Maravi

Abuse of parastatals

Abuse of parastatals
By Editor
Wed 03 Feb. 2010, 00:00 CAT

NO contemporary democratic state has an economic system that is either completely state owned or totally free of government regulation. All are mixtures of private enterprise and government oversight.

Democracy implies no specific doctrine of economics. Indeed, a good deal of debate in any modern democracy concerns the proper role of government in the economy.

In the final analysis, what really matters is how these enterprises, whether owned by the government or by private entities, are managed. They all need to be managed in the most efficient, effective and orderly manner. If there are companies owned by the state, the rules by which the directors and senior management are selected and appointed must be public and explicit, not secret, arbitrary or subject to political manipulation by those in power.

State enterprises will continue to play an important role in our economy regardless of the political sloganeering about a private sector-driven economy. And this calls for a lot of attention to be paid to the way our state-owned enterprises are managed. Right now, one cannot say we are managing our state enterprises in a prudent manner.

Looking at the way we appoint people to the boards of state enterprises, one wonders what we really want to achieve. As soon as a new minister is appointed to a ministry, boards of enterprises falling under that ministry are dissolved and new members are appointed.

These usually may comprise someone or some people favoured by the president, some ruling party cadres or campaign managers of the president or indeed of the minister himself. And this is not at the exclusion of relatives, friends and other associates of the president and the minister involved. Merit is not so much of an issue. If it is there, it is simply a matter of coincidence. Very little attention is paid to the competence of the directors. The same pattern follows the appointments of chief executives and other senior managers.

Clearly, their interest is not how well the enterprises perform but how much control they have over them. The parastatal jobs are used to reward supporters; they are used for patronage. And very little attention is paid to the performance of those appointed.

The other motivation is unrestricted access to the resources of these enterprises for the personal gain of the appointing authorities. Election petitions and other corruption cases that have come before our courts have shown how parastatals have been abused by those in power in their election campaigns. So to steal public funds from or through state enterprises, those in power strategically place their own people in key management positions.

This was very well revealed in the case of Zambia National Commercial Bank where money was being withdrawn with the help of the managing director and taken to State House for Frederick Chiluba to squander.

Who doesn’t know how the resources of Zesco are often used in election campaigns by those in power? If those on the board or senior management positions are seen to be hostile to the criminal and corrupt designs of those in power, they are quickly kicked out. Even denying a relative, friend of the minister or the president a job, a contract to supply this or that service is a crime for which one is likely to lose his job.

In this regard, working for a state enterprise is a very risky undertaking. One can lose a job so easily. Terminating a contract, whatever the penalties for doing so, is not an issue for those in power.

Look at the way they are abusing state enterprises in the media sector! One would think that those in power have the legal mandate to use the Zambia Daily Mail and Times of Zambia as if they were personal property for use by themselves, their supporters and their party, at the exclusion of all others. Even the managers and other workers at these enterprises have been driven into such fear that even lowly-placed ruling party cadres can intimidate them, can give them instructions.

They walk in and out of these enterprises as if they directly owned them at the exclusion of other citizens, especially those in politics. This is certainly not a recipe for managing state enterprises well. And it is this single factor that makes state enterprises fail to tick even with the best of managers and abundance of financial resources at their disposal. One can’t deliver under such conditions.

Look at the way they have been managing Zesco! They have been changing chief executives like underwear. You can’t run such a complex enterprise in such an unstable manner and expect it to deliver an efficient service to the Zambian people. It is the same with Zamtel. They have simply been raping these companies and bleeding them to death and then connive with their friends in the most corrupt way to buy them.

Parastatals can deliver good economic results to the benefit of our people if they are managed in an efficient, effective and honest manner. There are many countries in the world that are delivering huge economic benefits to their people through parastatals. For instance, Chile is doing very well economically while its key economic sector – copper mining – is dominated by the state enterprise. China is another example that cannot be ignored where state enterprises are delivering gigantic economic benefits to the Chinese people.

Malaysia also has strong state participation in the economy. Examples are many. But this requires discipline. Even private companies that are managed in a reckless manner are not contributing much to the economic development of our country. Like a parastatal, the private enterprise needs a good board, competent management and disciplined shareholders who don’t deep their fingers in the till.

We have no doubt that state-owned enterprises, operating according to the public and developmental mandate, are critical to placing the economy on a new developmental path. And for this reason, everything possible should be done to ensure that the boards of our state-owned enterprises comprise competent and honest people appointed purely on merit. It is also important that these are allowed to make the decisions that are needed for these enterprises to operate efficiently.

The recruitment of chief executives and other senior managers should be left to these boards, and not to the president and his ministers. This also calls for very high levels of integrity from those appointed to serve on these boards. They should not accept to do wrong things simply to keep their positions in these enterprises. Some should learn their lessons from what happened to people like Samuel Musonda who had allowed himself to be used as a tool in the looting of public resources from Zambia National Commercial Bank by Chiluba. Musonda was convicted by the magistrates’ court and it is simply by virtual of bail pending appeal that he is not in jail today.

Whatever the conclusion of his appeal will be, the point has been delivered that those who take up jobs in state-owned enterprises should have the spine and not allow themselves to be used by those in power to do wrong things. We say this because at the end of the day, they will have to personally account for their decisions and actions and their political masters may not be there to help them.

There is need for management stability in our state-owned enterprises. The arbitrary removal of chief executives of these institutions serves only to fuel uncertainty and promote hesitant management. Constant changes in management at many of our parastatals is not conducive to good performance of these enterprises or the stability or motivation of staff in general.

Our parastatals could be important revenue generating institutions for our country if they were allowed to operate efficiently, effectively and in an orderly manner. Interfering and meddling in the affairs of state-owned enterprises for spurious political and other reasons by our politicians is not good for the operations of these enterprises. There is need for a review of the way parastatals are being run and where necessary to quickly take corrective action that strengthens corporate governance in these entities. And the most urgent case, in our view, is that of Zesco because of its strategic importance to our country’s economy.

Labels: FACKSON SHAMENDA, PARASTATALS

posted by MrK @ 7:20 PM