Wake-up call for dependent firms

GOVERNMENT’s intention to stop bailing out loss-making companies as it grapples to whittle down unavailing expenditure constitutes an appropriate tack that was long overdue.

If followed to the letter, the decision poses a stern challenge to those companies that have survived by virtue of being doled with State largesse without demonstrating reciprocal preparedness to wean themselves from a dependency syndrome that has gradually ingrained itself in their psyche.

Worldwide, corporate bailouts have assumed a stature of undeserved rescue packages by government to companies lacking craft, competence and innovativeness or adaption to counter the vagaries of a dynamic economic environment.

In most cases corporate bailouts have spawned a culture of protecting the inept from vagaries of a shifting economic environment and punishing the poor who have to shoulder the unwelcome burden in increased taxation.

Finance minister Patrick Chinamasa’ assertion that government would only protect those companies which demonstrate that they deserve to be protected sums up a pragmatic approach to ensure funds are not misdirected at the expense of economic development.

His pronouncement arrives in a good moment as a wake-up call for companies that government has raised the stakes and can no longer celebrate or accommodate mediocre entrepreneurship.

Companies have to show they merit assistance bearing in mind that the centrepiece of government’s initial intention is to ensure beneficiary enterprises stay afloat and sustain employment levels.

Apparently, government has been hesitant to crack the whip on companies that shy from adaption and have solely depended on state assistance while these firms have dismally failed to reciprocate the rescue gesture.

The same treatment that ailing companies face as Chinamasa proposes, should be extended to loss-making but fund-gobbling parastatals which have hung like a millstone round the already impoverished taxpayers’ necks and have constricted economic development.

Zimbabweans marvel when company or parastatal executives of entities battling on the brink resist deferring some of their hefty perks until the company’s fortunes change for the better.

They opt to retrench rather than postpone entitlements such as expensive cars and superfluous emoluments underwritten by taxpayers’ contributions through bail-outs.

Other companies have opted for the easy way out in order to utilise government bailouts as a benefit for executives to continued enjoying as if things were normal.

Government cannot afford a benign approach towards those irresponsible corporates that show negligence to their workers by failing to exhibit a modicum of equality of sacrifice with the workforce and expect to divert taxpayers’ money to buoy their executive perks.

Hopefully, with Chinamasa’s recent proposition to rip up the corporate landscape of bailing out ailing parastatals and firms, government could do itself a whale of service if it vigorously pursues its stated pronouncements for these quasi-governmental enterprises to produce veritable annual audited statements.

Unless government pushes through radical reforms to cut on hand-handling inefficient enterprises, Zimbabwe has little prospects of weathering the economic odds rallying against it.

We hope Chinamasa’s proposition is not mere rhetoric.

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