity, therefore, the poor officials in the Ministry of Finance and Economic Development required to formulate the supplementary budget. They have to find ways of exacting the funds needed by government but have great difficulty in finding any way of doing so within a derelict economy without further catastrophically afflicting that economy and without extorting yet more from a desperately impoverished population.