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Government misses privatisation deadlines

by Staff reporter
06 Oct 2019 at 15:33hrs | Views
The government has failed to meet its targets to revive state- owned enterprises (SOEs) that were outlined under its much-touted economic blueprint amid concerns about policy inconsistencies.

Finance minister Mthuli Ncube last year in September unveiled the Transitional Stabilisation Programme (TSP), which was anchored on plans to revive SOEs by June this year.

Some of the notable deadlines were the proposed merger of Zesa subsidiaries by March 2019.

The Zimbabwe Power Company, Zimbabwe Electricity Transmission and Distribution Company and Zesa Enterprises were supposed to be consolidated under Zesa Holdings.

Agribank was also supposed to have been privatised by March this year as per the TSP benchmarks.

The government had also intended to demerge the Grain Marketing Board into commercial business units and strategic grain reserve units as well as push for a Cold Storage Commission joint venture last year.

Other entities earmarked for partial privatisation this year but missed the deadlines are Petrotrade, TelOne and NetOne.

Zimbabwe National Chamber of Commerce CEO Christopher Mugaga said the delay in parastatal reforms exposed government's failure to attract fresh capital into the country.

"This is a vicious cycle," he said. "If you say you want to commercialise or privatise but if there are no investors it becomes a challenge.

"For starters it's due to lack of liquidity in the economy."

Economist Eddie Cross weighed in saying failure to attract foreign investment was due to government's policy inconsistencies.

"It's difficult to understand why these timelines have not been met," he said.

"I think if the government had fulfilled its undertakings many of these companies could have been reformed. It's a great disappointment and the consequences to the fiscus are huge.

"I think we have a problem with our fiscal and monetary policy instability. Many investors see us as an unstable destination.We can overcome this if we offer better investment conditions."

Kipson Gundani, an economist, said the timelines set by government were unrealistic and " very ambitious".

"Firstly, the set targets were very ambitious because there is a lot of due diligence and evaluations that needs to happen first before you find a suitor," he said.

"Secondly, these entities are not insulated from the obtaining harsh economic environment.

"However, these delays may be a blessing in disguise because we were going to mortgage the SOEs for a song at a time when their assets are losing value with the coming of a local currency.

"What cannot be ruled out is that there are forces that are against these reforms especially those presiding over the parastatals.

"These entities are bloated and in every change process there are losers and winners. So losers are likely to derail these changes to keep their jobs."

Labour and Economic Development Research Institute of Zimbabwe director Godfrey Kanyenze said reforming the SOEs in the middle of an economic crisis was always going to be challenging.

"It says a lot about the sequencing of reforms. It's difficult to start reforms under the economic turbulences," he said.

"Remember there are people who benefited through corruption and misappropriation of funds from the enterprises. Those people feel threatened.

"Also lack of unity of purpose, a shared vision and coherence is another problem.

"What we need to do is to start building coherence. Reforms are in the realm of political economy.

"Zimbabwe is in a political minefield. There is a general lethargy."

Zimbabwe's SOEs continue to be a drain on the fiscus due to poor management and lack of capitalisation.

Source - the standrad

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