PRIVITISATION is a terminology used for the sale of government assets to private entrepreneurs to enhance efficiency and accountability. It’s the opposite of nationalisation. This has been a subject of much debate by many Zambians over the years because of the many perceived offshoots or unintended results brought about by the transition from government control to private ownership.
Privatisation programmes have been undertaken in many other countries with different end results because of the varying domestic fundamentals as well as cultural and social dynamics in these different counties. In our local context, this was the sale of mainly loss making companies that were a burden to run by the state.
Let’s begin by saying that up until1991, Zambia was under the one party state with a commandist economy where government controlled almost every sphere of the local economy. The media, print or electronic were under the government and the few that were private, if any at all, were heavily censored and provided very little checks and balance to the powers that-be. Companies, whether processing or service oriented were government controlled or the state had a 51 per cent share held by a holding company called INDECO-(Industrial Development Corporation). Some of you may remember FINDECO, MINDECO, ZIMCO and other such bodies that government used to have a stake in some of those companies, which they thought were strategic.
Because of strict government control and lack of competition, many of these parastatal companies under-performed and had to be subsidized from taxpayers’ money.
For all intents and purposes, Kenneth Kaunda’s socialist approach of running the economy was motivated by national pride and an attempt at being self-sufficient. However, our strained relationship with Apartheid South Africa and Iain Smith’s Rhodesia made trade between these neighboring countries restricted. Therefore, the UNIP government did everything to grow and protect the local industry, albeit at great cost to the taxpayer. Needless to say, this is the period when the country experienced shortages of essential commodities, including FOREX, which at some point had to be auctioned. If I may be rude, it’s the shortage of essential commodities that made Zambians rise against KK and demand multiparty elections in 1991.
Now let’s look at the post- Kaunda era. When second Republican President Fredrick Jacob Titus Chiluba took over the reign of power, his MMD government started to shed off some of those loss-making businesses in the country. The charismatic former trade unionist was once described by one international business magazine as ‘A hardcore capitalist who would not hesitate to privatise the army.’ Well, that could have been an overstatement, but FTJ and his gang were bent on making sure that all loss making parastatals were lined up for sale to anyone with money.
This is where the whole fiasco of privatisation started from and has been a subject of public discussion since then. However, as is on public record today, the country was also under immense pressure by the World Bank and IMF to let off loss companies in order for the country to qualify for their financial support which we badly needed at the time.
And so the liberalisation of the economy opened up our local industry to external competition and since many of these public companies were used to government protection, they started to die a slow death.
The rationale of this article, therefore, is trying to answer the question, ‘Was privatisation a curse or blessing? A comparison of the pre-and post- privatisation era shows that the former was characterised by shortages of essential commodities, poor service delivery and lack of business competition. On the other hand, FTJ’s liberalised economy brought forth private innovation and entrepreneurial skills that made some people make fortunes in a short time. If, like earlier alluded to, Kaunda’s socialist policies stifled private innovation, the opposite is also true. Chiluba’s open market policies allowed anyone with foreign exchange to import anything and sell to anyone willing. This is where we started to see some of our local industries succumbing to competition.
However. it’s also true that since the liberalisation of the economy and the sale of loss making companies, the country has over the years seen some remarkable improvements in the provision of goods and services triggered by competition. Some of the shopping malls in the country that make our towns look beautiful are some of the benefits of privatisation. In the print and electronic media, the country has recorded several publications; TV and radio stations have also sprung up to help to counter propaganda from state media. Private schools, colleges and even universities are some of the many efforts borne out of privatization.
Former state run stores like ZCBC, NIEC Mwaiseni Stores and others have been taken over by private chain stores like Shoprite that offer better and high quality goods and services. With a liberalised economy many people have acquired land and many are now proud landlords and contribute positively to the economy.
So this is a short snapshot of privatisation. Give us your views. Has privatisation been a curse or a blessing?
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