The following have been cited as major constraints that have affected the performance of the parastatal firms. Most of them have performed below par and some to the point of liquidation.
5.6.1
Derived ControlThe parastatal chiefs were appointed by the state and that meant that their allegiance was to the state itself. Their control and leadership was derived, to a large extent, from the appointing authorities. In serving the appointing authorities they were forced to implement decisions that did not advance the commercial objectives of the business but rather political ends. This included both managements and boards of directors even though the articles of association vested this power in the boards themselves.
Concerns for their job security naturally drove the appointed persons to comply as the appointing authority had power to hire and fire at will.
Political control in the parastatal organizations has been very substantial and hasbeen sustained (Simwinga: 1980:133) by:-
1) Ensuring a majority of the directors on the boards were party loyalists;
2) Placing civil servants on boards;
3) A system of block voting by government appointees; and
4) Appointing of Ministers or Permanent Secretaries as board Chairpersons.
90 5.6.2 The Political Imperative
There were two main objectives for the setting up of the parastatal sector by the political leadership (John: 1980:107). Firstly, state ownership was to ensure that the corporate sector of the economy was in the national hands rather than being controlled by either foreign investors or the minorities that enjoyed business dominance upon independence.
Secondly, to use investment in state firms to accelerate development in situations in which the private sector was reluctant to take risks.
This went on well from 1966 to 1972 as the national mines generated profits which went to support both the first and second National Development Plans. However, from 1973- 1975 when oil prices sky-rocketed and copper prices went down, political objectives were not sustainable (Turok: 1981). This was further aggravated by state involvement in the freedom wars against hostile colonial neighbours or against the apartheid regime.
For the manager in a parastatal firm, whatever business acumen he possessed, whatever commercial judgment he made to improve business performance became subservient to political needs of the state. The state played the tune and parastatal managers danced to that tune.
5.6.3 Imposed Strategic Direction
It was hoped that parastatal managers would spend most of their time in setting the strategic direction of their organizations by relating challenges posed by the external environment to the internal capabilities and resources. Even though the managers knew what could have been strategically beneficial to their organizations, they could only implement this in part because of the competing needs and demand of the Party and the government.
This situation was worsened by frequent transfers from one parastatal to another that characterized the appointments of the parastatal chiefs. This implied that before the chief executive could properly settle in his job and ensure the implementation of his desired dream about the organization, he would switch places and start all over again in another organization, often in a different type of business. A characteristic too of chief executives was that these were mostly male appointees.
91 It should be realized that government control over the investment inthe state enterprises extended beyond the legitimate confines of issuing policy. It went further to the determining of the strategy by which the policy was implemented. George Simwinga (1980:134) suggests that between 1972, 59 percent of all the projects carried out by the Rural Development Corporation were government mandated projects as compared with 47 percent for the INDECO group of companies and 14% for ZCCM Ltd. The 14 percent of Government mandated projects for ZCCM constitutes a small proportion of total projects, but this 14 percent was significant as it indicated government’s intention to take part in copper mining, the main source for national income and dominated by foreign investment and interests.
One vivid example of government interference in the strategic direction of a state firm involved ZESCO as indicated in the newspaper citation below. In this Presidential announcement, no discussion had been held or taken place between the management and the government on this task.
On 30th October, 2004 at a political rally in Chavuma, President Levy Mwanawasa directed Energy Minister, Mr. George Mpombo, to electrify Chavuma District within six months. When ZESCO started the project, it did not have enough money to run the project smoothly. Workers went for several months without receiving wages at the project. All ZESCO could afford was to provide food to these workers on site so as not to disrupt work and to meet the President’s target (Post Newspaper: 18/4/05).
5.6.4 The regulated environment
Government involvement in the financial activities of the state enterprises was also evident in the pricing of goods and services. It is expected that price of goods in state enterprises should be affordable to low income earners to purchase the essential commodities. The profit motive should not override the interests of the citizens.
