Thursday, 25 June 2015

Returning the ‘Public’ and ‘Public Service’ to our State Owned Enterprises.

A presentation to the Transparency International-Zimbabwe Ethics and Accountability Forum on the Annual State of Corruption Report
Thursday 25 June 2015, Sapes Trust Seminar Room, Harare.
By Takura Zhangazha*

Cde Chairlady, Ladies and Gentlemen,
Let me begin by thanking Transparency International Zimbabwe (TIZ) for inviting me to share some reflections on their very important Annual Corruption Report for 2014.  Especially because this report focuses on the functions and ethical (or lack of it) conduct of our state owned enterprises or as we have been wont to call them, parastatals.

This a report that is both interesting and depressing because it correctly depicts the reality that all is not well in the 78 or so SOEs that operate in the country. From its summation of the manner in which salary scales for chief executive officers were borderline ridiculous, unclear tender procedures through to its articulation of lack of accountability and transparency this report sets out a daunting task for policy makers and members of the public to rectify these unfortunate anomalies in how SOEs are managed.

An important aspect that however emerges from the report is that of the structural challenge of how SOEs are managed. The key question around this touches on the problems of political interference, militarisation and multiple regulation of parastatals by different line ministries. These essential challenges of SOE administration, and as correctly cited in the report under consideration invariably lead to a lack of transparency and corruption.

It is these structural challenges around SOEs that I would like to focus on in this brief presentation. By doing so, I am aware that there are key ideological questions at play where and when it concerns parastatals.  Their role in relation to statecraft or development fall largely within the ambit of two key schools of thought. These being the ‘free market’  or liberal economics and alternatively that of a state controlled economic framework. The latter is often times referred to disparagingly as either socialism or communism.

In Zimbabwe’s specific case,  and as outlined in the report, the history of our parastatals derives in part from the legacy of the settler state which established same said entities to protect minority privileges and services but within the context of a liberal economy.  In the post independence era, these SOEs were then primed to begin to serve a majority but within the context of the then declared socialist or state centric ideological ambit.

This soon gave way, with the advent of the economic structural adjustment (saps) to the commercialized or semi-privatised version of parastatal. (There was some privatization of SOEs, for example Dairiboard and Cotton Company of Zimbabwe)  It is this hybrid model that informs a majority of existent parastatals today. 

In the recommendations outlined by the authors of the report, it is posited that in order to circumvent the culture of corruption that informs these SOE’s, there is need for a structural realignment of the regulatory framework to make it not only singular but also independently managed. Other recommendations which are more options than hard and fast include those of learning from the experiences of China and Singapore, privatizing the SOEs, legislative changes, raising the costs of corruption and further training on accountability for employees of these entities.

These recommendations are very much in order and would, if implemented, go a long way in curtailing corruption not only in SOEs but also in our society as a whole.

The key question that however remains unanswered is that of the ideological framework.  It is imperative that we understand that the hybrid version of commercialized parastatals is what has been one of the primary causes of the endemic levels of such corruption. It is a model that neither serves the best public service interest nor promotes the profit and self sustenance models that many free market advocates would want to see becoming a reality.

Government, in using the commercialization model sought to combine both the profit motive with the public interest motive. The end result has been runaway boards and chief executives that apart from giving themselves perks have also failed to make any of the entities stay afloat let alone successful.
It would, in my view, be critical that we begin to look at the SOEs, as an extension of the obligation of the state to provide services in a manner akin to the generic social contract.  

This would entail a social democratic perspective which would be characterized by understanding our local context and applying models that primarily seek to serve the best public interest. Simultaneously, a baseline as to the state’s obligation to keep these services going in the public interest is of paramount importance. The guiding principles must be that everyone must have access to basic services such as water, electricity, transport, education and health. For those SOEs that are in the extractive industry sector, there must be an accountability framework that not only circumvents corruption but that explains how resources acquired and sold for a profit feed into a symbiotic sustainability cycle for all other public services. 

It would also require that we take a step back and identify what has been missing from the liberal economic and socialist (for lack of a better phrase) frameworks.  In this, I am confident that we will see that we have been pandering to global solutions that have been crippled by limited application to local context. The lack of sustained public pressure on the glaring levels of corruption would be further indicative of the fact that our country’s citizens are not aware of the values that SOEs are informed by. They tend to view them as part and parcel of the general state and private entity tendency toward corruption and lack of accountability.

So we need to act on imbuing a sense of democratic public interest service to our parastatals that goes beyond the legal and builds a broader democratic culture of accountability.

This would mean the panacea would not be wholesale privatization/commercialization or re-nationalizing of the SOEs but to demonstrate their primary necessity in the process of providing goods and services to the majority poor in our society.  That way, accountability would then become part and parcel of expectations of service with citizens going out of their way to defend these SOEs against corruption of any kind.

We have to keep the public service element intact within these SOEs. This can be done by, as correctly recommended in the report, looking at internal accountability mechanisms, professionalization and independence of those selected to be at their helm and democratic decision making as to the efficacy of their privatization or commercialization.
Where we fail to do so, the ‘public’ and ‘public’ interest will be lost to the SOEs and the elite will continue to not only abuse these parastatals but also protect each other and their roles in them.

Takura Zhangazha writes here in his personal capacity (