Revamped parastatals can grow economy

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THE noble effort by Government to breathe a new lease of life into ailing state enterprises and parastatals (SEPs) should be conducted expeditiously.
This is not the first time Government has tried to resuscitate the struggling public sector, but the results have not been encouraging.
The first time was in the early 1990s when, as a country, we made the mistake of swallowing, hook, line and sinker, economic prescriptions from the Bretton Woods Institutions.
The prescription to revamp the public sector, according to the World Bank and International Monetary Fund, was an economic package called the Economic Structural Adjustment Programme (ESAP).
ESAP, a five-year plan, was rolled out in 1991 only to later prove a Trojan Horse that destabilised industry and almost rendered the economy comatose.
Toying with key pillars of the economy proved futile.
Parastals such as the then Cold Storage Commission (now Cold Storage Company), Industrial Development Corporation and the Grain Marketing Board, among others, which used to contribute 40 percent of the Gross Domestic Product (GDP) at their peak, are now weighing down Treasury by continuously drawing money from Government.
And while continued Government subsidies are unsustainable, we cannot leap to embrace window-dressed solutions that will come back to haunt us.
Elsewhere in this publication, we write about how Government needs to critically read through the rhetoric on reportage on the benefits of privatisation.
Privatisation is being extolled as panacea to the struggling entities.
Such reportage is thin on analysis and woefully devoid of facts as it turns a blind eye on how private sector companies are failing to adapt to the turbulent macro-economic environment, culminating in massive closures of these entities.
So, what guarantee is there that privatising SEPs will not be a failure as has been the case in the past?
By the way, privatising SEPs is tantamount to delivering ready-built capital assets in key sectors of the economy to capitalists whose objectives are deviant from the purpose those SEPs were set up to serve.
In economic parlance, the sole objective of the public sector is social utility maximisation, while the private sector is geared towards profit maximisation.
So what will happen to the price of goods and services churned out by entities seeking to recoup their investment?
Where does this leave the ordinary man on the street in terms of quality of life?
The current drive by Government to revamp SEPs can be spurred by plucking a leaf from China’s reform of its own State-Owned Enterprises (SOEs), which have been the bulwark of the world’s fastest growing economy.
China, which has a record 150 000 SOEs spanning the breadth of the economy from the service industry such as tourism to heavy industry, managed to transform performance of its SOEs using a phased approach.
The Chinese SOEs reform process had four phases, namely; expanding SOEs autonomy (1978-1984), separating ownership and management (1985-1992), establishing the modern corporate system (1993-2002) and the state-owned asset management system (2003-2015).
Chinese SOEs account for 30-40 percent of total GDP and about 20 percent of China’s total employment.
During the November 2013 Third Plenum of the 18th Party Congress — a hallmark session that announced economic reforms, including calling for the market to play a more decisive role in the allocation of resources — Chinese President Xi Jinping called for broad SOEs reforms.
This shows that public sector reform process is not done overnight, it is an ongoing process.
The Chinese, much like Zimbabweans, have always thrived on finding homegrown solutions to their problems and their methods have a track record of success.
We should not be hoodwinked by Western-schooled capitalists to deliver the fruit of our sweat, our SEPs, into the hands of capitalists who want to reap where they did not sow.

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