OPEN ECONOMY: State enterprises are hindering jobs and growth

12 Oct, 2014 - 09:10 0 Views

The Sunday Mail

“As Government, we are burdened by looking after a highly-educated unemployed group of people who are hunting for jobs,” said Vice-President Dr Mujuru at a tripartite Sadc Summit in July.

She was right. It is true that empowerment programmes like land reforms give youths the capability to create their own enterprises. As the VP meant to imply, such programmes are a stepping stone for the youth, specifically in agriculture where farming can be an avenue for many profitable and uplifting activities.

So, indeed, in cases where youth have been given access to land and inputs, they should take the responsibility to do their own due diligence in terms of job-creation and not look to Government for jobs; indisputable stance by the VP.

However, Government is selective in applying that rationale. You see, to empower is to position the youth towards sectors of their own chosen interest, where they can apply their developed proficiency. Hence, we must accept that empowerment cannot be limited to agriculture as many youths are not best inclined to, and interested in pursuing that one specific sector.

We cannot ignore other sectors that youths of today have genuine interest in, and possess the respective skill and knowledge; technology, energy, entertainment, transportation and logistics. These are not just sectors that our youths are good at, but are also global growth sectors which the youth’s ability may give us a lift into global competitiveness.

The question must be asked: What is hindering our youth from entering these sectors and contributing to economic growth?

We may find the answer within the big-versus-small-government discourse. After all, the majority of these sectors are characterised by State enterprise predominance.

For instance, consider media and entertainment where we have ZBC.

Many youths today are astute with skills in mass communication, programming, and transmission. Entertainment is a complementary industry. Asked to pursue careers of their own volition, you would be hard-pressed to find a youth not eager to delve into this sector.

Meanwhile, our State enterprise allowed unsustainable salaries and benefits to executives for poor management, as evidenced by the eventual debt obligations.

Maybe those resources could have been better used to expand the sector, create better infrastructure and opportunities for skilled employment.

It is yet to be justified from an economic standpoint why ZBC is the predominant player in such a growing sector.

DStv is mega-business across Africa and is challenging conglomerates in Europe and the United States for multi-million dollar contracts.

Worryingly, with the proficiency and creativity of our youth, we cannot produce even a handful of channels from our market.

It is the same in transportation and logistics. While the operational efficiency of Air Zimbabwe has been open to criticism, more concerning are the incidents of corruption that have been a direct constraint to profitability and competitiveness.

Liberalising the sector may have been the right thing to do. Sums reportedly lost in given scandals surpass enough finances for capital by other well-planned and diligent operators intending to start their own flights on competitive routes.

In terms of energy, the decade-long problems at Zesa are exacerbated by lack of innovation and modern application of alternatives like hydro, wind, thermal, photovoltaic and solar energy. We could do with some fresh perspectives to energy.

With so much of scientific academics focused on energy, imagine the areas of employment that could be created; let alone the industrial boost we can get from more power availability.

Perhaps we are not motivated by other African countries like Morocco, which will be exporting renewable energy to the European Union by 2016.

The economic lag of State enterprises is understated. We often perceive it as just tax-payer money lost.

Let’s be specific.

Youths lose out on potential employment, infrastructure development and competitive economic growth. Instead, they are left vulnerable to expensive social costs, drug usage, venereal infection increase, family pressures of stunted economic advancement and an overall loss of morale and self-esteem.

I disagree with the communiqué put forward by the Zimbabwe Youth Council at the Youth Conference a few months ago. It stated, “Aware of the challenges of a culture of entitlement prevalent in the youth sector, we welcome calls to re-mould the youth image towards more responsible, respectful and hard-working youth.”

That may not be an accurate branding of the youth.

The youth may have a right to feel entitled. As long as they have attributes of value, they should be allowed the right to demand inclusive economic structures; on condition that economic returns are justifiable. Would I be irresponsible, disrespectful or unduly entitled if I demanded the Government to provide land to the masses?

Not at all; and that is because the economic benefits of land reform are well understood. Perhaps then, any disapproval towards suggesting liberalising certain sectors may be born out of a lack of understanding of the potential benefits of this notion.

A model example of a locally-liberalised sector is telecommunications.

The sector has expanded from a time when the State-owned Post and Telecommunications Company was a monopolistic entity. Today it has become a mainstay sector in our economy.

Notice, in particular, the infrastructure in Internet services and mobile money, both critical economic drivers.

Dominant economic theory is that private investment is more costly to citizens than public investment; this is not totally applicable to us.

Considering our public investment inefficiency, wastage and misappropriation; for example, unfair tendering practices and sub-par public infrastructure, that margin of difference is becoming much smaller and a cost consumers seem willing to bear in Zimbabwe.

More than 30 000 people today are employed in telecommunications, either directly or as contractors. As industry is born out of another, many more jobs will come as new industries emerge out of telecoms.

This sector has become so imperative that even our fiscal policy has taken to include tax structures on the use of these services. Imagine where our economy would be today if the sector had been kept under the State PTC monopoly?

To be fair, though, Government has done a fairly good job of regulating this sector over the years.

Unspoken of, and unfortunately so, is the level of information exchange and exposure that liberalising a sector can give to a country, enhancing its labour market’s technical proficiency and ingenuity. In my own experience, I have found that the average Zimbabwean youth is well-informed and technologically ahead of many other youths, even in developed countries when it comes to telecommunications.

If more growth sectors are liberalised, such intellectual capacity would be a competitive edge beneficial to the development of Zimbabwe.

Quite relevant is that our Ministry of Youth, Indigenisation and Economic Empowerment has not picked up on a fundamental flaw in our youth initiatives, especially youth loans and enterprise ventures. Capital availability and skills training have a diminished value when youth are confined to activities with limited growth potential.

Hence, the high loan defaults and business model imitation.

In certain economic activity, there are only a handful of business models one can apply; how many ways can one differentiate selling poultry? This is a consequence of opening up youth opportunities in just the one sector of agriculture; market saturation. Hence, 5 000 youths can immediately lose out to a single well-operated mass producer of poultry.

By involving youth in more sectors that have growth potential, entrepreneurial ventures have a higher likelihood to succeed. Anyhow, many youths have committed years to achieve tertiary education. Subsistence proprietorship should not be their highest ceiling of ambition.

They should be empowered to be involved in globally acknowledged real growth sectors, many of which are presided over by inefficient State enterprises. So, just like Government has made the effort to avail an entire agricultural sector to the youth, and rightfully expecting them to take the initiative in job-creation and economic growth, the same can be done in sectors that the youth are actually proficient at and genuinely interested in.

The notion seems simple.

State enterprises should be run to the point of maximum efficiency, which will be measured to justify their economic existence, or else there may be a justifiable economic reason to discontinue some of these enterprises.

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