HomeBusinessGovt Puts Parastatal Privatisation on Hold

Govt Puts Parastatal Privatisation on Hold

GOVERNMENT has shelved full privatisation plans for parastatals and state enterprises amid fears that the move would do little to boost shrinking treasury coffers.

Economic Planning and Investment Promotion minister Elton Mangoma said government would not embark on a “wholesale’ privatisation drive of undercapitalised public utilities.

Mangoma —— who chairs a cabinet cluster of ministries responsible for economic development —— made these remarks on Wednesday at the official launch of the 100-day work plan for the inclusive government.

“Our focus is not on wholesale privatisation,” he said.

The minister said government would, however, “develop strategies” to ensure that “key parastatals” such as Zesa and the National Railways of Zimbabwe operate efficiently. According to the 100-day plan document, public sector reforms would include civil service and Reserve Bank reforms and the Public Finance Management System (PFMS) and the Results Based Management System (RBMS).

Steel manufacturing company Zisco, according to the action plan document, would complete relining of one of its blast furnaces in 90 days. Zisco has over the years been a target of investors wishing to take full control of the underutilised firm.

“There would be parastatals that require reforms…where there is general agreement the public will know.

Selling assets at low prices does not bring any benefit either to the country or anybody,” Mangoma said.

His remarks mark a shift from proposals made in the Short Term Emergency Recovery Programme (Sterp), a blueprint forming the basis for the 100-day action plan.

“During the duration of Sterp, the inclusive government, through the ministry of State Enterprises, will undertake and evaluate all public enterprises with a view of rationalising their functions as well as other time-frame reforms,” said the Sterp document.

“Through this process and guided by cost effectiveness, options for public enterprise reforms will include recapitalisation, privatisation and part or outright disposal.”

Mangoma added that his ministry would audit Bilateral Investment Promotion and Protection Agreement (Bippa).

This key result area would be a litmus test for the inclusive government’s commitment to upholding property rights.

The anticipated audit comes at a time when the World Bank Tribunal ordered government to pay US$21 million compensation to 13 Dutch farmers —— protected by bilateral agreements —— who had their farms expropriated by government under the land reform exercise.

But government has remained adamant that it will only compensate farmers for infrastructural developments on farms. The Lands and Rural Resettlement ministry, which is also part of the economic cluster, said government would carry out a land audit to address multiple farm ownership during the same period. The ministry said it would “secure (the) farming environment-reduce conflicts and disputes on land and ensure security of persons and assets”.

The Ministry of Finance, which also falls into the economic cluster, also set various benchmarks to be met by August. The treasury pledged to mobilise resources to finance the 2009/2010 agricultural season. In order to boost government revenue, the ministry also proposed to broaden the tax base by reviewing the current tax policies.

Turning to the Reserve Bank the finance ministry pledged to implement International Monetary Fund recommendations on central bank reforms.

Meanwhile, the African Development Bank has pledged assistance to the cash strapped inclusive government once outstanding issues of the September 15 Global Political Agreement are resolved.


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