SoE’s privatisation: Zimbabwe’s age of oligarchs?

guest column Paidamoyo Muzulu

THE sale or partial privatisation or lease of Cold Storage Commission (CSC) and its assets announced a fortnight ago is problematic and could be setting the country on a path to create oligarchs.

The deal marks the first real effort to privatise since Finance minister Mthuli Ncube took over as minister after the July 30, 2018 general elections.
Zimbabwe has entered a new territory; the age of wholesale privatisation of State-owned enterprises as it tries to balance its budget and do away with parastatals that have perennially drawn on the fiscus to stay afloat.

The restructuring is expected to bring in US$350 million at the initial stage, but this could present an unparalleled creation of private wealth at the expense of the national silver.

It is interesting that very little is known of Boulstead Beef, the new investor in CSC, as the company does not have any digital footprint in this day and age. For all we know, it could be just another briefcase company used as a front by politically-connected individuals in an elaborate plot to asset-strip Zimbabwe. Investor details should be put in public sphere in order to allay any fears about its capacity to deliver on the deal.

Ncube, who is leading the economic restructuring, in his 2019 budget statement highlighted that the quintet of TelOne, NetOne, Telecel, Zimpost and POSB could be flogged for a combined US$350 million.

This is a tidy sum to the financially uninitiated, but peanuts to the corporate vultures circling above the dying Zimbabwe economy. Zimbabwe could be robbed blind in these transactions that are being done in an opaque manner if the partial privatisation of CSC could be used as a yardstick.

It has to be put on record that CSC is the biggest meat processor in Africa, operating five abbatoirs in Bulawayo, Chinhoyi, Masvingo, Marondera and Kadoma. It also owns distribution centres in Harare, Gweru and Mutare, including residential properties.

The meat processor also owns ranches in Maphaneni, Dubane, Umguza, Chivumbuni, Mushandike, Willsgrove and Darwendale, with an estimated combined total hectarage of above 30 000. All the above have been sold to Boulstead Beef for a meagre US$42 million (debt repayment) plus US$500 000 rentals in the first five years of the exclusive 25-year lease agreement.

The late Rhodesian Premier Ian Smith was a racist; he had a sensible economic mind that created CSC and grew it into the biggest meat processor on the African continent, while at the same time running it as a strategic national asset.

The interesting thing about the CSC sale is that its valuation was done privately. An independent valuation of the assets could prove that the company is worth far more than US$200 000 and has a potential to earn the country in excess of US$30 million annually if it resumes exporting its beef into the European Union market. These sums are exclusive to rentals and other associated revenues from leasing out its expansive real estate.

To cap it all, no valuation of CSC was transparently done nor was there an open bid or tender system to select the winning entity. This same opaque system is likely to be repeated in offloading NetOne, TelOne, POSB, Zimpost and Telecel. The first four used to be a single entity owned by the behemoth parastatal called Posts and Telecommunications Corporation (PTC). PTC is one of the biggest property owners in Zimbabwe, with buildings located at prime places in all cities, towns and growth points.

Its property portfolio is worth far more than US$300 million by conservative estimates. If one adds TelOne’s fibre network, the Mazowe Earth Satellite Station and NetOne’s extensive network of cellular base stations, the four companies could easily be valued at US$1 billion combined, never mind the fact that the communication industry is growing exponentially the worldover.

The same thing is happening in the privatisation of National Railways of Zimbabwe. A deal being structured with a South African consortium is valued at US$400 million.
Wait a moment as we list the property assets of the monopoly rail authority.

It owns 15 farms across Zimbabwe, has prime commercial lands in Harare, Bulawayo, Gweru, Masvingo, Mutare, Chinhoyi and Bindura, just to mention a few. It has sports clubs (Raylton) in all major urban centres. The company, also owns thousands of houses, both in low and high-density suburbs across the country.

We have deliberately not factored in the railway line network, wagons and engines. The company, by simply selling its constituent parts, will net Zimbabwe well over US$2 billion.

Scouring over these companies assets confirms why the government and Ncube would want the companies sold through private placement. Most likely these companies are being sold to acolytes, fronts and the elites in a repeat of what happened in Russia in the late 1990’s; the age that gave us oligarchs who stripped Russia of its gas and oil resources, and overnight became billionaires.

Can Parliament, civil society, labour and the opposition step up to cause the full disclosure of the parastatal worth, the identity of the buyers/investors and the business track records of the investors using the Access to Information and Protection of Privacy Act. Why can’t these same groups demand that these companies be privatised through listings on the stock exchange.
Or maybe we are in the age of elite cohesion and ideological understanding has been reached among the elites that neo-liberalism is the only way out and privatisation is the cheapest way for the elites to rob the hardworking peasants and labourers by selling the family silver?

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