HomeLocal NewsGovt deals: Private sector exclusion raises questions

Govt deals: Private sector exclusion raises questions

THE recent deals between government and the Chinese and Russians, officially described as “mega” and “massive” with the potential to create more than 30 000 jobs, have raised excitement and scepticism, but the absence of the private sector’s input in the agreements suggests opacity and raises the spectre of corruption.

Kudzai Kuwaza

President Robert Mugabe last month went on a week-long business visit to China accompanied by seven government ministers, including Patrick Chinamasa (Finance), Mike Bimha (Industry and Commerce), Walter Chidhakwa (Mines), Obert Mpofu (Transport) and Walter Mzembi (Tourism).

Nine major agreements were reportedly signed to provide financial support for economic enablers in critical sectors that include energy, roads, national railway network, telecommunications, agriculture and tourism.

Representatives of various business organisations such as the Confederation of Zimbabwe Inductries (CZI), Zimbabwe National Chamber of Commerce and the Chamber of Mines told this paper that they had not been invited, but declined to comment further.

This is in stark contrast to South Africa, whose President Jacob Zuma recently took a strong business delegation of more than 100 private sector representatives to Russia for bilateral trade talks with his counterpart Vladimir Putin.

In off-the-record briefings, captains of industry said they were “baffled and disappointed” by their exclusion from the trip as they have intricate knowledge of what is needed to revive vital sectors such as manufacturing and mining, which could have been a vital component for the state visit.

Zimbabwe also inked several trade agreements with Russia last week. A US$3 billion platinum mining project was commissioned in Darwendale. The high-powered Russian delegation included that country’s foreign minister Sergei Lavrov.

There has been, however, a conspicuous military involvement in the various agreements put together with Russia and China.

China Africa Sunlight Energy Company, run by a consortium of Chinese investors and Oldstone Investments, a Zimbabwean outfit fronted by secretary for Defence Martin Rushwaya, is a case in point.

The project entails the construction of a 600MW thermal plant, development of a 2,4 million tonne per year coal mine and the erection of a 240km, 400kV Gwayi-Insukamini transmission line, linking up the planned plant and Insukamini.

The limited role of the private sector in these deals demonstrates government’s penchant to be “in command and control” of every facet of the economy, according to University of Zimbabwe economist Fanuel Hazvina.

“Economic growth is usually driven by the private sector,” Hazvina said. “Government is expected to provide the policy environment to support the private sector, but the government wants to be at the centre of everything.”

He said government “inefficiencies” could be a major hindrance in the implementation of the deals signed with Russia and China.

Hazvina’s fears are not without foundation. Government’s inefficiency echoes loudly through the parlous financial position of most state enterprises which are riddled with corruption, mismanagement, debt and a corporate governance deficit.

These enterprises continue to drain the fiscus significantly.

Hazvina said the omission of the private sector in coming up with these agreements was in contradiction of government’s current thrust of promoting public-private partnerships (PPPs).

PPPs are a government service or private business venture which is funded and operated through a partnership between government and one or more private sector companies.

Hazvina said had government incorporated the private sector, it could have also come up with agreements that would complement government’s efforts and help create jobs in a country where more than 80% are unemployed; while the situation is worsened by a wave of retrenchments and company closures as the economy continues to flounder.

“Government is doing almost everything. What we need are market-driven economies not command and control,” Hazvina said.

In an interview with the Zimbabwe Independent last week, CZI president Charles Msipa said while he understood concerns by business leaders that they should have been part of Mugabe’s trip to China, he believes there are vast opportunities for business to benefit within the framework of the agreements signed between Zimbabwe and China.

“I don’t think that I buy the argument that we were compromised by not being there because those were really framework agreements that were developed. It is now up to Zimbabwe businesses to get involved,” Msipa said. “Certainly, I would hope and expect there will be a significant role for local businesses in all that infrastructure work and I don’t think that it is too late for such businesses to come forward.”

However, an analyst who requested anonymity pointed out that the deals between government and China, which excluded the private sector, have not benefitted the country. He cited the operations of the Chinese in the diamond mining fields of Chiadzwa which have been blighted by allegations of opacity, corruption and failure to remit funds to Treasury.

The Chinese have invested in diamond mining through Anjin and Anhui, a joint venture between state-owned Zimbabwe Mining Development Company (ZMDC), the military and the Chinese company. The deal is one of the most opaque and has fuelled distrust in Chinese investors as it failed to remit taxes to government.

“Zimbabweans have not benefitted from the agreements with the Chinese in the mining of diamonds. The lack of transparency and accountability shows insincerity in deals which only involve government entities and the Chinese,” the analyst observed.

Economist John Robertson concurred, suggesting the exclusion of the private sector will deprive the country of expertise in the implementation of the deals.

“China and Russia will be disappointed by the level of expertise they will be dealing with,” Robertson said.

“We really need the private sector to be partnering with these foreign investors.”

Robertson predicted the Chinese and the Russian will bring their own workers, freezing out Zimbabwean citizens who could have benefitted through employment, thus reducing the high unemployment rate.

“This is a very bad business plan. We have no idea on how the businesses are run,” Robertson said.

So while government continues to trumpet the efficacy of the deals in meeting targets set under its economic blueprint ZimAsset, fears abound the deals are likely to benefit a few well-connected individuals within Zanu PF at the expense of long-suffering Zimbabweans.

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