The myth that the removal of government control in economic sectors, and the introduction of profit making in public institutions makes for good development economics, has no solid basis to support the argument.
Most developed economies have intitially started the development cycle by making heavy public sector investments in economic programs as a catalyst for private investors to be attracted and invest in the same programs. When a threashold is achieved whereby private investment exceeds public investments in any sector with a healthy active competition, then the public institutions withdraw from the sector to leave the competiton amongst the private sector such that the businesses remain viable and sustainable due to market forces. Even with the promise of competiton and demand driven price structures, the government still puts in place a public interest watch dog mechanism generally refered to as a Competition Commission that focusses on the maitenance of fair competition and the removal of monopolies.
Europe and the North American sub continent have Anti Trust laws that ensure that no single private company can monopolise a business sector. By contrast, the only institutions that are allowed to hold monopolies are governemnt owned, which include defence research and monetary policy management to name but a few.
The understanding is that an economy can liberlise up to a point, but some form of regulation and authority must be put in place to prevent damage to the economy by unscroupulous business people or dictatorial investors.
The regulators and authorities in these developed economies transformed their role and moved away from being aggressive, excluding, oppressive, and prescriptive. Their new roles were of being supportive, informative, facilitative, inclusive, and collaborative. The driving goal for regulators and authorities is to support economic growth and wealth creation in a hassle free manner yet put public welfare on the top of the agenda.
This is the challenge for Zambia. Regulators and authorities need to transform in mindset, preception, operation, goals, and service delivery.
Public companies are seldom subjected to similar treatment as the private sector by regulators and authorities. The reality on the ground is that public institutions are never held accountable to the people in respect to meeting benchmarks, and no sanctions are generally taken against public companies that do not comply with the regulations of the day.
On the other hand, private companies view regulators and authorities as barriers to doing business rather than partners in developemnt because of the aggresive manner in which these government sanctioned bodies engage with thier private sector customer base.
The typical scenes are those of a regulator or authority threatening to shut down any business enterprise on account of relevant paperwork not being in place. This includes licence and permit renewals that may be in the domain of other agencies that are not demanding immediate renewals due to operational difficulties. Examples of this type of harrassement is evidenced in respect to road tax discs, carbon tax receipts, trading licenses, rezoning permits, health permits, fire and safety permits, and other permits and licences that are affiliated to the construction sector, manufacturing sector, tourism sector, mining sector, agriculture sector, and services sector. Every area of economic development is affected and suffers the same plight of threats and punitive punishments rather than facilitative interaction and the promotion of good business practices.
The situation is compounded with further aggression and punishment when regulators and auhtorities are forced to adopt the self sustainablility paradigm and cost recovery charging for services rendered. Regulators and authorities tend to introduce more nuisance licencing and permits regimes that add to the cost of doing business through the government sanctioned monopolies. These bodies are not accountable to the public in respect to the introduction of new charges and costs, and they seldom look at their own operations in an effort to reduce inefficiencies, over spending, and over employment.
Zambia will soon become an active member of the COMESA Customs Union and will have to compete with member states and other players in the region. The neccessity for regulators and authorities to partner with the private sector in order to make Zambia more productive cannot be over emphasised. The Customs Union is the clarion call for collaboration and engagement that will transform Zambia into a more productive state that will grow its private sector and export into the region.
Zambia has the immediate challenge to go back to the drawing board to redraw the values and responsibilities of the various regulators and authorities such that the private sector can embrace these institutions as partners for development and use them as practically as possible.
Today, managements and their workers band together to ward off the aggression of a regulator or authority. Tomorrow we would like to see these statutory institutions become development partners of the managements of private companies to the extent that the issues brought up can become input for managments to challenge themselves and their workforce on better business practices and professional conduct that will benefit the economy through growth, more employment, and better skilled human resources.
Published 23 March 2010
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