HomeBusinessNo imminent privatisation of parastatals: PM

No imminent privatisation of parastatals: PM

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

 

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