Chairperson, Organisers of the workshop, Captains of the Business Sector, Colleagues, Distinguished Guests, Ladies and Gentlement.
It is my great pleasure to be invited to this important symposium and present on this intriguing subject on “Zimbabwe`s New Economic Agenda: The future of Parastatals”, given the renaissance a new economic thinking in the contemporary world of an economic development path that hinges on State Enterprises and Parastatals (SEPs). SEPs are used by governments in both developed and developing economies to facilitate growth and progress that comprises the economical and social dimensions that reflects directly and positively on its citizens by way of raising their standard of living and providing better life and well-being.
Mr. Chairman, the recent global economic crises has rekindled discussions on the role of the state in economic development. During the global crisis, the Obama Administration introduced a fiscal stimulus package of $787 billion for the US financial market. In the UK, the state injected £37 billion to bailout its financial institutions. Furthermore, various Western governments had been pivotal in reviving their economies with bailouts packages for banks, the automobile industry and other parts of manufacturing. All these actions and reactions by the states attested to the relevance and increasing role of the state in economic recovery and development.
As I have alluded to above, the involvement of governments in the planning and execution of social and economic policies is almost inevitable. Governments’ involvement in the economy in Africa has been more relevant in the absence of viable indigenous entrepreneurs especially soon after independence, as well as the threat posed to their entire economic structures by neo-colonialism. In Zimbabwe, like most African countries, upon attaining independence the Government observed that neither the public service it inherited nor the few scattered private enterprises controlled by some alien investors could produce goods and services that would satisfy the development aspiration of the country. It is from this background that the recent discourse on economic management is now premised on what kind of state should be set up to facilitate economic development in the country. In that regard, it is therefore discernable that the future of the Zimbabwean economy hinges on the role play by the Government through SEPs which are conduit through which government provide commercial and social goods.
Chairperson, SEPs have been, and will continue to be a dependable wand that governments use in embracing the principles of a new economic system of a Democratic Developmental State (DDS). In the recent years, there has been a debate among policy practitioners and academia on the adoption of the DDS model, as a successor of the once celebrated command and free market ideologies as a key to future of the developing world. In this vein, the United Nations Economic Commission for Africa (UNECA) has not deviated much from the revelation of DDS when it advocates for a state-led model of development intended to bring about industrialisation and entrepreneurship through intensive and deliberate effort by the state.
Chairperson, it is quintessential to note that the rise of the DDS paradigm had been motivated by world metamorphosis which culminated in new conditions which renders the old economic systems ideologies inapplicable for the policy making process though these old systems had produced some desired fruits at a certain time and place. These conditions facing the contemporary economic landscape include the rapid diffusion of new technologies, new holistic definition of development that incorporates needs and rights approach, regional and international integration pressures, the globalization of markets and pressure for democracy among others. Given these new economic developments, Zimbabwe is faced with an intricacy situation of either embracing DDS paradigm quickly or be forcefully eclipsed to a trivial consuming province by more powerful neighbours like South Africa.
The DDS model acknowledges the role of the state, through its conduits SEPs, as a economic facilitator in correcting market failures by providing necessary infrastructure in various sectors and other social requirements that cannot be provided by the private actors normally motivated to produce by the profit scent.
In that regard, government shall continuously implement comprehensive developmental programs through SEPs so as to activate and stimulate the national economy, raise its efficiency and growth rates.
Chairperson it is important to mention that SEPs shall continue to promote economic development and social progress in Zimbabwe through provision of important services and infrastructure in areas such as public transport, posts and telecommunications, energy, water supply, agriculture, health, education, tourism and so on. Recently the definition of economic development has been broadened to include a host of issues of needs and rights of citizens, a move that demands an active role of Government in facilitating development by providing collective goods (including social ones) that otherwise would be under-supplied by the market.
Chairperson, it is worth reiterating that Government has a responsibility of ensuring that its citizens receive their needs through its SEPs. There are SEPs which are purely social and developmental in nature like ARDA and some are strategic like the GMB and Zimbabwe Defence Industries which have the responsibility of fulfilling specific social goals and providing employment. These SEPs are also used for correcting glaring social and economic imbalance between genders, classes, regions, and ethnic groups which is necessary for DDS.
Furthermore, SEPs are central especially in those areas where private entrepreneurs are reluctant to invest due to inadequate investment owing to scarcity of capital and high risk aversion coupled with poorly developed markets. SEPs therefore utilise the available economic space for attaining economic development.
Some SEPs are commercial in nature particularly in the mining sector and can accelerate the growth in exports and can be champions in diversifying the country's export basket by supplying non-traditional export items. On the other hand, they also improve on import-substitution policies.
Mr. Chairman, the best strategy for sustaining growth and achieving developmental success in the future is the continuous reforming of the economic system to enable it to adapt to changing circumstances. In that respect, restructuring of SEPs plays a central role in attracting foreign investment by restructuring of SEPs through strategic alliances and joint ventures with carefully selected foreign partners. This policy thrust on SEPs restructuring facilitates the increase in the flow of investments and technology so as to bring about dynamisms and diversification of the production base of our economy. In addition joint ventures and strategic alliance enables the country to access global markets given the rising of trading blocks that will block small economic players.
