Kenneth Clarke came to town to promote privatisation in South Africa, reports Madeleine Wackernagel
Privatisation, which warranted barely a mention in last week’s Budget, was brought back into the spotlight by Kenneth Clarke, Britain’s Chancellor of the Exchequer, this week. Selling off state assets would solve the problem of under-investment and output expansion in the public sector, he said in Johannesburg.
South Africa, he said, did not have the tax base to finance vital capital outlays; international investment would fill the gap. Citing the British experience, he said privatisation had been a huge success: those utilities that were once overmanned and unprofitable were now the picture of financial health. Nor would privatisation be an emotive election issue again — even the Labour party had given up all ideas of re- nationalisation.
Clarke, in typically ebullient form, said South Africa should not reinvent the wheel, but learn from Britain’s mistakes. Lack of competition had been a problem, he said, as had the issue of pricing. As newcomers to the business in the early 1980s, it was an easy mistake to make; some share issues had been undervalued.
Accompanied by British businessmen and merchant bankers, Clarke’s itinerary included parliamentary briefings as well as private meetings with the deputy presidents, Thabo Mbeki and FW de Klerk, and the finance minister, Chris Liebenberg. Discussions were not specifically directed at certain companies; Telkom, for one, was invited by the Ministry of State Enterprises to attend talks about UK investment in general.
Privatisation may no longer be an emotive issue in Britain, if Clarke is to be believed, but it raises many hackles in this country.
The problem is whether privatisation merely turns a public monopoly into a private one; the UK evidence is not reassuring. And if the proceeds of asset sales are used to offset the public debt, rather than increase investment, the problem is compounded.
Dr Vella Pillay, a member of the board of the National Institute for Economic Policy, rejected Clarke’s argument outright: “The UK experience is totally irrelevant to South Africa. With the scale of unemployment as it is, the state is obliged to use the public sector for job creation. Instead of cutting jobs, the state should concentrate on improving efficiencies. Funds are available for expansion; the problem is delivery.”
Maria Ramos, deputy director general of Finance, stressed the government’s holistic approach to privatisation. “We are looking at the whole gamut of options and how to deploy state assets more efficiently. Some operations would be better kept in the public sector, others may need restructuring to become more efficient.
“Government is committed to job creation, so we are taking all factors into account, particularly concerns raised by the labour movement, and consultations are ongoing.”
Clarke, she said, was not here to set up specific deals, but for general discussions on the UK experience. “There are plenty of foreign models to choose from,” added Ramos, “some more successful than others.”