Natasha Chamba Bulawayo Bureau
GOVERNMENT should trim its costs by disposing of non-performing state-owned enterprises and engaging competent private sector players to run them, an economic expert has said.
Contributing during the recent Confederation of Zimbabwe Industries (CZI) annual congress and international investment indaba in Bulawayo, University of Zimbabwe economics Professor and Government advisor, Ashok Chakravati, said it was not sustainable for Government to keen nursing poor performing entities at a time it was battling high costs against limited revenue.
“A healthy parastatal sector is key to economic development of the nation, competitiveness and alleviating poverty. Some of the parastatals in Zimbabwe are not doing this. Rather they are draining the country’s resources and not making any recognizable profits,” he said.
“Non-performing parastatals in the country should be sold to investors either indigenous or foreign and privatise them.”
Prof Chakravati said while the number of state-owned enterprises had increased over the years to 114, their contribution to Gross Domestic Products (GDP), a key measure of economic growth of a country, had dropped to 13,4 percent.
He said that Zimbabwe must consider selling non-performing public entities to boost investment and possible boost earnings. He said countries like Russia have done the same.
“Zimbabwe must bite the bullet and completely wean off perennial loss-making parastatals to clean up the country’s balance sheet, which is weighed down by a $12 billion debt.
“By selling the loss-making parastatals and state enterprises, the country could benefit immensely from this. The economy will benefit once the Government is freed of the loss making burdens that it shoulders, the Russians did it and it worked,” said Prof Chakravati.
“By selling these dormant parastatals to foreign investors it could be a means to get foreign currency, which is currently scarce at the moment.”
In his fiscal measures announced Monday, Finance and Economic Development Minister, Prof Mthuli Ncube, said Government has carried out an exercise of categorising all state owned enterprises according to their degrees of viability, profitability and balance sheet strength.
He said the process of privatisation will be accelerated for those entities that rank highly on privatisation scale.
“This will not only improve their viability but also strengthen the public private partnership character of the enterprises and generate much need revenue to Government,” said the minister.