Alternative To Privatising Parastatals Like ZESA Makes More Sense In The Long Run
Last week, Techzim ran a story discussing the government’s plan to privatise most of the state owned enterprises. In that story we talked about how privatisation has to be done right otherwise it will fail like it did in Zimbabwe in the 90s.
Parastatals are just businesses in the end, privatisation simply means moving ownership and control from the government into private hands. If the private owners can revive the business it means the problem is not that there is no business case for the parastatal to exist but rather that the government-appointed leadership was not up to the task.
It follows then that if the government can fix the management issue, these ‘technically insolvent’ parastatals of ours can thrive.
After reading the abovementioned article, one Sheena Freeman gave a comment I felt needed to be publicised. Sheena gives practical measures that can be taken to revive our parastatals without resorting to privatisation.
Here is the comment in full:
We need to get efficient management in to clean up corruption and get these entities running properly. It is a very bad idea to allow our parastatals to be sold off to foreigners. It happened with the railways in Britain. Now British people are paying exorbitant train fares that subsidise railways and fares in Europe.
Our parastatals used to be extremely well run and they were profitable. As I see it there are several factors that could make a difference.
- Efficient, honest and commercially minded management and staff who will work hard for the success of the parastatal.
- Clean up corruption – and that includes stopping employees from running their personal businesses on company time/using company resources. It used to be that civil servants and parastatal employees were not allowed to have their own businesses or even to have other jobs, e.g. waitressing, without special permission.
- Cut waste and inefficiency.
- Maintain, reuse / repurpose existing assets.
- Ban exorbitant salaries/ contracts. Allow moderate basic salaries with bonuses based on productivity. For example Triodos Bank pays its top executives a maximum of 9 times what its lowest paid employee earns.
- Enable / encourage the local production of inputs.
- Reinstate the commercial farmers so that Zimbabwe can grow its own food instead of importing. They are among the most efficient in the world. Displaced Chinhoyi/ Karoi farmers turned Zambia from a food importing nation to a food exporting nation in 18 months.
- Subsidise basic necessities e.g. mealie meal, brown bread, milk, school uniforms. This will help to keep the cost of living down, so wages will not need to be so high. This will make us more competitive in export markets. The important thing is not how much you earn but how much you can buy with it.
- Make the prisons productive again. They used to provide fruit, vegetables and meat to feed themselves and hospitals and other establishments. This provides inmates with skills they can use after their release as well as dramatically reducing food costs in government establishments. Audit regularly.
- Bring in stringent financial oversight and control. Audit. Audit. Audit
- Transparency is essential.
Everything we import means exporting jobs and money to other countries. The more we can produce in Zimbabwe and the more we can supply our own needs and produce enough to export, the better off we will be because this will provide jobs for increasing numbers of our people. If we sell our parastatals to foreigners all those profits will be exported. If we privatise our parastatals we will not be able to control the prices they charge and the profits will make rich people even richer.
Encourage our people to come home from the diaspora to help getting the country back on its feet or import skilled workers/management on short term contracts with the provision that they can become residents/citizens after a certain period of time. Where necessary, these contracts need to be renewed well before they expire so that the technicians/managers can plan their lives. We lost superb people in the late 1990s/2000s because their contracts were not renewed soon enough.
We need to strive towards a Zimbabwe where no one starves and no one is obscenely rich at the expense of others. We need a well run country with justice for all. We need transparency in all public office. Nobody should be paid huge salaries, e.g. mayors, while the entities for which they are responsible are in poor condition. No senior politicians/ local government/ civil servants should receive their pay if the people they control have not been paid. The people at the bottom are much closer to starvation/ homelessness and need their pay.
Parastatals were originally designed to provide more efficient methods of providing services/ finding markets than individual businesses could do. Parastatals were to benefit the whole nation – but they have to work on trust e.g. if farmers borrow money from a parastatal to plant crops, they must repay that loan by delivering their crops to that parastatal.
Soon after Independence some farmers were borrowing money from the parastatal and then selling their crops privately (not repaying their loan). This meant there was no money to advance to farmers for the following crop and the whole system broke down. Greed doesn’t work in the long term.
There you have it. You may not agree with everything Sheena said above, which is fine, there are multiple ways to skin a cat. You can probably come up with your own suggestions or revise the ones mentioned above. Either way, we are all acknowledging that privatisation might not be the best option but…
I had some back and forth with Sheena and I pointed out that the reason I personally want privatisation is that I do not trust the government to make the necessary reforms at these parastatals. I would prefer a situation where all the responsibility which can be moved from the government be moved private hands.
Ask yourself this, would the Zimbabwean economy be at the biggest of risks from profiteering oligarchs if Agribank was nolonger under the control of the government? Probably not. Unless it’s a matter of state security or some similar reason, I’m all for privatisation of most parastatals. ZESA and a few other parastatals being the exception, for those, the government has to fix the management issue.
Introduction and conclusion by Leonard Sengere.