The debate concerning state enterprises is in need of transformation, reports Meshack
IF foreign investors were looking for dramatic statements on privatisation to emerge from the recent state enterprise restructuring bosberaad, they would have been disappointed.
The government, under persistent pressure from some major stakeholders to take a definite stand, is adamant not to be drawn. It has even eschewed the term “privatisation” in favour of “restructuring” to indicate that all options would be explored in handling state enterprises
At the meeting of the “portfolio committee on public enterprises and the office for public enterprises” in Gauteng, Public Enterprises Minister Stella Sigcau pleaded for the debate to go beyond arguing about the “rights and wrongs of state versus private ownership of the SEs” with “people taking up positions based upon political dogma”.
Sigcau referred to this as a “sterile debate” which must be broken.
The hugeness of the task is compounded by the fact that SEs account for a sizeable portion of the economy: the major parastatals (including Eskom, Telkom, Transnet and Denel) are worth over R100 billion, about a quarter of the Gross National Product. For a long time, they constituted a large chunk of net fixed investment: in the period 1970 to 1984, coinciding with the onset of sanctions, 63,7 percent of total net investment was made by the public sector which included SEs. Because of their dominance, the restructuring of SEs will be inextricably linked with that of the economy
Actually the restructuring is also tied up with larger macro economic positions and policies such as:
l government expenditure, (which impacts on monetary policy and fiscal measures);
l competitiveness (as some of the parastatals are either near or full monopolies);
l the effects on the flow and size of private local and foreign investment (should there be a big bang sell off of SEs);
l the effects on socio-economic development and equity (prompted by fears of lays-offs and higher prices should there be privatisation),
l black economic empowerment and community participation.
So it is understandable that government has been cautious. This was evident at the bosberaad. All major stakeholders – unions, the private sector, political parties and various ministries – were represented. Sigcau reminded participants that the government of national unity (GNU) is “aware that (such a) restructuring would affect a wide range of constituencies. A programme to build political consensus and support is perhaps the single most important initiative.” This may be politic but it won’t make it easy to escape the very ideological concerns that have made the debate “sterile”.
Sigcau also mentioned that the restructuring hinges on running public enterprises “better in order to deliver more, higher quality products and services for the benefit of all the people”. This does not necessarily mean that privatisation is the answer – although World Bank economists have produced strong economic arguments in its favour.
The bosberaad was warned against cookbook solutions, which aped other countries’ restructuring exercises. And it was reminded that restructuring of parastatals had begun in the 80s.
How far restructuring should go is moot. This is where the interests of all stakeholders come in. The spectrum of options will need to be explored to suit every situation and state enterprise. But the complex nature of the society and the exercise itself is likely to make restructuring the most difficult issue confronting the GNU.