Jaspreet Kindra
A SECOND LOOK
Should a developing state lose strategic control of assets that provide basic services? Debates are raging within the government and the tripartite?alliance over whether the state will be able to fulfil its social and?developmental obligations once privatisation takes hold.?
This debate has been rekindled with the expected market entry of the first of the parastatals earmarked for listing the partially?privatised Telkom.?
A year ago it was not uncommon for the alliance partners the Congress of South African Trade Unions and the South African Communist Party to raise?the issue.
Now retrenchments to make parastatals project a market-friendly lean-and-mean image, coupled with the increasing unemployment that was?widely reported as a reason for the low youth turnout in the December local government elections, have forced this issue to centre stage in the?ruling party.
Aspects of the debate surfaced at a meeting of the African National Congress’s economic transformation committee at the weekend. Members of?the committee have apparently endorsed a rethink of the government’s?liberalisation policy, particularly in relation to strengthening, in the?process, the strategic role of the state.?
Concerns about the state losing control were voiced at the ANC national executive lekgotla last month. This translated into a resolution?calling for assurances that the “current restructuring of state assets?contributes substantially to the developmental and redistributive role of?the state”.
ANC secretary general Kgalema Motlanthe says the party is attempting?to “reprioritise” the government’s approach to its conservative?macroeconomic policy and the party’s leadership maintains it is not ditching its commitment to privatise. But there clearly seems to be an attempt within the party to strike a bargain with those who insist that?the privatisation and economic liberalisation process bring social?benefits.
The question party members are asking themselves is: “Should we give up our strategic hold over state assets when we are only six years old as?a democracy when the majority of the population that has historically been?deprived of basic services such as transport and communication remains cut off from the economic mainstream?”?
Another recent example of the revival of this line of thought is the SACP’s initiative to make banking services accessible to?the entire community.
The socialist character of such an attempt has led many observers to pronounce that the ANC’s approach to its economic policy has shifted to the left. But as an ANC member put it, the party is actually reverting to its “pro-poor” roots prescribed in the Freedom Charter.
Besides the debate on the highly emotional job losses issue, some Cabinet members at the ANC lekgotla apparently also voiced concerns that their adoption of economic reforms promoted by the International Monetary Fund (IMF) and the World Bank has not resulted in any benefits for the country’s economic development particularly in the form of substantial foreign direct investment, which has failed to materialise.
This stand has apparently been endorsed by the Cabinet lekgotla held the following week: Minister of Posts, Telecommunications and Broadcasting Ivy Matsepe-Casaburri announced at?the weekend that the Cabinet is settling for “managed liberalisation”.?
The SACP’s central committee this week also tried to contextualise the debate in light of the current rethink on the “one size fits all” approach to economic reforms prescribed in the Washington Consensus a formula devised?for the developing world in the 1980s by the World Bank, the IMF and?United States economic officials. The consensus prescribed fiscal discipline,?tax reform, trade liberalisation, privatisation of state enterprises and deregulation, among a host of other measures, to turn economies around.
The SACP said that, while it appreciated the need for countries to implement the Washington Consensus, it supported the current debate on the consensus’s?features within international financial institutions such as the World Bank?and the IMF.
The two institutions have expressed concern about the widening gap between rich and poor despite the widespread implementation of economic reforms.
But the major concern raised by sources in labour and the SACP is whether the ruling party will be able to come up with a comprehensive and coherent plan to address concerns over how the state should approach its role in a developing economy.
Here sources cite the Department of Communications’s failure to come up with its list of strategic objectives in restructuring Telkom.
For example, the department has failed to explain how it intends to reconcile its social obligations expanding its network into the rural areas with the interests of its multinational partners, SMS Communications and Telkom Malaysia, which own 30% of the parastatal.
According to sources, Matsepe-Casaburri met with the Telkom board for the first time in January this year.
The SACP central committee cited Telkom as an example of a lack of clarity around the strategic objectives of some proposed restructuring.
This lack of communication between the board and the department, labour feels, was the reason for a recent fracas when the parastatal’s management was forcing through the retrenchment of 700 Telkom workers at Christmas last year.
Minister of Public Enterprises Jeff Radebe, who sees himself as a go-between between labour and the state-owned assets in line for restructuring electricity utility Eskom, transport utility Transnet, arms manufacturer Denel, and Telkom was forced to intervene.
The department submitted supporting affidavits in the Communication Workers’ Union’s (CWU) urgent application in the Labour Court for an interdict to stop Telkom from retrenching workers.
The department, however, maintained that the affidavits did not support Telkom or the union, but merely endorsed the existence of the national framework agreement, a forum set up in 1996 to facilitate debate between labour, the government and the state-owned enterprises on restructuring.
Labour sources maintain that the Cabinet is split over the social role that has been envisaged for the state by “progressive” ministers such as Radebe. They say President Thabo Mbeki’s recent letter to the Department of Public Enterprises questioning its stance on the Telkom workers’ issue is a sign of?dissent within the government over the state’s approach to restructuring.
Interestingly, there has been strong speculation about the imminent departure of Minister of Finance Trevor Manuel for a position overseas. The suggestion apparently stems from the likelihood that it is going to get increasingly difficult for him to maintain fiscal discipline amid increasing unemployment. If the rumours are true, it is a sure indication that the government is coming under emotional pressure not to push a retrenchment agenda while pursuing economic reforms.
Some in the labour sector are not happy about the mediating role that?Radebe’s department has identified for itself. As in the Telkom saga, their?unhappiness is based on whether they should have faith in the assurances?by the department that the communications sector is earmarked for growth?and retrenched workers will be absorbed by the entry of competition when Telkom’s monopoly ends next year or in 2003.
CWU deputy president Karthi Pillay refers to the R2,3-million spent on human resources development in which more than 18 000 unskilled black?workers received training as single-line fitters by Telkom. He says many of?these newly trained workers are among those who have been retrenched by Telkom or are in the process of being fired.
On the other hand, there is a feeling within the government that the unions are adopting a more “unreasonable stance” as the older leadership has been replaced with a more radical one.?
While eyebrows are being raised over Radebe’s role, it should come as no?surprise. Radebe’s department has from the outset been explicit on the role of the government in its vision for restructuring. The department’s vision for?restructuring identifies a complementary role for the state and market in?a mixed economy scenario. It cites China’s example in which the state still plays a strong developmental role while adapting to the global?economy.
Radebe’s department’s policy document says it needs to restructure corporations to get rid of their unsustainable debt burdens, streamline structures,?attract foreign direct investment and upgrade technology. But at the same?time, it underlines the social benefits that are expected from the?restructuring plan.
Sources close to the government rebut claims of a split over the vision produced by a “communist” minister (Radebe is an SACP member), pointing to the fact that the plan received the entire Cabinet’s endorsement at its lekgotla in 1999.?
At this stage, the ANC’s plans for “reprioritisation” of its macroeconomic?policy remain unclear and, therefore, it is difficult to predict how it will?shape up.
It would appear that Radebe, on whom rests the pressure of demonstrating the government’s commitment to restructuring and privatisation, is feeling his way with the government, with the party following closely.?
Radebe, the government and the ANC face the same question as that reflected in the World Bank’s Development Report 2000/2001: why has the gap between rich and poor widened, despite widespread implementation of economic reforms?
There is no certainty about the answer.