Privatisation can aid Zimbabwe's economic recoveryMUPONDA'S ARCHIVED ARTICLES• Tapping diaspora capital to kick-start Zim economy
• Benefits of RBZ currency reforms immediate, but not long term
• Economic recovery beyond the politics of now
• ZSE must reform to stay relevant
• The rise and politics of Sovereign Wealth Funds
• RBZ must support currency move with more reforms
• RBZ must tame quasi-fiscal acvitities to aid recovery
• Is land-based economy best model for Zimbabwe?
• Zimbabwe mirrors Yeltsin's Russia
• Inflation to worsen beyond political change
• Amidst the uncertainty, investors can take chances in Zim
• Managing change in Zimbabwe
• RBZ at the heart of banking crisis
• ZSE party may be about to come to an end
• How interest rates propel Zimbabwe's inflation
• Muponda: Corruption driving Zimbabwe's inflation
• Muponda: How Zimbabwe lost control of inflation
By Gilbert Muponda
Last updated: 11/12/2009 16:59:31
SUB-SAHARAN African states urgently need expanded and more dynamic private sectors, more efficient and effective infrastructure/utility provision, and increased investment from both domestic and foreign sources.
Privatisation is one way to address these problems. But African states have generally been slow and reluctant privatisers; a good percentage of industrial/manufacturing and most infrastructure still remains in state hands.
Given prevailing public hostility towards privatisation, and widespread institutional weaknesses, such caution is defensible, but nonetheless very costly. The long-run and difficult solution is the creation and reinforcement of the institutions that underpin and guide proper market operations.
Clear benefits from privatisation have been recorded in terms of the contribution to government financial flows and at the enterprise level where there is a definite trend for privatised enterprises to improve performance, largely as a result of new investment, which has a delayed positive effect on employment.
Ten countries account for most of the privatisation in Africa so far: Mozambique, Angola, Ghana, Zambia, Kenya, Tanzania, Guinea, Madagascar, Nigeria (federal government only) and Uganda.
A study points to the surprising difficulty of obtaining transaction data in many countries and the failure of most governments to establish monitoring procedures so as to be able to track and evaluate enterprises’ post-divestiture performance.
The trend of the privatisation process in Africa reflects some of the problems: lack of political commitment, poor design, insufficient resources, weak management, and corruption. The trend is a cause of concern because privatisation is a one-off opportunity not only to reduce the fiscal and administrative burdens of a large public enterprise sector but also to stimulate private sector development, to instil greater government accountability, and to contribute to the fight against poverty; and that opportunity has been grasped by few governments.
Zimbabwe has had several stop-start-stop attempts at privatization programmes. A few entities have been successfully privatised such as Cotton Company and Dairibord. The current economic situation will require tough choices to be made and allow privatisation and commercialisation of several so-called “strategic” entities.
Parastatals such as Zisco, ZESA, CSC, NRZ and Air Zimbabwe are leading candidates for privatization from which the State can raise a substantial amount of capital to finance infrastructure and other social services.
Given the attractiveness of some of these assets, the State can include requirements to dispose of these assets in the much needed foreign currency provided local and indigenous partners are somehow accommodated. Foreign partners normally help to strengthen the talent base and access to foreign markets and a stable financial base.
African governments’ commitment to the...
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