East Africa's Privatisation Geniuses should turn to State Houses

By Finnigan wa Simbeye

The Perspective
Paris, France

Posted May 8, 2002

TWO major developments involving Tanzania President Benjamin William Mkapa and his Ugandan counterpart Yoweri Kaguta Museveni defending privatisation of parastatals on grounds of improving management were highlighted by the media in the two countries capitals last week.

"Tanesco's [Tanzania National Electricity Supply Company] management has failed to deliver and the government cannot continue using tax payers money to sustain it," President Mkapa was quoted as saying while commenting on a controversial move to hire a South African management team, Net Group Solutions, to run the state owned power company.

Tanesco’s new management deal has been a subject of a heated debate in the country following workers demands for payment of terminal benefits and signing of new contracts with the South African managers as many see the latest development as preparing the utility giant for privatisation as has been the case with other parastatals before.

President Mkapa’s government has been facing strong opposition both from within his own ruling Chama Cha Mapinduzi (CCM) party and the general public on the way the administration has been handling privatisation of state run enterprises as pre-conditions for aid from Bretton Woods institutions and Western governments.

While President Mkapa argued that Tanesco's management has failed to stop the parastatal making losses the latest of which was over $100m revealed by an external audit report conducted recently, he aknowledged that the government and its various institutions owe the utility giant over $40m in unsettled bills accumulated over the years.

A private motion by a caucus of hardline members of parliament from the ruling party demanding government explanation on key controversial issues, including Tanesco’s privatisation, the purchasing of a $40m radar from BAe Systems of United Kingdom which even donors have questioned its costs, was foiled at the eleventh hour during an ordinary session of the House last month.

President Mkapa summoned the ruling party legislators and attacked them publicly for working against his government while warning them of the risk of fragmenting the party.

In Uganda, where another free market and privatisation genius President Museveni is in power, a revived African Joint Airline Services (AJAS) which was formed owned by South Africa, Tanzania and Ugandan governments jointly, was being launched under the name Africa One with Nigerian, Tanzanian and Ugandan private shareholders.

"Prior to Uganda Airlines closing wings, there was a hot debate whether the government should re-capitalise the loss making airline....., I refused. I don’t entertain loss making entities," Museveni was quoted as having said while commissioning first maiden flights of Africa One to West Africa and London at Entebbe International Airport.

Museveni and Mkapa who are good friends of World Bank, International Monetary Fund (IMF) and Western governments pushing for private ownership of the economies on argument that private shareholders are better managers than governments, are also heading governments which are accused of high level graft.

Presidents Museveni and Mkapa like their Western privatisation and free market economy geniuses based in Washington and London are using the argument of management efficiency as smoke screen to back such developments which are essentially aimed at benefitting foreign investors at the expense of the local populations.

In Tanzania, for example, the new managers and the government have already raised power tariffs by more than 10% while lay offs are being planned behind closed doors as has often been the case. The cost of hiring the new foreign managers which will be settled by a World Bank loan, is state secret known by the elites and donors.

President Mkapa’s government record of combating corruption and embezzlement of public funds by his senior lieutenants and appointees is just as bad as that of his Ugandan counterpart whose maladministration has crossed frontiers into Democratic Republic of Congo (DRC).

Tanzania’s Controller and Auditor General (CAG)’s annual reports have been negative and critical of levels of unvouchered, unaccounted and missing funds in the country’s public coffers in recent days with appeals from the opposition demanding that presidential appointees such as ministerial permanent secretaries, be disciplined for failure to account for billions of shillings paid by tax payers.

One such permanent secretaries in Tanzania is that of Transport and Communications whose office is at the centre of the controvrsial purchase of the $40m radar system from the UK with a commercial loan from Barclays Bank with an interest rate of 4% per annum. Tanzania has a foreign debt of over $7bn and the government has been requesting total cancellation from Western creditors.

According to CAG report of 2000, unaccounted public funds in local governments of the country’s 102 mainland districts amounted to over $500m which was a slight improvement from over $300m which went missing the previous year.

Losses of huge sums of money in government ministries and key institutions including State House, are astronomical but the President has resisted calls by the opposition to discipline his close aides and where such people like ministers have been forced to do so under donor pressure, President Mkapa has often brought them back after sometime.

A living example is former Natural Resources and Tourism Minister Dr Juma Ngasongwa who was forced to step down in 1996 with former Finance Minister Professor Simon Mbilinyi after being associated with graft in a fish fillet export scandle involving Indian businessmen.

Things are not better in Uganda’s Museveni where the privatisation programme has been embroiled in corruption and embezzlement involving the president’s key aides, family members and a brother.

Even the president himself had been named in court as being party to a fraudulent privatisation programme of Uganda Commercial Bank, Green Bank and Bank of Uganda to a Malysian businessman and his close allies while the army has constantly been involved in controversial deals of purchasing helicopters which cann’t take off from Russia.

While these African leaders are justifying privatisation of state owned enterprises some of which are very sensitive to people’s lives like Tanesco, their government’s performance may justify the need to privatise even the entire system managing them, if privatisation is synonymous to efficiency and good management.

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