HomeOpinionEric Bloch: Parastatals Restrict Economic Recovery

Eric Bloch: Parastatals Restrict Economic Recovery

THIS columnist has become increasingly confused whenever he hears the word “service” used in the context of parastatal operations in Zimbabwe. 

What on earth does it mean when cited as electricity supply service, telephone service, air and rail service, water distribution services and the like?

None of these are indicative of what this columnist has always thought “service” meant.  Then suddenly, it became clear, for last week he overhead two farmers talking, and one of them said he’d hired a bull to “service” a few cows.  WOW, all of a sudden he understood what those parastatals are doing!

And that is so catastrophic.  Commerce and industry, mining, agriculture, tourism and virtually all other economic sectors cannot operate viably and effectively in the absence of consistently reliable service delivery of utilities, of rail and air service, and the like.

Erratic service availability destroys productivity, in many instances results in ruination of products in the course of manufacture, impacts very negatively upon cash flows and therefore enhances needs for working capital, and can be a major catalyst of the collapse of businesses.

This applies similarly to the efficacy of marketing, administration and almost all the other facets of business, exacerbated when the enterprises are recurrently victims of extremely defective communications, unreliability of rail and road services, and frequent non-availability of air services.

In addition, decrepit infrastructural resources and related inferior service delivery of essential domestic utilities is a major motivation for many to seek residence in countries where the discomforts and hardships of that inferior service do not exist.

There is no doubt that a very significant contributor to the mass exodus of Zimbabwe from their homeland to neighbouring countries, or destinations further afield (known as the “brain drain”) has been those discomforts and hardships occasioned by grievously unreliable utility service delivery.

Concurrent are the grossly excessive, regionally unrealistically high charges being demanded by the providers of the defective, erratic, utility supplies.    The brain drain has greatly deprived all sectors of the economy of the skills for maximised viability of operations.

The so-called “service providers” (which they currently are not, nearly as often as they are) contend, with much credibility and substance, that any deficiencies in service delivery are due to circumstances beyond their control.

On the one hand, without exception they are highly under-capitalised, being parastatals never provided an adequate capital base by government, and having sustained the same erosion of working capital by hyperinflation and Zimbabwean currency demonetisation, as has impacted upon private sector enterprises.  On the other hand, they have experienced the same brain drain-driven erosion of technical and administrative skills as has been the affliction of commerce and industry, and others.

Despite the probable substance to the explanations given by the parastatals as to why there is such ongoing deficiency in their service delivery, these explanations do not counter the immense harm sustained by the economy as a result of the grievous defaults in meeting the needs of those upon the economy depends.

Furthermore, the magnitude of the inability of the parastatals to serve the economy’s needs, reinforced by those explanations, which impliedly suggest that a transformation in service delivery is far from imminent, is a major deterrent to the massive investment that the economy critically needs as a catalyst of economic wellbeing.

The harsh facts are that government does not have the necessary resources to fund the parastatals adequately, the financial sector does not have the liquidity to provide the required funding to the parastatals and the international community is understandably unwilling to provide the gargantuan resources needed, unless and until there is an internationally acceptable, stable, democratic political environment in Zimbabwe.

Therefore the parastatals have no real prospect of transformation and, instead, will in all probability be in a continuing, cascading decline.

There is therefore only one tangible, real prospect of the necessary parastatal metamorphosis.  Partial or total privatisations of parastatals are an absolute must.  For 20 years government has intermittently espoused an intention to pursue PPPs (Public/ Private Sector Partnerships) but, save for a few very successful ones in the mid-1990s, it has all been governmental talk, unsubstantiated by actions.

The tragic reality is that there has been virtually no evidence of genuine intent, but only of mouthing of intent.  Undoubtedly, many of those previously at the political helm, and in the hierarchy of government administration, have been equally reluctant to sustain a diminution of empirical control and authority, and to lose opportunities of possible self-enrichment.

Commendably, ever since his appointment Minister of Finance Tendai Biti has stated that PPPs must be pursued, including statements to that effect in his 2009 Budget Review shortly after his appointment to office, and again in his 2009 Budget Mid-Term Review.

But there is distressingly little evidence of any unity of support for his declared intents, within the so-called “unity government” and, with the greater part of a year having elapsed since he first so credibly enunciated the need, there is no evidence of any tangible progress towards implementation.

The sole possible exception is the apparent likelihood of an international investor acquisition of, or partial investment in, Zimbabwe Iron and Steel Co Ltd, being finally determined upon in the fairly near future.

This will be a very positive step towards resolving that company’s pronounced ills, and its recovery will be a boost to the engineering industry, and to the economy of the Midlands, but will be only an infinitesimally small step towards all that is needed.

Zimbabwe cannot afford to dither any longer on the issue of privatisations.  PPPs must be very energetically pursued, with financial and strategic partners, for Zesa, TelOne, National Railways of Zimbabwe, Air Zimbabwe, Zimbabwe National Water Authority and other parastatals.

The injection of funding and of technical skills, technology transfer, and other privatisation benefits will astoundingly change the parastatals for the better, enabling and ensuring their efficacious service delivery, meeting the needs of an economy set for growth.

The time for governmental dragging of feet has expired, and dynamic, effective  action is a grossly overdue need which should now be energetically prioritised and pursued.

 

Eric Bloch

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