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Privatisation: Is it the best way towards economic growth?
2005-12-30 09:27:24
By Correspondent Ernest C. Ambali
A privatized company is not like a shirt sold by a trader to a customer who is free to do anything with it. The customer is free to sell the shirt to another person, burn it or give it to a newly married man as a wedding present.
Whatever the customer does to the shirt after buying it, is of no concern to the trader, because the shirt now belongs to the customer.
This is not so with the public companies transferred to the private sector through the Parastatal Sector Reform Commission (PSRC).
The privatized companies are government’s primary concern to ensure that they produce their prescribed goods and services and deliver services as required by law, in a win-win situation.
It is therefore unfortunate to note that some people seem to believe that the privatized companies are actually ’’sold’’ to the private sector, and that whatever happens to them is of no concern to the government.
Indeed, this is a misconception about privatization, and President Benjamin William Mkapa clarified on this when opening the ’’Utility and Infrastructure Regulatory’’ workshop in Dar es Salaam on 19th November, 1999.
He said that privatization of public utilities did not mean that the government was abdicating its political responsibility for overall performance of the relevant sectors.
’’The people will still hold us accountable .We must therefore, develop a partnership with private operations and suppliers that reflects this reality,’’he said.
In other words, this means the privatized public utilities remain the concern of the government to ensure that they produce and increase goods and deliver services efficiently as expected by the people.
Otherwise, primarily it is the duty of all governments under our sun to provide for their people manufacture clothes to dress them, produce drugs for their health services, to educate them, supply them with clean water, feed them, give them good houses and, indeed, performing its function of maintenance of law and order.
All governments on this planet tried the ’’father - does - it- all’’ - providing all the needed goods and services for their citizens. This went on for hundreds of years.
But when things started to fall apart -when production reached the level of diminishing returns, they started transferring liabilities to the so-called private sector, comprising individuals whom they licenced to produce the goods and services.
The first to allow creation of the private sector, were governments of the so-called Western developed countries in Europe. Those in the Eastern Europe - Communist/socialist world came lately in recent years.
We had our share of things fallings apart in Tanzania’s economy built on socialism, which admittedly, was buoyant in the early years.
When the socialized economy started falling apart from the giant, medium and small parastatal organizations, many of them nationalized from private hands, the government decided to reform the ailing economy.
The reform was in various facets including privatization of the parastatal bodies, some of them in the commanding heights of the economy. Since the privatization programme started about 339, out of 357, have been transfared to private hands.
The government is therefore limiting its role in the economy to that of provider of public goods and regulator and facilitator of private commercial activity.
This situation allows the private sector to blossom to be more efficient and productive.
Today the private sector alone accounts for over two-thirds of the Gross Domestic Product (GDP), nearly 90 per cent of paid employment.
This explains reason for government drive for establishment of a smart partnership between the public and private sectors.
Opening the Fourth International Investors’ Round Table (IRT) meeting in Dar es Salaam, on 23rd November, 2004, President Mkapa emphasized the need for strengthening the partnership.
’’We will continue to implement the Business Environment Strengthening Program for Tanzania (BEST), which is directed at the legal and judicial environment for business,’’ he said when briefing participants of the meeting on one of the five priority areas of the reforms -’’Enabling Environment for private Investment’’.
The other reform areas were Land-related, Labour Market, Business Licencing, Tax and TRA.
All these reforms were undertaken to show that the government has not left the privatized public concerns and the Direct Foreign Investers, are not left totally in the hands of the private sector.
Therefore the privatized parastatal organizations which are part of the fast-growing private sector in the country, were not sold so that the government abdicates them - to be left at the mercy of the private hands.
The parastatals were transferred to private hands. I would dare say that the parastatals were ’’hired out’’ to perform the duties which primarily would have been undertaken by the government.
Indeed, the parastatal organizations were not sold like a shirt from a trader who after selling it, has nothing to do with it.
The buyer can do anything with it. The government has not abdicated its political accountability over the privatized firms.
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