Harare: There are many obstacles to the operational viability of Zimbabwe’s manufacturing sector. These range from gross undercapitalisation (ever since the erosion of their capital resources during the 2008 hyperinflation era) to diminished productivity and an unaccommodating regime of customs duties which enables unfair competition from imports from the Far East, among others. However, amongst the principal obstructions to manufacturing viability is the unreliability of essential utilities.
Industrial operations are dependent upon availability of diverse utilities, but that has not been the case for Zimbabwe for many years. Major among the hurdles to viability of manufacturing operations are electricity outages. Although the Zimbabwe Electricity Supply Authority (Zesa) periodically issues schedules of intended power cuts, adherence to such schedules infrequent, with unscheduled load-shedding worrisome. Moreover, the schedules have little regard, if any, for industry’s need for a continuous power supply.
Lately, there has been increasing frequency in power cuts over extended periods of time. On various occasions the power cuts last the entire day, causing manufacturers to halt production and, in some cases, inputs being processed are damaged. Factory workers are forced to be idle as their dutie are disrupted. Over and above these major losses firms still reel from high costs of wages to which workers remain entitled, notwithstanding the absence of production.
Companies also have to pay fixed overheads such as rents, local authority charges, administrative salaries, and much more. Frequently, inability to effect timeous production results in inability to effect timeous delivery of products to customers, which often causes not only order cancellations, but also customer reluctance to continue dealing with the manufacturer. As if the unreliability of energy supply is not burdensome enough for manufacturers, many have to contend with frequent non-availability of essential services. All-too-often, local authorities (especially Bulawayo and Harare) fail to provide reliable supplies of water, or to collect refuse.
Little reliance can be placed upon the National Railways of Zimbabwe to effect timeous delivery of inputs from suppliers to industries, or of finished products to customers. Similarly, Air Zimbabwe is no longer available to air-transport goods, or even to enable manufacturers to meet customers and suppliers.
To a considerably lesser extent, Zimbabwe’s telecommunication services are often unreliable. While TelOne’s services are frequently satisfactory, sometimes it is impossible to complete long-distance calls, be they national, regional, or international, and internet connections suffer frequent interruptions. The consequence is yet further negative impact upon essential communication between suppliers and customers.
Delivery of all these essential services is so inadequate that numerous other obstructions to industrial viability are compounded to the extent that some manufacturing ventures are downsizing, while others cease operations. Tragically, while government recognises the reality of the circumstances, it does not have the capacity to solve the problems. It lacks both fiscal resources and the skills to achieve substantive transformation of parastatals.
That this is so is not unique to the Zimbabwean government, for, worldwide and for more than a century, very few governments have shown the ability to on parastatals effectively on a consistent basis. However, rarely have any governments allowed their parastatals to consistently provide declining service quality to the extent characteristic of most Zimbabwean parastatals.
If providers of essential utility services are to stop bleeding the fiscus, they must be privatised as a matter of urgency. This will enable them to receive considerable funding to upgrade their operational infrastructure, much of which is now long past operational life. Privatisation will also accord enterprises the ability to access skilled management and employees essential for viable operations.
The revival and development of Zesa, NRZ, Air Zimbabwe, TelOne, and many other essential enterprises (including Zinwa) is crucial if comprehensive economic recovery is to be achieved. That revival and development cannot be achieved by a government which is bankrupt, and there is virtually no access to state-of-the-art technology.
Transparent transfer of parastatal ownership to international investors with requisite financial and technological resources would bring about a relatively expeditious metamorphosis of the essential service-provider enterprises. It is long past time for Zimbabwe to face up to reality, and to expedite substantive privatisation of its parastatals.