October 10, 2003

TANZANIA: Privatisation spectre still haunts the government

The spectre of privatisation continues to haunt the Tanzania Government despite its attempts to shrug it off. Complaints are mounting that the exercise is being done haphazardly. Several people who were sounded out said that the presidential Parastatal Sector Reform Commission (PSRC), which has been charged with the privatisation programme, leaves much to be desired.

No follows-up are done to ensure that strategic investors who take over State-owned entities adhere to the business plans they present. This gives room for investors to blatantly do what they like with their acquisitions, regardless of their privatisation agreements with the Government. Complaints largely centre on the lack of transparency regarding the privatisation. Some vital documents, including business development plans, are made secret from the Tanzanian people.

The investors may abandon core objectives of the businesses and, say, turn otherwise productive factory premises into warehouses or distribution outlets. This means that some sectors which could have been developed by improving the relevant operations become stunted. Noting that the Government was not fully safeguarding the national interest, the so-called strategic investors seemed to be calling the shots, instead of the Government. As a result, some public companies were sold at throwaway prices. As examples, they cited the National Bank of Commerce (NBC), and the Tanzania Telecommunications Company Limited (TTCL) whose "strategic investor has delayed to pay the final purchase sum for no apparent reason."

According to a privatisation expert in Dar es Salaam, there are a number of issues which need to be attended to during and after privatisation. These include a clearly defined programme on workers' layoffs as a result of privatisation. Unfortunately, he said, a uniform retrenchment policy is lacking. That is why some companies pay terminal benefits to their retrenched personnel, while others do not do, leading to industrial unrest. In any case, it is not clear who should pay the terminal benefits to retrenched workers, he said: the strategic investor, or the Government.

Furthermore, Tanzanians simply do not have the requisite capital, thereby making them unable to acquire modern technology, machinery and equipment. Moreover, locals face hurdles in getting credit from the existing banks, including near-prohibitive lending rates. As such, they are also unable to compete with foreign investors. (Business Times, Dar es Salaam)


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