Parastatals reform key to economic growth

The World Bank has decades of experience in evaluating economies almost everywhere in the world, identifying economic attributes and constraints, and authoritatively concluding actions and measures key to addressing such constraints.

The Eric Bloch Column

On many occasions since Zimbabwe became independent 33 years ago, the World Bank has compiled and released various evaluations of the Zimbabwean economy, its potential and its positive features, hindrances to attaining that potential, and identification of what must be done to enhance the economy, as well as actions necessary to address and remove obstacles to the realisation of those positives.

Recently it issued another report titled Interim Strategy Note Supporting Economic Recovery for Inclusive Growth for the Republic of Zimbabwe. Among the many issues addressed therein is a focus on the abysmal deterioration of much of Zimbabwe’s infrastructure which precludes consistent and effective provision to the economy of essential utilities and services, thereby intensively hampering attainment and continuance of economic wellbeing.

The report emphasises that the very negative state of Zimbabwean infrastructure is, or should be, of great concern and its enhancement is of critical importance for the attainment of substantial improvement of the economy to be realised.

Among the many negatives of the prevailing infrastructural resources are:

  • Gross inadequacy of energy generation, with the Zimbabwe Electricity Supply Authority only being able to supply little more than half of the national need, due primarily to the aged, disrepaired and under-maintained state of the power generation resources at Hwange, Kariba, and urban power stations.
  • A railways network that the World Bank assesses is currently operating at a level of approximately 15% of theoretical capacity due to the poor state and condition of more than 70% of the railways’ network and the aged and derelict condition of much of the railway’s rolling stock.
  • Of the 88 100 kilometers of road networks in Zimbabwe, it is estimated that 20% are in sound condition, impacting very negatively on transportation of goods, and intensively increasing transportation costs.
  • Telecommunication and Internet services fluctuate from good and effective to the very negative, partially jeopardised by the erratic availability of energy, partially by inadequacies of maintenance, and in part due to the progressive ageing of the infrastructures.

The negative state of Zimbabwean infrastructure is also emphasised in an African Development Bank overview which contends that the minimum funding necessary to rehabilitate, restore and enhance that infrastructure would be US$14,2 billion, an amount beyond the means of government.

In view thereof, the World Bank report contends that it is essential that private capital be accessed to fund the infrastructural needs for government and its underlying state-enterprises do not have the necessary funding, and are unable to access such funding.

In convincing emphasis of the need for policy changes directed towards procuring private capital for infrastructural development, maintenance and enhancement, the World Bank report contends that “rehabilitating infrastructure will be critical to steady recovery, but the environment for enabling private sector investment in infrastructure must improve first”.

The Report further states that: “Though the bulk of financing rehabilitation Zimbabwe’s infrastructure would come from the private sector through Private Public Partnerships, there is a clear need for capacity building at all stages of investment development and regulation and for specific support in power, water and telecoms sectors.” A like need applies to the transportation sector, with special relevance to National Railways of Zimbabwe (NRZ) Air Zimbabwe and the Civil Aviation Authority.

The impecunious state of government, which will inevitably endure continuously until the economy is so radically revitalised as will then accord sufficiencies of fiscal inflows, is beyond doubt that infrastructural redemption, essential for that economic revitalisation, can only be achieved by partial (albeit substantial) or total privatisation of all the key parastatals and other state enterprises.

Concurrently, such privatisation would accord access to the latest, state-of-the-art, technological developments and resources, and to the managerial and operational skills which by now are grievously lacking in most of the public sector enterprises. This would address much of the managerial inadequacies and incompetences which have become characteristic of many of those enterprises.

Almost 20 years ago, during the Economic Structural Adjustment Programme (Esap), legislation was passed to enable the parastatals to privatise, wholly or partially (via Public-Private Sector Partnerships), and pursuant thereto, for a short period of time government included a Ministry of Privatisation.

However, despite governmental contentions to the contrary, those in power and authority did not actually favour any disinvestment from state entities, and hence the actually fulfilled privatisations were minimal, the only key ones being the privatisation of the then Dairy Marketing Board, the State Insurance Company, and partial disposal of shares in a few commercial banks.

Thereafter, for more than 15 years, government vigorously resisted any devolution of ownership and authority over state-enterprises, notwithstanding the ongoing decline in the operations of almost all of those enterprises.

It is heartening to note that the manifestos of most of the parties that contested the “harmonised” elections this week contended intention to assure Public Private Partnerships for presently state -owned, and controlled, enterprises and parastatals, but it remains to be seen whether the incoming government will conscientiously and determinedly pursue such policies, or whether those were naught but hypocritically enunciated policies to garner votes, devoid of any intent of fulfillment.

Hopefully, although horrendously belatedly, the words and promises will be converted to actualities, for parastatal transformation is an absolute prerequisite for economic growth, notwithstanding that many other constructive actions are also necessary.

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