The announcement last week by the African National Congress that privatisation of parts of Eskom and Transnet will not go ahead, at least not in the foreseeable future, is a sensible change of heart and a subtle concession of defeat on a range of fronts. Yet it presents a new set of challenges.
Loath as it may be to admit it, the ANC has grudgingly accepted that private sector participation is not a guarantee of better service. Its hand has also been forced by factors such as depressed markets in sectors where it had hoped to flog assets. The sale of state assets since 1997 is estimated to have realised about R35-billion, with R25-billion accruing to the Treasury.
The most compelling reason to rethink privatisation is that the need for proceeds is no longer pressing. Treasury’s stated policy has been to use proceeds from privatisation to reduce debt — an exercise that has been successful.
Another consideration is that large privatisation projects have failed to drive empowerment at ownership level. Telkom has a paltry holding from the Khulisa discount share scheme. It also has a 3% stake from Ucingo, deemed by commentators to be an ”afterthought”, and which would be under threat but for Telkom’s spectacular share price performance.
The ANC now insists that parastatals must lead by example in creating jobs. But that presents two posers. First, it leaves unresolved controversial plans to concession ports to private operators. If privatisation is off, is concessioning still on? The government lost the last round to labour and deferred the issue by 18 months. Concessioning raises the second: How does one balance the drive for improved parastatal efficiency with creating jobs? There is no point in letting 15 people do a job that 12 can do.
The best contribution restructuring of the state sector can make is to drive empowerment through procurement, strive for improved efficiency, contain price increases of services and use the optimum number of employees required.