Common sense and private sector’s demonisation…..state enterprises viewed differently

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By Dr Tafataona Mahoso

Current reportage on Government efforts to change the governance of state enterprises and parastatals (SEPs) is thick on rhetoric but very thin on analysis.
And unless this imbalance changes, Government will be misled and misguided in its noble efforts; and the SEPs reforms will fail as happened before.
An astute reader of economic and business reports on the reform of SEPs cannot fail to notice a glaring common-sensical paradox; all the problems in state enterprises are blamed on mismanagement, alleged incompetence and corruption while the comatose state of private industry is explained differently.
For instance, at the latest Zimbabwe National Chamber of Commerce (ZNCC) indaba, some sections of the media have obligingly put the blame for the failures of industry on foreign direct investment (FDI).
Some of the reportage has gone on to describe the state enterprises as ‘cry babies’.
In other words, the very same people attributing SEPs problems to gross mismanagement, incompetence and corruption are telling us in fact that the vexing foreign currency crisis and pervasive lack of confidence that is hurting new investment only apply to the explanation of their problems but not to problems facing SEPs in the very same national economy!
Now, is it really honest or wise to argue in such a manner?
The reporters, the private sector and even ministers jumping on the SEPs reform bandwagon assume that the public does not know that so-called industry is in fact in a worse condition than the SEPs and that in 2012, the same Government set up what was called the Distressed Industries and Marginalised Areas Fund (DIMAF) to which at least 28 private sector firms in Bulawayo alone applied for ‘social welfare’.
The same reporters now doing PR for so-called industry actually complained at the time that 28 broke industry applicants for this fund by Bulawayo firms alone was actually too low a number!
There were many more broke companies in Bulawayo then than just 28!
There were far too many more such distressed firms.
Most did not apply because they were too hopeless to expect recovery from injections of DIMAF cash alone.
But the press never called the Government hand-outs to the private sector ‘mollycoddling’ and the reasons so many companies were distressed beyond hope were not explained.
Gross mismanagement and corruption were never mentioned in connection with the collapse of the private sector and the resulting demand for DIMAF!
Yet our readers know that if they go back to 2009, they will find many more private companies reported as collapsed or collapsing every year up to now!
The implications of this contradictory reporting are many:
l First, it is as if there are in fact two separate and unequal economies in Zimbabwe: One in which private sector companies exist and operate, and another in which SEPs operate. This is wrong;
l Second, it is assumed that a completely separate culture prevails in the private sector, unrelated to the culture prevailing in SEPs; and that top managers from one sector are unrelated to those from the other. This is not the case;
l Third and most dangerous, it is also assumed that Government would be better off selling the poorly performing SEPs to the already distressed or comatose industrial sector!
This makes no common sense and it means forgetting the original reason for existence of SEPs in the first place.
Reporters must start by reminding their readers that this kind of corporate sector demonisation of SEPs began with the Economic Structural Adjustment Programme (ESAP) in 1991.
Worldwide private sector attacks on SEPs have been intended to enable aspiring capitalists to buy ready-built capital assets cheaply at tax-payers’ expense.
In fact, the privatisation and cheap sale of SEPs to the private sector is the easiest way of covering up the failures of the private sector itself to achieve growth on its own.
The sector then achieves fast but false growth by merely transferring to itself ready-built capital assets in the form of SEPs.
So, readers must separate the need to reform SEPs from the self-interested attacks on the same SEPs by so-called ‘captains’ of a non-existent industry.
The same criticism levelled against SEPs must be directed against the private sector as follows:
First, for a long time, the so-called ‘captains of industry’ have not been represented by a proper leadership face and voice that demonstrates a truly national business class. What we see especially now is mostly a PR function fronted by young economists whose main goal is to deflect criticism from the sector. These PR economists are not the true decision makers behind the so-called industry bodies.
l Second the neo-Rhodesian posture of the real decision makers in the bodies which Lynn Mukonoweshuro of the then Kingdom Financial Holdings exposed, 10 years ago, remains to this day. Mukonoweshuro made the following observations among many as far back as 2007:
