Prime minister Yousaf Raza Gilani in his address to Rawalpindi chamber of commerce stated that the government intends to solve the management issues of the state owned enterprises by privatising them. This suggestion like so many other suggestions given by this government reeks of stale, tested and failed actions. The government seems to have no clue to what needs to be done to solve the energy crisis; how to bring Railways out of its grinding halt; how to make PIA safe and sustainable and so on. WAPDA, NAB, Pakistan Steel and so many more white elephants are bleeding the economy with their humungous appetite of more and more unaccountable money.
The question is that is privatisation the only remedy for this virus? The next question is that does the public sector mean failure and the private sector success? The answer to both questions is a ‘NO’. Within the same public sector we do have examples of efficient organisations like NADRA that has made great contribution to not only the country by supplying innovative services at low costs but is also now a model that is being emulated in other countries. The reason for NADRA’s success is that it is manned by people who are professional and is not funded or subsidised by the government. This lack of financial support from the government forces the organisation to generate its own resources and to generate resources it must be innovative and professional. This model may be rare and not applicable to all public sector ailing organisations but can be tried on some of them.
The other model is privatising them. The example of PTCL and the Pakistani banks is there. PTCL had a tumultuous sell off to Etisalat and has become more efficient in its operations but the sell off process of these organisations itself is a huge pain. Since the sellers are governments and most of our governments have political rather than economic motives, the sell offs are either non transparent, or undervalued. PIA has gone through many turnaround plans but each time it has detracted, like many of their dysfunctional airplanes. With one of the highest employee to plane ratio in the world it can never become efficient. Every time there is a mention of a downsizing there are riots in the union resulting in shut downs costing billions of rupees.
With such conditions no investor foreign or local is too keen to take over these white elephants that are almost immoveable. Take the case of KESC; Abraaj Capital has taken over this giant but is constantly at war with the union. If they lay off workers, these very workers with the support of relevant political parties become gangsters who threaten and assault company assets and officials. With such interference from the government and literally no way of executing plans unhindered, most of the investors run miles away from touching these political infernos. The other consequence of this deterioration is that even if an investor makes an offer the offer is substantially marked down keeping in view the huge costs they anticipate in trying to fight all these threats and dysfunctional agents. So many a financial analysts have lamented the cheap sell off of PTCL and HBL etc but aside from the dominant element of under the table deals by the government, the conditions under which these organisations will operate also pull the bidding price down.
There are some models of hope. PSO is now almost a global case study being prepared by Wharton Business School of how a politicised state owned enterprise was turned around by great leadership. The story of the great Shaukat Mirza taking over PSO and insisting on doing it his way without government interference is an inspiring example. How his strong and visionary leadership made a white elephant dance is a tale that is difficult to emulate but not unbeleivable. What was striking about Shaukat Mirza was his ability to connect to all stakeholders with success. He was able to convince the government to his style of management; he was able to convince employees of their own and the organisations potential.
The moral of the story is that it is not the business model that drives an organisation but rather the one who drives that business model that makes all the difference. Finding such people may be difficult but not impossible.
The writer is an analyst, consultant and CEO of FranklinCovey Pakistan and can be reached at [email protected]