Gains and losses of privatisation

Debate continues in Zambia over the economic benefits versus the social costs of wholesale privatisation, a central plank of the government’s economic reform programme, analysts told IRIN on Friday.

Confronted by bankrupt and inefficient state enterprises, on winning office in 1991 the pro-free enterprise administration of President Frederick Chiluba implemented one of the most thorough and rapid de-nationalisation programmes in Africa, winning applause from Western donors and the World Bank.

According to sources in the Zambia Privatisation Agency (ZPA) - the statutory body charged with overseeing the programme - out of the 280 state-owned enterprises and units to be privatised, 229 have already been sold off.

“It is difficult, though, to determine how much money has accrued to the government from the sale of these companies,” the sources told IRIN. “The majority of these companies had huge debts and were candidates for liquidation. Much of the proceeds from their sale were therefore used to pay off liabilities as well as retrenchments packages.”

The ZPA acknowledged that some workers did lose jobs after the companies were privatised. “However, of the 61,000 jobs lost between 1992 and 1995, only about 6,000 were lost as a direct result of privatisation,” the sources said.

The ZPA told IRIN that the government, with the assistance of the World Bank, had set up a social safety net to help the retrenched workers. “A sizeable number of casualties of privatisation have gone through the agency’s varied skills training courses, including entrepreneurial development,” the ZPA sources said.

However, the sources added, many of these have neither the capital to start businesses nor collateral to qualify for loans. “We are currently evaluating the safety net to address the post-privatisation difficulties faced by the retrenched workers,” said the sources, and added that the government has no money to sustain unemployed workers.

A non-governmental organisation (NGO) activist monitoring the government’s economic reform programme, acknowledged the necessity of privatisation given the moribund state of the Zambian economy in 1992, but told IRIN that the programme has caused much suffering among the retrenched workers and their families.

“We have been counselling a lot of retrenched men who are suffering from depression due to the loss of income and their diminished status,” the activist said.

“The retrenchment packages were quickly spent on consumables, and as soon as the money was finished people started to realise the hopelessness of their situation,” she said. She alleged that there are few new jobs being created in the service industry, even though it is the fastest growing sector as a result of privatisation.