FULL TEXT: Creative Destruction Is Required To Reform And Restructure The Economy - Mthuli Ncube

The flamboyant Victorian British Prime Minister, Benjamin Disraeli, once noted that; “There can be an economy, only where there is efficiency”.

Zimbabwe’s economy has been full of inefficiencies for far too long. Waste in the economy has led to wanting amongst the people. Our people deserve better. And as the Minister of Finance, I have a duty to set things right.

The Government’s Transitional Stabilisation Programme is at the heart of our reform programme. It outlines the State Enterprise Reform initiative as one of the most important areas to ensure sustainable economic growth and improved service delivery.

At the core of this restructuring initiative is what to do with our under-performing parastatals? On the one hand, we believe that our natural resources and large industries are Zimbabwean, and must remain in the hands of Zimbabweans.

Yet on the other hand, with the bureaucracies and inefficiencies of Government, including our own, the experience and qualifications of private sector investors and managers, would guarantee significant improvements in both production and profits.

It is no wonder, former United States president Harry Truman once quipped that he would like someone to find him a one-handed economist!

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However, economists all agree, that by making these State-run industries efficient, all Zimbabweans will profit. We will take the astronomical burden and their associated costs off the shoulders of Government. And with costs cut, these moves will increase revenues from both the sale of the companies themselves and in the long run, the increased tax revenues from the newly-profitable ventures.

State enterprises, in their foundation, were supposed to play a major role in the provision of infrastructure and other critical services such as water, electricity, telecommunications, transportation, health, education, among others.

However, recently, they simply are not up to the task. It has been noted that most of them are loss making (99 per cent) and they continue to hold onto idle and unproductive labour, accumulating salary arrears and continuously requiring bailouts from Government to finance their operations and debt servicing.

Who pays the costs? The Zimbabwean taxpayer.

We, therefore, cannot allow for inefficiencies and mismanagement to waste our taxpayers’ money anymore; especially in an era of austerity. The people of Zimbabwe deserve better.

The inefficiencies, arising from poor business models and years of maladministration, including uneconomic pricing and poor product service development, demand immediate reform.

Cognisant of their traditionally critical role, and the emotional attachment of such institutions to the people of Zimbabwe, Government is not applying a blanket approach.

The reform and restructuring process will include a host of thought-out and carefully examined interventions.  These reforms will range from liquidation, full privatisation, transformation to regulate, merging and demerging, as well as departmentalisation into existing ministries, depending on how strategic the parastatals are and their respective performances.

There are numerous factors to take into consideration.

We will learn from the mistakes of other countries and ensure that Zimbabwe conducts these processes in the right manner. This will be driven by economics, not politics.

The reform process, therefore, will ensure that parastatals, and their restructuring, are fully accountable, transparent, efficient, effective, and viable, complementing Government efforts in promoting economic growth and improved service delivery to the general public.

We will not allow a situation whereby tenders are won by the most connected, but only the most qualified and deserving.

Already, with support from development partners, both international and local, Government is carrying out performance reviews of our parastatals. We are diving deep into the processes of governance systems, as well as the financial, operational and legal environment.

The reviews will analyse all levels of processes and procedures in order to guide us on an appropriate course of action to improve operational activities.

It is important that we do not try and chart this course alone. Of course, we have a team of local experts, many of whom are leading global experts in finance, economics and business management.

However, local brainpower must be supplemented with international counterparts, ensuring optimal quality, and full transparency.

In that light, we will bring in recognised and qualified transactional advisers, with international experience to accompany the process. These advisors will include accountants and strategic advisers and will be complemented by Government technical committees to ensure the people of Zimbabwe get the best deal possible deal during the process.

Because it is our duty to put the economy back on its feet. At all times we must put the people of Zimbabwe first. Austerity measures, of course, are tough. Restructuring and reforming will inevitably require a degree of creative destruction.

But this is how innovation begins.  This is how we will rebuild Zimbabwe’s economy, from the bottom up.

Our economy tragically has been a sick patient for too long. It is now time to inject the right medicine, however painful it may be in the short term, to get our patient up on its feet and walking again.

By bringing efficiency back to our economy, and in particular our failing parastatals, Zimbabwe will not just walk again, we will fly!

Hon. Prof. Mthuli Ncube is the #Zimbabwe Minister of Finance and Economic Development.