No imminent privatisation of parastatals: PM
Saturday, 28 April 2012 16:54
BY NQOBILE BHEBHE
PRIME Minister Morgan Tsvangirai says government is not in a hurry to
privatise loss-making parastatals as this will expose Zimbabweans to
exorbitant utility rates.
Addressing an International Business Conference in Bulawayo, which ran
concurrently with the just ended Zimbabwe International Trade Fair (ZITF),
Tsvangirai said there was a general misconception about parastatals.
“There are those parastatals that are of a social nature, those that provide
services such as electricity and water,” he said.
“Those we will continue to protect because they provide an essential
service. If we privatise them, we would be exposing the people to exorbitant
rates, so we will continue protecting them.”
Government has over the years continued to protect water and electricity
provision arguing that they are strategic sectors, but services have
continued to deteriorate leading to calls for privatisation.
As part of measures aimed at improving parastatals’ operational efficiency,
government prioritised the privatisation and commercialisation of 10
entities in 2010.
However, State Enterprises and Parastatals minister, Gorden Moyo, has
previously blamed line ministries and management for lack of commitment
towards completing the restructuring process.
Critics say most of Zimbabwe’s parastatals have been ruined by poorly
qualified managers, many aligned to Zanu PF, who were put in charge of the
government-controlled firms because of their political connections rather
than technical expertise.
Zimbabwe has 78 parastatals, which at full capacity can contribute 40%
towards the country’s Gross Domestic Product (GDP).
“Yes, there are those parastatals that need to be privatised because the
government does not need to be in business. Business should be business.
Why should the government be in manufacturing? Therefore, those parastatals
that are in manufacturing should be privatised,” said Tsvangirai.
Parastatals have continued to be dogged by challenges that include
undercapitalisation, obsolete infrastructure, low capacity utilisation, lack
of working capital caused by low debt collection, outstanding long-term
loans, non-compliance, lack of good corporate governance and the existence
of substantial inter-parastatal debts.
The premier said government would identify firms that it could enter
partnerships with.
Suggestions were made at the conference that all heads of ailing state
enterprises be fired.
Contributing to the discussion, Deputy Prime minister Arthur Mutambara told
delegates that in China, parastatal bosses who continued making losses would
be viewed as economic saboteurs and shot.
“In China such bosses are treated as economic saboteurs. They are shot dead,
but we should not do that here,” he said.
The government has lined up 10 firms for privatisation that include the
Grain Marketing Board, fixed-telephone line operator, TelOne and its sister
cellular company, NetOne, Cold Storage Company, Allied Timbers, Air Zimbabwe
and Agribank among others.
Most parastatals’ operations have recently come under the spotlight, owing
to continued losses incurred despite continued assistance from fiscal
authorities.
Tsvangirai says farmers need leases
Meanwhile, Tsvangirai said government should give farmers leases in order to
facilitate their access to capital.
He said the new black farmers continued to fail to produce enough to feed
the nation because of lack of capital, as their land was not “bankable.”
“I cannot over-emphasise the need for government to move with speed to
restore the collateral value of land and other commercial assets to leverage
our natural heritage. One of the reasons our farmers and indigenous
entrepreneurs have not been as successful, is the failure to access the
much-needed capital as land remains a dead asset with huge potential for
financial leverage,” Tsvangirai said.
Government once released 99-year-leases, but these have been criticised as
not being bankable because of clauses in the offer letters. The 99-year
leases do not give rights to banks to grab land once the lessee defaults on
loan repayment. Instead, the minister of lands is the one with powers to
repossess land.
Agricultural experts have said the lack of secure land tenure has been a
major disincentive to those who want to invest in agriculture, saying this
was the reason why much of the once productive land is either lying idle or
producing very little.
The Commercial Farmers Union (CFU) has previously stated that agrarian
reforms rendered land dead capital, as it could no longer be used as
security when applying for loans for farming activities. — BY NQOBANI NDLOVU