Preventing The Effective Establishment And Operation Of State-Run Enterprises
It is true to a larger magnitude to assert that patronage politics has frequently prevented the effective establishment and operation of state-run enterprises. This is evidenced by political interventionism which compromises profitable operations. Patronage appointments also give room for corruption, political appointments of management which is not qualified to scale thus compromising proper management, inhibits innovation and causes maladministration. It also facilitates politicization of government programmes, overstaffing and scares away investors. All these factors can be attributed to patronage politics and they compromise corporate governance principles, integrity of the public sector, values of transparency and accountability and the doctrine of open government.
However, apart from patronage politics, there other factors which can be detrimental towards the effective establishment and operation of state–run enterprises. These factors include, economic challenges, the emerging of parallel markets as in Zimbabwe and poor investments decisions like the indigenisation policy which scared away investors and inability of the government to cope up with new technological developments of the globalised world. Therefore, the closure and falling of production in state-run enterprises like ZESA, GMB, COLCOM, ZISCO, Cold Storage Commission can be explianed through these factors. According to Maunganidze (2014), the creation of the state owned enterprises can be traced from the onset of independence where they were built behind the idea of political patronage in which they wanted to reward loyal comrades who had fought the war with public sector jobs. This therefore indicates how the creation of these parastatals is embedded within the political economic perspective. Patronage politics encourage corruption and mismanagement and all other immoral business practices. According to Maunganidze (2012), state institutions became more fragile therefore hence increasing more opportunities for corruption and resource misuse. It is all because patronage remains the principle coverage for wealth accumulation in politics. Hence resulting in patronage politics preventing the effective establishment and operation of state-run enterprises. One can observe such act in Zimbabwe causing ineffective establishment and operation of state-run enterprises. As argued by Rotberg (2003: 9) when the rulers are perceived to be working for themselves, and their kin and not for the state, their legitimacy, and the state’s legitimacy, plummet. According to Maunganidze (2012: 237), the politics of patronage was mostly evident in Reserve Bank of Zimbabwe (RBZ)’s quasi-fiscal operations. For example the bank acted as an agent of fiscal policy by procuring agriculture equipment and providing it directly to farmers. According to Charap and Harm(1999), these quasi-fiscal operations were created to foster loyalty through patronage.
Therefore preventing the effective estabishment and operation of state run politics. [bookmark: _GoBack2]Patronage politics undermine innovation and this has prevented the effective establishment and operation of state run-enterprises. Scherer (1984) defines innovation as the application of new ideas to the products, process or other aspects of the activities of a firm that lead to increased value thus innovation is a an important assert towards effective operation of state run-enterprises. Patronage politics undermine innovation through substituting quality as a hiring criterion thus public sector jobs are awarded as reward for one’s loyal to the party in power without looking at the quality aspect. Therefore, officials in the public sector are being forced to pay political homage to those that are above them because of the hiring criteria which is being used in the state run-enterprise for example the appointment of former CEO of Air Zimbabwe S. Chikore. It is alleged that he was appointed on the basis of patronage since he was loyal to the then president of Zimbabwe R Mugabe thus he lacks experience in the operation of air Zimbabwe hence this undermine the ability to apply new ideas in the organization which fosters for development. Therefore, with the evidence at hand, it is clear that patronage politics has frequently undermine the effective establishment and operation of state run-enterprises. Patronage politics through the appointment of security services in the management of state owned enterprises has undermined the effective management and operation of these entities. The militarisation of the state entities has seen as jeopardy of values of transparency and corporate governance principles.
For instance, between 2002 and 2006, ZANU led the patronage network under operation Maguta in Grain Marketing Board of Zimbabwe (GMB) by absorbing over 4000 members of the army (Moyo 2015: 39). Therefore, state entities were made to achieve political and security goals that had nothing to do with corporate mandates and objectives. Hence they worked under strategies and multiple lines of accountability thus becoming hostage to political and conflicting bureaucratic interests which these military men had to pay homage to the existing political order at the expense of the state entities thus ultimately led to the closure of some entities and some remain loss making entities due to the issue of patronage appointments. The view that politics of patronage has frequently prevented effective establishment and operations of state-run enterprises can be said to be relevant looking at the fact that appointment of Board of Directors (BOD) under this systems is based on nepotism and favoritism. According to Ireri (2016) this nature of appointment explains why directors are usually perceived to be political aides of prominent politicians whose appointment is part of the reward system for patronage. Nepotism has been evident in Kenya as stipulated by Ireri(2016) that in Kenya the then Minister Mr Najib Balala appointed his close political advisor Mr Kenneth Ombongi to head the Kenya Utalii College without advertising the position. Ibid further notes that regular appointments have been made because ministers exceeds their powers by not admitting that their duties end at the policy formulation stage and forgetting that heads state owned enterprises(SOEs)have been given their jobs by the statutes creating SOEs. Hence if one is appointed as a favor, such an appointee is threatened with sacking for failure to strictly adhere to the orders of the line ministers or someone at a higher rank which greatly contributes to poor cooperate governance of SOEs.
