by Munetsi Madakufamba
Privatisation in southern Africa has moved into top gear as governments seek to shed off loss-making state enterprises into private hands.
Guided by socialist principles, governments have for a long time been reluctant to give up “strategic” industries despite pressure from donor countries and institutions. However, most of the parastatals continue to make losses resulting in high budget deficits that many governments cannot bear.
Zambia, which according to the World Bank has the most successful privatisation programme in sub -Saharan Africa, has sold off more than 145 state enterprises.
In a recent report, the Bank commented on the southern African country saying Zambia’s programme had created one of the most attractive investment climates in Africa, as demonstrated by several big companies which took advantage of the exercise to expand their interest in sectors previously dominated by the government. These include Lonrho, Anglo-American and the Commonwealth Development Corporation.
“In no other country in the African region has a government had the confidence to place complete responsibility for privatisation in the hands of one entity,” says the Bank referring to the Zambia
Privatisation Agency (ZPA), an independent body set up to oversee the programme in the country.
ZPA has a 12-member board with only three government appointees and the rest from the private sector.
The agency hopes that 70 percent of the economy will be in private hands by the end of this year. The government owned more than three-quarters of the economy before the programme started five years ago.
However, the country has been hesitant on its largest companies: Zambia Consolidated Copper Mines
(ZCCM), the telecommunication company Zamtel, Zambia State Insurance and Maamba Collieries, which are yet to be privatised.
Mozambique is another country that has moved quickly on its privatisation programme despite stiff resistance from some parliamentarians and labour unions. Industry, Trade and Tourism Minister Oldemiro Baloi told the Noticias, a partially state-owned newspaper, that about 700 companies have already been sold off since the programme began in 1989. Up to 90 percent of the privatised firms had been sold to Mozambicans. Baloi said 300 to 400 businesses would be privatised this year, hopefully winding up the programme.
Considerable progress has been reported in Tanzania where the Parastatal Sector Reform Commission
(PSRC) was established by the government to spearhead the privatisation programme. In an annual report, George Mbowe, chairman of PSRC, said a total of 138 divestitures had been effected by June last year. The PSRC aims to privatise 128 more public companies in the 1996/97 financial year.
Like other countries, the ongoing privatisation exercise takes the form of sale by shares, liquidation, closures, leasing or management employees’ buy-outs. The broad objective of the restructuring programme which started in 1993 is to improve the performance of companies that were in the public sector as well as easing pressure on the exchequer, said Mbowe.
In Zimbabwe, where privatisation is synonymous to indigenisation, a National Investment Trust was established last year to speed up the process.
“One of the key objectives of the privatisation programme is the indigenisation of the economy and the
National Investment Trust will act as a vehicle for the empowermenl of the indigenous people,” said
President Robert Mugabe opening a parliamentary session last year.
To date, the Cotton Marketing Company and Cold Storage Commission have been fully commercialised, while work is in progress on the Dairy Marketing Board and Grain Marketing Board. But the government has been a bit hesitant on Zimbabwe Iron and Steel Company despite recommendations from consultants.
Privatisation plans have also reached an advanced stage in South Africa, where the exercise is seen by experts as a litmus test for the country’s commitment to economic reform. But the programme has already met with opposition from the powerful Congress of South African Trade Unions (COSATU). The government has targeted telecommunications as the first and main parastatal for privatisation.
Southscan, a London-based weekly, quoted Deputy President Thabo Mbeki as reiterating the government move. “It would be impossible to deal with all the state assets in one go,” he said. “But we will start with telecommunications assets.” The programme is expected to start in March.
Cosatu has, however, identified telecommunications together with electricity, public transport, housing, health, water, municipal services, education and roads as sectors which should remain in state hands.
The Lesotho government last year named the first 10 state-owned enterprises earmarked for privatisation under its Privatisation and Private Sector Development Programme. The enterprises include Lesotho Airways, Lesotho Flour Mills, Lesotho Pharmaceutical Corporation, the government mechanical workshops and two tourist mountain lodges.
Malawi also launched the Public Enterprise (Privatisation) Bill in 1996. Justin Malewezi. Vice-President and Minister responsible for Statutory Corporations, said this move was to encourage indigenous Malawians to own enterprises being sold by government.
Although privatisation is undertaken with good intentions — revamping economic growth – critics say the exercise does not benefit ordinary citizens and often results in skewed distribution of wealth. On one hand, poor people, particularly women, have not been beneficiaries of proclaimed indigenisation efforts, resulting in only the rich few grabbing all state enterprises on sale.
On the other hand, some parastatals had been found to be in such a bad state that they had to be liquidated or closed down completely. In Zambia for example, thousands of workers were laid off when Zambia Airways and United Bus Company were liquidated, and more are expected to be affected when ZCCM, the biggest employer after the government, is finally privatised.
There is need therefore to undertake wide consultations before going ahead with any privatisation programme in order to minimise spill-over effects. (SARDC)
