Howard Barrell and Barry Streek
The decision by top government leaders at an all-day meeting in Pretoria on November 29 to accelerate privatisation of state- owned enterprises is of great political and economic importance, according to officials who were present.
The meeting represented a commitment by the government to economic restructuring – whatever the potential for conflict with groups in the Congress of South African Trade Unions and the South African Communist Party.
The main goal set out at the meeting is to earn the state billions in extra revenue from restructuring, in order to be able to reduce government debt and create an environment for economic growth.
At the same time, the government is determined to use the restructuring to release funds for the recapitalisation of infrastructure and advance black empowerment on a sound financial base.
Forms of restructuring range from outright sale to strategic equity and management partnerships with black empowerment components. While opposition representatives have said the government’s proposals “do not go far enough to capture the imagination of emerging market investors”, this does not detract from the significance of the decisions.
Observers see the clarity of the decisions as demonstrating President Thabo Mbeki’s determination to go down as “the delivery president” and his acknowledgment that restructuring is the path he must take to free up the financial resources to do this.
This should make it easier for the government to maintain the fiscal discipline that forms the basis of the its policy for growth, employment and redistribution while improving service delivery and social provision.
Restructuring receipts over the past five years have brought in R8-billion. Estimates of the value of state-owned assets available for restructuring are around R160-billion. An earlier study by the Department of Finance showed that restructuring could earn about R15-billion in a year. This could have an influence on South Africa’s budget deficit, total debt and interest rates.
“The consensus at the meeting was: we must now urgently turn things around, unlock value in our economy, accelerate growth and demonstrate improved service delivery,” said a government official.
Mbeki is reported to have set a two-and- a-half year deadline for progress on service delivery and job creation.
The meeting – a special policy session of the interministerial Cabinet committee on the restructuring of state assets – was attended by Mbeki, Deputy President Jacob Zuma, Minister of Finance Trevor Manuel and their top officials. Minister of Trade and Industry Alec Erwin was represented by Alistair Ruiters.
Minister of Public Enterprises Jeff Radebe was also present, as were several other ministers, including Ivy Matsepe-Casaburri (posts, telecommunications and broadcasting), Membathisi Mdladlana (labour), Phumzile Mlambo-Ncguka (mineral and energy affairs), Stella Sigcau (public works), Abdullah Omar (transport), and Ronnie Kasrils (water affairs and forestry).