Mashakada says a $4 billion economy has no capacity to invest in the airline business

Movement for Democratic change Shadow Minister for Finance Tapiwa Mashakada says a $4 billion economy, like Zimbabwe’s, has no capacity to invest in the airline business.

“What I recommend, is to take a brave step to open up, commercialise, privatise it, find new investors who can bring in the equipment, planes and take over all the routes that were operated by Air Zimbabwe,” he told Parliament.

“Government will then remain with a regulatory function to make sure that all things are done above board.

“This is not a new model. If you look at the Kenyan Airlines, today the Kenyan Airlines in Africa is second to Ethiopian Airlines. The magic is very simple, they partnered KLM, the Royal Dutch Airlines and allowed the airline to run commercially, professionally and viably.

“You do not have to burden yourself with appointing board of directors and this and that. Let it be done as a private entity.

“That will improve operational efficiency because the problem with Government having to appoint board of directors is that once a Minister leaves that portfolio, a new Minister comes, tries to change the board and interferes in the operation of that airline. Whatever reforms or changes the previous Minister would have made would be reversed.

“I recommend to the Minister that, better explore the privatisation route, it is profitable and it does not bring headaches to Government because we do not have enough resources,” he said.

Full contribution

HON. DR. MASHAKADA: Thank you Mr. Speaker Sir for this opportunity. I want to start by thanking the Minister of Transport and Infrastructural Development, Hon. Dr. Gumbo for his clear presentation and also thank him for the effort that he is doing to turnaround the transport portfolio.  Be that as it may, I wish to raise the following issues for his attention.

In my respectful and humble view, Air Zimbabwe is saddled by two basic problems which are at the core of the restructuring strategies that you might wish to adopt. The first problem is the problem of ownership and control. The second one is the problem of budgetary resources. Any solution that is going to be found around the problems bedeviling Air Zimbabwe has to address these two major issues.

We must disabuse ourselves of the notion that Air Zimbabwe needs a strategic partner. I do not think Air Zimbabwe at this stage needs a strategic partner. This airline, for the last 20 years has been recording operational losses. This airline has been recording operational losses because it has lost strategic routes which were profitable and also because it has not been receiving adequate budgetary support from the fiscus. You can understand that a $4bn economy has no capacity to invest in an airline business. In my view, it is not possible to get strategic partners because Government has to clean the balance sheet. The loss now stands at over $20m. When we were in the Inclusive Government, I am quite sure the loss was around $14m and I am not sure about the extent of the loss now. For a strategic partner to come in, Government has to take over the debt and clear the balance sheet so that it becomes profitable for that strategic partner to come. This has been an albatross around Air Zimbabwe, the question of the debt. That is why it is very difficult for the Minister to get a strategic partner.

What I recommend, is to take a brave step to open up, commercialise, privatise it, find new investors who can bring in the equipment, planes and take over all the routes that were operated by Air Zimbabwe. Government will then remain with a regulatory function to make sure that all things are done above board. This is not a new model. If you look at the Kenyan Airlines, today the Kenyan Airlines in Africa is second to Ethiopian Airlines. The magic is very simple, they partnered KLM, the Royal Dutch Airlines and allowed the airline to run commercially, professionally and viably. You do not have to burden yourself with appointing board of directors and this and that. Let it be done as a private entity.  That will improve operational efficiency because the problem with Government having to appoint board of directors is that once a Minister leaves that portfolio, a new Minister comes, tries to change the board and interferes in the operation of that airline. Whatever reforms or changes the previous Minister would have made would be reversed. I recommend to the Minister that, better explore the privatisation route, it is profitable and it does not bring headaches to Government because we do not have enough resources.

I know it is sentimental to say we have to fly the national flag but you can go round that like what the Ethiopian Airlines did. They have agreed that this airline will run independently and commercially but the brand that should be used is the brand of the country. It is possible that even when a new investor comes, we might insist for them to fly the national flag and use the brand of the country for national and sentimental reasons. I would also support that but Government has no business in the running of airlines. It is a professional and technical area where you need well resourced entrepreneurs who can run that viably.  The issue that I want to suggest Hon. Minister is the question of the presidential jet.

THE HON. SPEAKER:  Order, order. I had said I have indulged you and your colleagues.  I need to respect you.  You can wind up but some of these good points should have come during the debate on the motion and I am sure that the Hon. Minister would have captured these bright ideas from Hon. Mliswa and yourself.  Just wind up.

HON. DR. MASHAKADA:  I am indebted to you Hon. Speaker for this opportunity for me to wind up.  I was going to propose that maybe going forward as a country, we might need to study other models – how they treat their Head s of State and the implication that it has on the operation of the fleet as a whole.  In some countries, I think that they have dedicated small jets for Heads of State which are easy to run.  They are economic but they are also efficient and are fit for the purpose.  But in our case, we have not yet decided that the Head of State should have a dedicated jet.  So, that has implications on the fleet since the President has to be given one of those big planes and I think that also has an implication on the operational health of the airline.  The Minister might want to look at that model of having a dedicated efficient small jet for the Head of State and then allow all commercial planes to be deployed in the meantime to service all the routes that Zimbabwe has been servicing.  I thank you.

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4 Comments on Mashakada says a $4 billion economy has no capacity to invest in the airline business

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