Maravi

Zim govt must reform state enterprises

Zim govt must reform state enterprises
Tue, 12 Jan 2010 22:44:00 +0000

ZIMBABWE has had its fair share of unpleasant records in the last decade. The inclusive Government instituted in February 2009 has brought tentative recovery, relief to a wearied population and cautious optimism in investment circles, foreign and domestic.

The coalition can sustain these advances via a more pronounced reform agenda with particular emphasis on fashioning institutions, standards and releasing adequate space in sectors such as manufacturing, tourism, transport (including air), computer and related services, through a relaxation of equity conditions to unleash the dynamism of the private sector and create employment.

A reform agenda that pursues pragmatic and business friendly policies will pay dividends and release much needed energies.

As the state implements the reform process in other sectors, it must crucially be forthright in reforming itself, and in particular, state enterprises.

Suchreform should stress the importance of forging new organisational and administrative forms with emphasis on efficient, diversified and comprehensive enterprises.

These reforms can include giving enterprises relatively slack plans and autonomy, promoting direct contractual relations such as borrowing from the market in their own capacity or raising investment capital.

The current operational inefficiencies, weak balance sheet positions, huge debt overhang of parastatals make outright privatisation via the obvious fire sale unattractive.

Each concern carries its own fundamentals, national and economic, which must be explored and evaluated separately.

The financial crisis clearly demonstrates that the state has a role to play, even if that role should depend on places and circumstances, with theories advocating outright deregulation having shown their ineffectiveness.

The State Enterprise Restructuring Agency must be more visible in the shaping of a credible action plan for the restructuring of state owned enterprise (SOE) management and commercialisation.

The overall objective should be creating professional units of management that will pursue technical and economic efficiencies relatively free of daily interference by Government, striving to achieve sustainable profit and be largely self supporting.

It is sensible to aim for a gradual phasing out of state bureaucratic economy under which economic units are run by political authorities as practically an integral part of Government administration and have no independent material interest in demand oriented, cost efficient and dynamic performance.

It is possible to achieve a strengthened bureaucratic role and market role for state enterprises. This argument does not represent corporatist bureaucratization without the benefit of political principle.

It is not simply an advocacy for measures without regard for their social implications, but stresses the importance of new organisational and administrative forms compatible with social responsibility concerns in re-orienting the political economy and creating viable entities.

The state should aim only to influence enterprise behaviour via economic levers such as taxes, monitoring prices set in collaboration with stakeholders on a theoretically valid basis, and credit policies encouraging these entities to take socially desired actions and other public good objectives.

Above all, and most crucially, this reform process should be hedged by a strengthening of parliamentary oversight on state enterprises and enhanced corporate governance.

It is a fair observation to note that, for one reason or the other, state enterprises have been a heavy burden on the fiscus.

There is now an urgent need for restructuring state enterprise and all elements of this inclusive Government must demonstrate the political capacity and will to insulate such economic decisions from narrow political interests.

*Miles Mudzviti writes from Yorkshire in England.

Labels: PARASTATALS

posted by MrK @ 9:05 AM