First, the current crop of ‘captains of industry’ were too pessimistic and too cynical to prepare Zimbabwe’s industry for its impending recovery; the same recovery which South African firms saw at the time and which caused the South Africans to treat challenges facing Zimbabwe as opportunities.
Second, because of their role as Rhodesian and neo-Rhodesian ‘prophets of doom’ against their own economy, many of the ‘captains of industry’ in 2007 were not grooming new and appropriate leaders to take over from them and to position Zimbabwean industry for the impending recovery then.
This partly explains why recovery has been either sluggish or nil.
The current price war therefore revives a persistent national question which we have asked many times and in different ways through this column. Mukonoweshuro’s paper raised the same question from a business development point of view.
In the context of the economic war then and now, our point of view is wider than just one of corporate transition and succession: Are the so-called ‘captains of industry’ in Zimbabwe real captains leading new teams of Zimbabwean industrialists or are they a bunch of isolated, co-opted and compromised African individuals grafted on to the rump of a dying Rhodesian oligarchy once sustained by foreign capital?
At the bottom of all these observations and criticisms is the question whether or not we do have a patriotic national business class.
If it exists, how would we notice?
What would be the characteristics of such a class?
Before listing the normal characteristics of a patriotic national business class, it is important to point out that imperialism and foreign capitalist business interests have historically opposed the emergence of patriotic national business classes in countries of the South and the East.
For instance, if we were to put Zimbabwe, during and after ESAP, in the place of Russia from 1989, from the collapse of the former Soviet Union and the end of communism to this day, we would see similarities in the attitude of foreign capital and local businesses fronting for foreign capital. According to Professor Michel Chossudovsky in The Globalization of Poverty:
“The IMF-style shock treatment (of Russia) initiated in January 1992 (strategically) precluded from the outset a transition toward national capitalism… that is, a national capitalist economy owned and controlled by a Russian entrepreneurial class and supported as in other major capitalist nations by the economic and social policies of the (Russian) State.”
So, the policies of the US, France, Germany, Britain, Canada and other Western powers towards Russia, after the collapse of communism, would no longer be to fight communism but rather to ensure that foreign business interests were fronted by locals against the national interests of the Russian people as a whole.
Is Zimbabwe today an exception to this historical fact?
So, in Zimbabwe, what would be the qualities of a genuinely patriotic national business class led by true captains of industry?
l That national business class would be honest about the real day-to-day conditions of their sector and how it relates to the whole economy;
l It would have opposed a foreign-imposed and foreign-driven ESAP but instead design a home-grown national economic reconstruction programme.
l It would have supported and tried to guide the African land reclamation and land tenure revolution.
l A Zimbabwean business leadership would have had enough strategic business intelligence to recognise as a threat to them and their customers the draft of the so-called Zimbabwe Democracy and Economic Recovery Bill (now an act) when it was being drafted here by white Rhodesians and the MDC in 2000. That bill is now the US sanctions law against Zimbabwe. Its latest abuse cost CBZ alone US $385 million in 2017!
l A Zimbabwean business leadership would have quickly put together a private sector strategy to kill the sanctions bill before it became US law and that strategy would have solicited the support of their US colleagues. The Zimbabwe Democracy and Economic Recovery Act (ZDERA) is not only racist and illegal. It is also anti-business. But we do not hear this from the business bodies.
l Even now, there would be no doubt among Zimbabwean citizens as well as politicians where the business leadership stood in relation to the US-UK sanctions and what this leadership was doing to defeat the same sanctions. The absence of a collective business voice against ZDERA is indictment on business leadership in Zimbabwe.
l Moreover, the same business leadership would be the first to acknowledge that the country is in a state of economic war and to provide detailed tips to business, to their own customers and to the State on how best to survive and win the war. The absence of such a collective strategy is again a sad and striking comment.
In other words, the so-called private sector should be the last to preach self-righteous sermons to SEPs. They are in a much worse state than SEPs.

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