Eric Bloch Column

Prolonged lip service to privatisation

WITH very great fanfare, in late 1990 and early 1991, the government announced its Economic Structural Adjustment Programme (Esap) and after implementing the programme very half-heartedly and, therefore, most ineffectually for the first three ye

ars, it then belatedly and successfully pursued the blueprint with some commitment and success.

Over the three years from mid-1994 to mid-1997, Zimbabwe’s economy experienced some significant recovery and growth. However, there were two key elements of the programme which still did not receive the necessary commitment, and instead were to a significant extent only accorded superficial lip service.

A key element which received very half-hearted attention from the government was the privatisation of parastatals. The programme envisaged governmental disinvestment from all parastatals as were of a commercial, industrial or like economic nature.

At the time, most parastatals were functioning inefficiently and recurrently incurring great losses. In addition, they were perceived to be riddled with corruption, although at that time the government did not acknowledge that to be the case.

The parastatals were not fully satisfying the needs of the economy, let alone being able to service greater needs as the economy expanded and grew. At the same time, infrastructural development by the government was severely constrained by an insufficiency of state finances.

It was therefore an important element of Esap that parastatals be privatised — in whole or in part — in order to attain strategic partners who would ensure effective operations and their adequate capitalisation. The privatisation proceeds would yield developmental funding for the government and relieve it of debt.
 
But, despite these declared intents and expected results, there was little real inclination on the part of the government to pursue privatisation, for that would deprive politicians of perceived control of key economic drivers, and would reduce the empires of permanent secretaries and others in the public service.

In 1998, which was two years later than scheduled, the government launched the successor to Esap — the Zimbabwe Programme of Economic and Social Transformation (Zimprest). To a very great degree that programme encompassed the fundamentals of Esap, and expanded them.

Among those fundamentals was the privatisation of parastatals. However, Zimprest was to prove to be a virtual non-event, and in line with very limited adherence to most of the principles of that programme, once again there was little direction of parastatal privatisation, although the government did bring into being the Privatisation Agency of Zimbabwe (PAZ). The PAZ sought to pursue privatisation energetically, and had some initial successes, only thereafter to be frustrated by governmental ambivalence and lethargy.

Zimprest was succeeded by the Millennium Economic Reconstruction Programme (Merp) which, to a very major extent, was a rehash of both Esap and Zimprest, although it also had new components founded upon the then pronounced interest of the government being the land acquisition, resettlement and redistribution programme — subsequently referred to as land reform.

Four years later, there is still no evidence of implementation of Merp, including its declared intent, as per the predecessor programme, to privatise parastatals. It must be acknowledged that there have been a few highly successful privatisations, although none of them have occurred in the last few years.

Among the successful privatisations were the Commercial Bank of Zimbabwe (now known as the Jewel Bank), Dairibord, Cotton Company of Zimbabwe, Zimbabwe Reinsurance Company and Rainbow Tourism Group.
 
With the great success of those privatisations, which saw all those ventures become markedly customer-care-conscious and profitable, with greater efficiency and productivity than ever achieved when under state control, it is astounding that the last three years or so have sustained a total drought of privatisations.

Instead, there are frequent ministerial statements opposed to privatisation and a determination of the government not to relax its controls over entities that are essential to the economy but which are, in the main, ailing in the extreme.

That this be so could be condoned and understood if the parastatals were operating effectively and in the best interests of the consumers and of the economy as a whole.

It could be even more condoned and understood if, in addition, the government had the resources to capitalise the parastatals adequately, so that they were not overburdened and doomed to fail as a result of gargantuan borrowings and unsustainable burdens of financing costs, over and above their other deficiencies, and if the government did not require trillions of dollars for essential infrastructural development and retirement of debt.

But none of those characteristics apply and therefore the prolonged failure of the government to adhere to its own programmes must be condemned. That condemnation is reinforced by the manner in which some of the most vital parastatals conduct their affairs.

First and foremost is that only a week ago the Minister of State for State Enterprises and Parastatals, Rugare Gumbo, said that many of the parastatals were heavily contaminated with corruption. On the balance of probabilities, he is presumably very right in this assertion.

But if that is so, what is the government doing about it? After all, seven years ago we heard a similar ministerial statement, and again Zimbabwe was told approximately four years ago that there is extensive corruption in certain parastatals.

Perhaps, instead of witch-hunting private enterprises who resorted to parallel market dealings to keep their businesses operational, their personnel employed and export income flowing, the authorities should prioritise in-depth investigations into, and prosecution of, those who are major economic saboteurs by robbing government and the populace blind through corrupt practices in certain parastatals.

At the same time, when one of the economy’s greatest enemies is inflation, being strenuously combated by the governor of the Reserve Bank of Zimbabwe, it must be of immense concern that various parastatals are currently raising their charges to an extent markedly greater than prevailing inflation.

For example, Tel*One has increased its charges twice in the last six months, its most recent increase being in excess of 400%. And it has the temerity to do so at the very time that its services have reached their lowest ever ebb.

Similarly, Zimpost’s charges have soared to levels where the law of diminishing returns applies. So great have the charges become that more and more are resorting to e-mail and telefax communications, even though the latter is associated with endless transmission frustrations.

If the government is genuinely consumer-conscious, if it genuinely wishes parastatals to operate efficiently, if it has a real intent of debt reduction and of its infrastructural development, it should cease all lip service to privatisation and instead should enable PAZ to fulfil its mandate without fear or obstruction.