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Business urges caution

Africa Moyo Senior Business Reporter
BUSINESSPEOPLE who met Government on Monday to thrash a sustainable way forward to grow the economy, reportedly called for restraint in the much-touted privatisation of underperforming parastatals.

A reliable source that attended the crucial meeting held at State House told The Herald Business that parastatals play a key role in the economy and any move to privatise them should be done cautiously.

“One of the businesspeople told Government to be very careful regards privatisation of parastatals. He said people shouldn’t confuse the place of parastatals in the economy and the absence of capacity to run them efficiently,” said the source.

“Essentially, he was saying ‘don’t throw the baby together with bath water’. If it is issues of capacity that are bogging down parastatals, Government should look at how it hires competent staffers and competent board members, but knowing that a given parastatal has a role to play in the economy, if it is economically viable.

“The long and short of his message was that there shouldn’t be wholesale privatisation.”

Experts say privatisation of all parastatals would eventually “weaken the State”, at a time Zimbabwe badly needs a strong State, which is able to write the rules in the market and enforce them.

“Now, when you say a weak State is further weakened by the removal its public sector, how then does it influence the market? “If the State is weak, it becomes available for capture, which is not good,” said one of the businesspeople who attended the breakfast indaba.

Government has indicated its intention to privatise parastatals so that it cuts down on the burden of supporting them.

Finance and Economic Development Minister Professor Mthuli Ncube, recently told The Sunday Mail Business that Government wants to “reform parastatals, with some being fully privatised while others will be partially privatised and others will be buried”.

Prof Ncube said Government will fast-track the privatisation of at least 11 companies.

Concrete deals are expected in the next six months.

“We are going to be privatising and privatising fast. I am pushing hard to make sure that we privatise some parastatals.

“It can be 11 of them, within six months, we have to make progress.

“And I am also insisting that if privatisation happens, some of the equity is listed on the Zimbabwe Stock Exchange (so as) to deepen our capital markets. Let’s do that and make sure that there is local participation, not just foreigners with deep pockets,” said Prof Ncube.

Parastatals have become a major drain on fiscus as most of them are perennial loss makers who rely on Government support.

Operations of some are shrouded in secrecy and do not audit their operations while others “hide” the financial results to avoid public scrutiny.

In 2016, 38 out of 93 audited parastatals recorded a combined $270 million loss due to weak corporate governance practices and ineffective control mechanisms.

source: the herald

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