EDITORIAL COMMENT: Don’t give up on the parastatals

An old hypothesis suggests that parastatals are inherently incompetent, inefficient and corrupt relative to the private sector.

This informs the drive to reform the country’s 107 State-owned enterprises with a view to secure partnerships, investors, push for mergers, dissolution and more debatably, privatisation.

However, we submit here that privatisation of parastatals is a ground that we have to tread with much caution.

An elaboration here will do.

The State is an intricately put together machine that works most efficiently when every organ is performing its functions well, just like the human body.

As such, State entities are not a coincidence; each and every one of them was put in place to serve an important purpose.

With parastatals in almost every sector of the economy ranging from telecommunications, energy, agriculture, health, education, mining and transport, among others, the entities provide essential subsidised services and products to the citizenry.

Consider for example, the Zimbabwe Electricity Supply Authority (Zesa) on the one hand and the Zimbabwe National Water Authority (Zinwa) on the other; the parastatals are of strategic importance to the country.

Government cannot wholly depend on the private sector for the provision of food, water, energy, education and the like.

It has to have its own strategic industrial pillars and State assets that service the populace, with the private sector only coming in to complement the efforts.

However, this has not been the case for years now. The vital socio-economic infrastructure has been crumbling under the leadership of inefficient boards and management.

The problem is not within the parastatals themselves or the model in which they operate, it lies in mismanagement.

It must be noted that the model has not failed, it cannot fail; what has failed is the way in which business is run in the State enterprises. But apart from mismanagement, some State companies have also failed to deliver because of political interference.

Executive appointees consequently owe their allegiance to the appointing authority, not to the success of the companies.

In years gone by, this is why we have heard whispers of ministers who drew perks and allowances from the struggling parastatals that fall under their purview.

Also, under the guise of corporate social responsibility, huge sums of money have also been siphoned from the parastatals.

As a result, the organs that continue to be milked mercilessly have failed to drive the development agenda in the country.

So what is the way forward?

Different medicine will have to be prescribed for the different ailing parastatals.

Of particular importance, privatisation of service-oriented parastatals is not the best solution as this will place all the strategic pillars of the country’s socio-economics in the hands of private players; with the possible consequence of a higher cost of living.

As announced by Finance and Economic Planning Minister Patrick Chinamasa last month, parastatals that offer more or less of the same services will be merged, while the perennial loss-making entities can be liquidated. Some will be partially and wholly privatised, depending on their strategic importance.

Government is working round the clock to restructure the businesses.

Sound policies that promote corporate governance in the sector are being put in place so as to improve efficiency and stimulate competition. The Public Entities and Corporate Governance Act, which clearly defines the roles of stakeholders, the Government, the minister, permanent secretary, the chief executive officer and the board, has already been passed. In the not so distant future, we expect the restructured parastatals to have the capacity to generate profits for the Government, create employment and improve the citizens’ quality of life.

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  • Munhumutapa XXII

    Did a thesis on the impact of ownership to an organisation. It cut across from parastatals to political parties. A political party is said to be owned by “The people”. Is that true. Sure as hell it is not. That’s why political parties sub-consciously end up printing regalia with their leaders pictures or names on them. Its an ownership problem. If you remove Strive’s name from Econet that organisation’s brand position will degrade somewhat, at least for some time. Yet Econet is on the sock exchange and belongs to everyone.

    Sell or give even as little as 5% shareholding of any parastatal to some icon and you will see the impact. Not just from a branding perspective, but also from a performance perspective. Management will know for certain that this guy is here to maximise his 5%. One doesn’t need to want to maximise a big stake to demand organisational performance… so, commercialisation, which is basically performance improvement of parastatals, MAY never go to its highest levels by itself without an ownership structure change.

  • Msana we ngombe

    The government is compromised in as far as parastals are concerned. The government expects conflicting dividents, financial dividents on one side and political dividents on other. For it to realise political dividents some parastals are made to use sub economic tarrifs to offer their services. On the other hand the government expects the same parastal to contribute something to the treasury. Only a miracle can see the government realising both dividents.
    With such an approach by the government we will be talking about parastatal reform for years to come with nothing tangible on the ground.