92 There was a question of formal and informal control concerning personnel activities which continues to date. There is the issue of directives not to lay off workers from state enterprises, even when the factory production was unsustainable or had ceased. Workers from such enterprises continued to get salaries from other parastatal companies.
Government also has control, as earlier indicated, over transfer of management in and out of individual public enterprises. It was also common to see political cadres being appointed to management positions even when they didn’t have the required experience (Dresang &Young: 1980:93; Simwinga: 1980:134).
5.6.5 Management’s personal aspirations
There were managers whose companies benefited from funding by government whose business could otherwise be self-sustaining. These managers made personal economic gains when the collective national economy was fast sinking into general poverty. The corrupt crop of parastatal leaders took advantage of state ownership to strip assets and amass wealth (Namuchana, Zambia Daily Mail:11/11/2009) .
These became powerful technocrats who wielded the power of entrenching a state capitalism in which large monopolistic institutions would be insensitive to public needs and efficiency. These included companies like ZESCO and ZAMTEL which are still state monopolies although the latter is facing competition. These parastatal managers had individual goals that were at variance with the commercial goals of the organizations they were appointed to serve. In a sense they supplemented government’s effort in ensuring the parastatal sector did not perform (Krishna: 2006:64).
5.6.6 Rapid Zambianisation
The Zambianisation programme was rushed into without proper analysis as to which positions needed to be filled and at what time. The training schedule and mode of those who were to take over needed to be worked out. Unfortunately, personnel were appointed to the posts for which they were not qualified and this happened in most of the state enterprises because of political expediency. The appointments were in most cases not based on merit but on political allegiance and nepotism. Where people appointed had the right qualifications, they lacked the necessary experience in the industry. This situation
93 led to a lot of mistakes by those in management and brought about low morale among subordinate employees. This state of affairs led to poor productivity in organizations (Zambia Daily Mail: 04/05/2011).
5.6.7 Money diversion
The government saw in state enterprises sources of its income and often requested for it as and when they needed funds. This was irrespective of whether the money was for reinvestment, workers benefits or even creditors’ funds. On many occasions these firms were ordered to make donations to the party and its government for so many programmes including unproductive Party programmes as reported in the Zambia Daily Mail of 26th February 2009.
5.6.8 Over-employment
Due to political pressures and influence, many parastatal firms have found themselves making decisions based on political or populist reasons. The politicians often make a company increase its staffing levels to reduce unemployment. These state enterprises operate without regard to human resource planning if it exists all.
The classic example is the Zambia Consolidated Copper Mines (ZCCM) which maintained a very strong manpower services unit unlike other parastatal organizations.
ZCCM was said to be overstaffed in 1993. The Ministry of Mines in 2003 reported the following:
“ZCCM is overstaffed and the labour problems are more complex than may have already been appreciated. Large-scale redundancies are expensive, socially unacceptable and politically risky. Comparing copper production figures of 1973 and 1993 annual reports shows that the 1974 productivity per employee was nearly twice as high as 1993 productivity. Total employment in 1974 was 56,128 while production was 709,480 tonnes of finished copper. In 1993 total employment was 61,433 while total production of finished copper was 432.206 tonnes”.(2003 Annual Report for the Ministry of Mines)
94 This scenario was repeated in most of the parastatal firms. The increase in the number of employees did not correspond to the increase in quality and quantity of service or product provision from which the company’s income came.
5.6.9 Mismanagement of company resources
Even where a company had substantial retained earnings, managements exhibited financial indiscipline. It has been observed by many, including the political leadership, that parastatal managers have often spent huge sums of money on top management’s luxury vehicles, loans, and trips locally and abroad and on various kinds of allowances.
At Zambia Airways, this abuse was most pronounced as it was common to see flights with half of the passengers being members of staff. It was a common experience for clients to be denied a seat at the convenience of a member of staff. Although it was one of the conditions of service at no cost for Zambia Airways employees, that someone had to pay for the costs of the flights.