‘Govt has no business in production’ 

Source: ‘Govt has no business in production’ – NewsDay Zimbabwe February 1, 2018

Economist, Ashok Chakravarti says the present administration should privatise parastatals, as the government has no business in production, which is the realm of the private sector.


Chakravarti, a government adviser, said the government should confine itself to the development of key infrastructure and providing an enabling environment for business to operate.

“I don’t go for restructuring (of parastatals) I am sorry I don’t go for that. My recommendation is that we should look at commercialisation, joint ventures and privatisation of up to 90 parastatals,” he told business and government leaders on Tuesday at a symposium hosted by the Confederation of Zimbabwe Industries.

“It’s my belief that the government should not be in the production processes. They should be involved in providing an enabling environment, education and infrastructure. There is no reason to be involved in production. So that is the way to go. Let’s not be timid. Let’s not talk about the restructuring of 10 parastatals.”

Public enterprises have remained a drawback through inefficiencies, with their contribution to the economy down to 2% from around 60%, weighed down by poor corporate governance practices.

A reform programme on State-owned entities has begun, with government courting chartered accountants for placement on parastatal boards.

The government, through the Office of the President and Cabinet, Finance ministry and the State Enterprise and Restructuring Agency, is in the process of developing a proposal for comprehensive reform and rationalisation of the State enterprise and parastatal sector.

The proposal, according to Treasury, is being crafted on the basis of input requested from line ministries in respect of all state entities falling under their respective purviews, including evidence based assessments of the current financial and performance status and potential future viability of each entity together with recommended options for reform, which include liquidation, privatisation, joint ventures, part privatisation or departmentalisation within line ministries.

In his 2018 National Budget, Finance and Economic Development minister Patrick Chinamasa said State enterprises that exhibited potential would be reformed, while those that cannot be rehabilitated were candidates for privatisation or outright closure.

Chinamasa said 38 out of 93 public enterprises incurred a combined $270 million loss in 2016, attributed to weak corporate governance practices and ineffective control mechanisms.

Chakravarti said it was improper that a company like the Industrial Development Corporation (IDC), which was established as an incubator, now has 26 companies under its wings.

“Why should they have Chemplex (Corporation) and all these other companies? In my view, IDC must sell all the companies they hold. They should generate the funds from the same and use that to incubate more private investors and new partners,” he said.

IDC has invited bids for financial institutions to help the group dispose of its fertiliser concern, Chemplex Corporation.