Zimbabwe should consider privatization to raise funds

OPINION – The current effort to revive the Zimbabwe Economy should also consider a well planned Privatization as a way to raise funding for the cash strapped Government.

Privatization can assist in raising funds and reduce Government expenditure which is used to support and subsidize state enterprises such as Net One, Zisco Steel, Air Zimbabwe ,National Railways of Zimbabwe and others.  

A privatization driven economic recovery will allow Zimbabwe to break with tradition and escape the usual debt trap that  hinder many  developing countries. The current stand off between Zimbabwe and the donor community represents an opportunity to properly come up with a revival plan based on the country?s resources and assets.

Instead on seeking donations and aid as the key to economic recovery Zimbabwe must also consider privatization as one of the key strategies to revive the economy  .This is a process which can be controlled and structured by Zimbabweans without the usual strings attached that come when a country relies on Aid and donors .

Privatization runs a very broad range, sometimes leaving very little government involvement, and other times creating partnerships between government and private service providers where government is still the dominant player. There are significant benefits in the current environment to state a highly publicized privatization programme. These include raising the country?s profile as a stable and attractive investment destination .

There are three widely accepted   methods of privatization which Zimbabwe can pursue. These are :

Share issue privatization (SIP) – selling shares on the Zimbabwe Stock Market Asset sale privatization – selling the entire firms or part of it to a strategic investor, usually by auction Voucher privatization – shares of ownership are distributed to all citizens, usually for free or at a very low price. A voucher privatization programme should be considered in Zimbabwe?s case .It will allow those previously excluded from the national economy to benefit. Institutions such a National Investment Trust have really not done much to empower the ordinary citizens. Therefore a voucher based privatization programme will assist in  resolving this marginalization of a huge portion of the population.

Share issue privatization is the most common type of privatization used in many countries. This is so because the process and mechanism allows for transparent valuation  .The share issue normally results in a very widespread share ownership process with previously excluded sections of the country getting involved on the Stock Market for the first time.

Currently most parastatals and state controlled enterprises are under funded and are failing to deliver services .Their privatization may help in improving service delivery and make them more competitive whilst raising funds for the state coffers.

The Privatization process represents an opportunity to attract additional capital which is desperately needed  in revival of production and job creation .Currently Zimbabwe?s industry is functioning at around 20 % capacity and there is need for injection of additional capital , the privatization process can act as one of those programmes used to kick start production .

Other sectors of the economy such as banking, financial services and the tax department will greatly benefit from the general activity generated from privatization. Institutions such as the Zimbabwe Stock Exchange can play a leading role in the process by co-coordinating the process and  leading the way in encouraging the privatization process .The Privatization process will create suitable candidates to list on the  Stock Exchange .

Gilbert Muponda is an Entrepreneur based in Canada.

He is Founder of GMRI Capital He can be reached at;

Email: gilbert@gilbertmuponda.com Skype ID: gilbert.Muponda

Twitter ; http://twitter.com/gmricapital

Phone: 1-416-841-5542