Parastatals derail economy

Several state-run institutions such as Grain Marketing Board (GMB), Agribank, Agricultural and Rural Development Authority (ARDA), National Railways of Zimbabwe (NRZ), Zimbabwe Electricity Supply Authority (ZESA), Noczim, Ziscosteel, Cold Storage Commission (etc) have been in intensive care for the past decade due to the mismanagement of financial resources, corruption, lack of clear policy direction and poor corporate governance.

Since the land grab, ARDA, which used to supply the bulk of the countrys maize production, has been unable to fully utilize its vast land, whereas GMB has been struggling to pay farmers their outstanding balances from 2008.

Early last year, Finance Minister Tendai Biti told the media that Zimbabwes railway system was on the verge of collapse as a result of mismanagement and failure by the national railway utility to update its systems over the past 20 years.

High potential of NRZ disaster

The World Bank once recommended that NRZ should close down two-thirds of its railway network to allow for rehabilitation because of the high potential for disaster it poses.

The 2010 to 2015 Medium Term Plan recommended the creation of a separate body to own and operate railway infrastructure while the rail freight would be opened up to interested private players.

The plan also placed emphasis on rehabilitation of all railway infrastructures such as communication systems, worn-out rail lines and vandalized copper wire lines, which has effectively paralyzed the signal and communications systems across the country.

Zimbabwes railway network covers over 3000 kilometres and includes signalling and telecommunications.

Transport and Telecommunications Development minister Nicholas Goche told parliamentarians that the government would soon establish a separate body to own and operate the countrys railway infrastructure and open up railway services to independent players, which will bring an end to NRZ monopoly.

At the moment NRZ requires up to US$10 million to replace vandalized equipment.

Havens of mismanagement

These underperforming state entities continue to eat in the fiscus after recording a loss of over US$40 million during the period ending June 30, 2010 alone.

Air Zimbabwe recorded a loss of $14.6m, Noczim $11.9m, GMB $4.5m, NRZ $9.6m, Cold Storage $3m, and $2.8m for Agribank.

These parastatals have become havens of mismanagement and corruption, yet the government is busy blaming so-called sanctions.

Despite these figures, the Minister of Agricultural Mechanisation and Irrigation Development Dr Joseph Made said the government did not have any plans to privatise parastatals when he announced new board members for several State run and highly imbedded parastatals: GMB, Agribank, ARDA and the Pig Industry Board (PIB).

His arrogant refusal shows how Zanu (PF) is misusing parastatals to silence its disgruntled retired army generals and party stalwarts by planting them in executive positions at the expense of qualified personnel.

The recent calls to privatise 10 state-run-institutions made by the Minister of Parastatals and State enterprises Gorden Moyo highlights that the government can no longer afford not to commercialise these companies.

Three pronged approach

Minister Moy also revealed that 15 entities have been earmarked for privatisation, 18 for commercialisation, 34 for restructuring and 11 are still under consideration.

This follows an earlier agreement, in principle, by Cabinet that enhancing the performance of parastatals and state enterprises would take a three-pronged approach which involves restructuring and privatisation.

For the process to smoothly sail, government has to adopt a hands-off attitude to critical service. It should also bail out some of the parastatals since they are reeling under heavy debts. With the parastatals sitting on such debts, no investor will come in.

Also, boards of management credible to the investor community should be put in place and must be empowered to run the organisation without political interference.

For close to 20 years the government has expressed its intention to privatise some parastatals following the success story of few State firms such as Zimbabwe Reinsurance Company, Commercial Bank of Zimbabwe and Dairibord Zimbabwe, which were sold under the parastatals reform framework of 1991-1995.

However, since then government has only expressed its intention to dispose of its interest in underperforming parastatals and State enterprises, but little action has been taken.