The office of the president and parent ministries wield a lot of influence over the appointment of BOD to SOEs and their chief executives. This deprives the state corporations of their autonomy and eventually poor performance hence preventing effective operations of state owned enterprises. Patronage politics prevents the operatons and establishment of state run enterprises looking at the issue of appointing military personnel as board members or top managers of state run enterprises. It can be noted that the security officers have replaced competant and better trained personnel. They lack the relevant skills required to uphold integrity and ethics that is they do not possess the required commercial backgrounds as a result there is lack of corporate governance principles such as transparency, integrity and openness. Ndlovu (2010) indicates that the leading members of the security forces were employed by the state to the Parastatals that have been used as retirement zones. This result in the poor performance of parastatals looking closely at how GMB and NRZ have been performing there is poor delivery of goods and services from these military led parastatals. The ZBC board which had these former military officials dissolved as well because the board engaged in corrupt activities. The top management was receiving large sums of money (hefty salaries) as monthly salaries ($44500-$26876), air travel privileges and also fuel coupons whilst the rest of the workers spent 7 months without receiving any salaries. According to Maunganidze et al (2014: 133) this is as a result of the absence of standardized remuneration for the executives which further results in the looting and accumulation of state resources by the management.
However, patronage politics also facilitates effective establishment and operation of state enterprises. According to Woods (1998: 69) through dispensing patronage politics via state jobs, political principals distribute and manage state institution’s jobs in order to bargain over policy output. In similar tone Gay (2000: 115) argued that patronage politics in the operation of public enterprises also ensures that state agents achieve principal’s policy goals and objectives particularly given the danger of the opposition political party agents to derail and sabotage the governing political party’s policy vision and objectives. Woods further see political patronage as an inherent feature of all governing political parties in government worldwide and there is no problem in dispensing the same system at all. Drawing from the above school of thoughts one can also argued that all governing political parties widely apply or make use of patronage politics or rather political appointee system as a political tool to control and regulate the behaviour of public sector officials so as for them to be loyal and abide to organisational set targets, goals and objectives. Therefore form the above view one might uphold the claim that despite its several shortfalls, patronage politics is necessary in facilitating the operation of state enterprises since it serve as an eye of the political principals in always monitoring the level of support for the principal’s policy goal within the state institutions.
However, it is important to note that it is not only political patronage that is preventing the effective establishment and operations of state-run enterprises as social factors like lack of diversity and gender mainstreaming in board appointment is also a contributing factor. According to Roosevelt (1991) diversity is a focus on the influence of different culture, education level, gender, regional background, sexual orientation and ethnicity on quality, product development and other core businesses. Diversity is relevant to board composition because it has the capacity to influence work relations by offering greater perspectives on business issues and opportunities as well as a wider range of ideas and solutions Turok (1981). The lack of diversity in board composition is a major problem affecting the operations of SOEs. Diversity can not be fully discussed without reference to gender. Appointments are mainly biased towards men.
According to Ireri(2016) a close scrutiny of SOEs in Kenya shows that board composition is mainly homogeneous besides showing signs of patriarch, thus women or female in boards of SOEs are few and not well represented. Hence on the issue of appointment little attention is given to gender diversity. Ibid notes that the collapse of Enron was attributed to mismanagement at board level and absence of gender diversity. The company had only one female board member which contradicts the theory that better decisions are made by boards that have some diversity to allow consensus building. Therefore all this being said one can note that despite political patronage, social factors are also hindering the effective operations of SOEs. In conclusion, it can be noted that, patronage politics is detrimental to the effective establishment and operation of state-run enterprises. This can be noted by the militarisation of SOEs, corruption, overstaffing, administartive eficiencies, poitisization of government programmes and scaring away of the investors. These effects are contributing toward the closure of companies, loss making of enterprises and lack of nvestment.
