Candid Comment: Govt fiddles while parastatals bleed

Among the 14 viable parastatals the government inherited at Independence was the flagship carrier Air Zimbabwe, which had replaced Air Rhodesia. Since its inception in 1967, Air Rhodesia had operated profitably despite comprehensive UN sanctions.

With the advent of Independence, the newly reconstituted Air Zimbabwe was expected to expand its operations since new lucrative markets were now open for exploitation. However, soon after 1981 the national airline started to register deficits in spite of the new routes open to it.

This resulted in it relying heavily on state subsidies to survive, and since then, the flagship carrier has hardly made any profit. It continued to bleed the national fiscus until it was eventually permanently grounded last month bringing 32 years of disastrous operations to a halt. At the time of its shut down, the national airline had a debt of more than US$140 million and virtually had no operational aircraft after all but one of its aging five planes had been grounded because of a lack of spare parts.

 

AirZim finally came to journey’s end last month when the government announced its shutdown. Although a new company to run a new airline has been established, no one knows when it will start flying since no private investors have been forthcoming as most are jittery about investing in an entity in which the government is the majority shareholder.

The AirZim disaster is just the latest in a long list of failed parastatals. Ziscosteel, Zupco, National Railways of Zimbabwe, Zimbabwe Electricity Supply Authority, Noczim, Cold Storage Company, Grain Marketing Board and the Agricultural and Rural Development Authority, among others, are dysfunctional and either technically insolvent or facing collapse.

 

They are all victims of rampant corruption, poor corporate governance, mismanagement of financial resources, and lack of clear policy direction. The monopolies these parastatals have enjoyed since Independence have been of no help and have instead helped in destroying the economy through numerous bailouts from depleted state coffers for them to remain afloat.

It is also disturbing that some government officials, particularly ministers, ran most of these parastatals as personal fiefdoms by handpicking their highly incompetent cronies to manage the entities for purposes of patronage.

No sooner had these managers been appointed than they began lining their pockets. For example, Ziscosteel was the main foreign currency earner before Independence, but incompetent management rendered its main furnace derelict for years resulting in the company shutting down. The closing down of Ziscosteel did not only affect the town of Redcliff next to Kwekwe where it is located, but other towns linked by the railway line from the steel-maker such as Bulawayo and Hwange. Bulawayo was worst affected since most industrial companies dependent on steel for survival were shutdown throwing thousands of workers into the streets.

Most of these parastatals have also been negatively affected by the non-constitution of boards and too many people acting in senior positions. As long as corporate governance is not adhered to in the running of these entities, parastatals will continue to be used as gravy trains at the expense of the overburdened and suffering taxpayer and the economy.

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