In addition, technological innovation which are brought about by strategic alliances and joint ventures shall prop the competing private businesses to develop new activities. This strategy will compel private players to be innovative, a move that will result in continuous improvement in product and/ or service quality. Continuous improvement is a key element for the DDS for economies to survive in the new competitive global market.
Mr. Chairman, it is worth mentioning that opening up the economy to international markets and investment will help the country develop new ideas, acquire new technology and capital, and raise the level of productivity necessary for sustainable growth.
Chairman, it is important to mention that the future of Zimbabwe on the implementation of the concept of Public Private Partnership (PPP). PPP arrangement is a tool of modern government which create value for money and reduced fiscal risk. The concept is based on the idea of constantly improving and finding more efficient ways of providing public infrastructure and services. Public Private Partnership is a live issue in many countries, and will continue to be, as long as governments continue to seek ways of modernising their public administration systems, in improving service delivery, tapping benefits of technological transfer, respond to domestic external pressures and meet the challenges of globalisation.
Economic development driven by PPPs depends on a reasonable balance between the public and private sectors at the local level and the use of private sector methods in local public management, keeping in mind that size and scale as important factors in considering the costs and returns of PPPs. Clear and comprehensive PPP Legislative framework being proposed by this Bill shall be crucial in adoption of this modern public management framework.
Mr. Chairman the attainment of a DDS status relies on the promotion of evidence-based decision-making which demands transparency and accountability from all state functionaries; and strives for social services provision mechanisms that are underpinned by the principles of efficiency, equity and sustainability. It is from this background that a culture of good corporate governance must be espoused at national level so as to promote DDS principles in the process. The Government through SEPs can spearhead the need of good corporate governance. The compliance of SEPs to good corporate governance principles on its own transmit a message to the private sector to comply.
In this regard, the Government promulgated a Corporate Governance Framework (CGF) for SEPs. Good corporate governance is a must, given the spreading of globalization driven by Information Technology (IT) as the local companies will be required to enter into business contracts with international suppliers that value good corporate governance. In addition, the pressure for international economic integration is another new reality that makes good corporate governance even more important. The Government through my Ministry shall continue to promote good corporate governance in SEPs which will have some ripple effects on the private sector.
Mr. Chairman, DDS is also about prudent regulations, rule enforcements, and accountability. The state advocates for governance of the economy mainly through regulatory agencies that are empowered to enforce a variety of standards of behaviour to protect the public against market failures of various sorts, including monopolistic pricing, predation, and other abuses of market power.
Mr. Chairman, the present SEPs sector institutional capacity requires to be strengthened through a SEPs Management Act so that SEPs will perform effectively and efficiently. South Africa, a good example of a country that follows DDS principles, has an empowered Department of Public Enterprise which effectively monitors the performance of SEPs. In this context it is imperative for Government to empower SEPs oversight body which is the Ministry of State Enterprises and Parastatal through a Legislative Framework so that it can effectively carry out its mandates.
It has been noted in this paper that restructuring of SEPs through strategic alliance and joint ventures play a pivotal role in technology transfer, financial investments and accessing of global markets which are key elements of a DDS. In this regard there is need of a SERA Act that compels transparency and discipline in the SEPs restructuring process. This envisaged Act will also speed up the process for the economy to enjoy full benefits of restructuring by reducing restructuring-lag encumbrance and bottlenecks.
It is however pleasing to note that the Government has approved the Restructuring Framework which has identified 10 State Enterprises that formed the first batch for restructuring on a case by case basis. These entities included in the priority list are the Cold Storage Company, ZISCOSTEEL, NOCZIM, Air Zimbabwe, Agribank, NRZ, ZESA, GMB, NetOne and TelOne. Progress is being been made in restructuring these identified SEPs and they are now on different stages of restructuring. To date two of these entities were restructured ZISCO now called New Zimbabwe Steel Company and unbundling of NOCZIM which saw the formation of Petrotrade and National Oil Infrastructure Company.
Mr. Chairman an appropriate regulatory framework which separates ownership and regulatory functions is a vital institutional scaffold for the economy to fully benefit from restructuring of SEPs which will culminate in the success of the DDS ideology. In that regard, there is need to come up with a proper regulatory framework in all sectors it does not exist, as it is a prerequisite in inducing the private sector participation. There shall also be need to strengthen rules for the existing agencies.
In addition, Government considers the creation of a multi sector regulatory agency against sector specific regulatory framework so as to benefit on skills sharing, reduce cost of regulation, ensure consistence in approach and foster independency. Best practice regulatory framework usually allows effective competition, set price cap to avoid cross subsidies and remove political influence on regulators. These principles must be considered in coming up with appropriate regulatory framework.
In conclusion, cooperative spirit in government and among all stakeholders proffers solutions to our economic challenges while uncoordinated economic responses are a source for turbulence and uncertainty in the economic recovery.
I Thank You
1
No comments:
Post a Comment