IN 2022, the Competition and Tariff Commission (CTC) approved over 20 mergers worth about US$1 billion.
Mergers rocketed during the period, demonstration how investors see value in combining efforts to tackle clusters of trouble confronting industries.
Most of these deals were under consideration for very short timeframes. Investors took time to weave through layers of Zimbabwean bureaucracy to open fresh pages in their operations.
Once such deals are inked, companies move to concentrate on production, instead of running under uncertainties brought about by impending changes. This is more pertinent when mergers involve State firms which, with colossal balance sheets, hold sway in how the economy functions. A good example is the People’s Own Saving Bank (POSB), which this week said its lengthy privatisation process was still incomplete, over 17 years since privatisation reports started filtering into the market.
POSB wants the process completed by December.
But this is far too long. Government knows the merits of attracting private capital into POSB and other publicly-owned firms, which have been under the radar for decades. The privatisation of Dairibord in 1997 gave Zimbabwe insight into what happens when the government lets go. Today, Dairibord is one of the anchors helping Zimbabwe stand its ground as headwinds strike from all angles.
On assuming power in 2017, the current administration indicated that it wanted to take a different but positive trajectory from the ruinous policies of the first republic, which oversaw the destruction of State firms from 1980. But accelerating the privatisation of State-owned enterprises, a needless drain to public funds, has been among its top to do lists.
The truth is, following the extensive plunder and theft of many decades, taking some State firms out of the purview of crooks is a good decision. State firms saw their contribution to gross domestic product plummet to about 12% in 2020, from a high to 40% during boom times around 1996.
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When Finance minister Mthuli Ncube took over the portfolio in 2018, he trimmed the number of public firms earmarked for privatisation to a much smaller number. But it appears he has also developed cold feet.
Perhaps those signing to wean off State firms require absolute assurances that they would be safe if things go wrong. The assets under consideration are too big. But it appears noone is ready to break the ice for the fear that they may in future be held to account.
But they also know that no one will hold them to account if they continue let things ride as they are, whatever the destruction being wrought on these firms. Yet the longer it takes for key decision makers to develop bold nerves and sign the papers, the worse the deterioration of these firms. And the less attractive they would become to private capital.
By the time common sense prevails, State firms earmarked for privatisation would be nothing but shells — without value or assets to talk about.
