ANC document says parastatal model is on its last legs

The ANC will explore ways of surrendering unused state-owned entity infrastructure to the private sector, according to a draft economic policy document by the governing party.

The document — which was drafted ahead of the ANC’s policy conference later this year and has been seen by the Mail & Guardian — goes on to suggest that the current model for South Africa’s ailing state-owned entities (SOEs) is dying, effectively passing the ball to the private sector.

State-owned entities, the document notes, “play a critical role in providing an economic or infrastructure need that the private sector is not able to deliver”. However, many have been gutted by years of neglect, state capture and poor corporate governance.

The document poses certain key questions regarding the future of the country’s state-owned entities — including which should be retained, consolidated or repositioned. It also asks whether there is a need for a new or hybrid model for state-owned entities.

“What is clear is that the current model is dying. If we want to save those SOEs and those workers’ jobs, then we need concrete plans that are based on the realities of the economy and the needs of workers,” the document reads.

“The era of bail-outs for SOEs is over.  It is not sustainable. Workers whose jobs are at risk must be reskilled and redeployed to where vacancies exist.” 

The document does not mark a significant departure from privatisation policies previously pursued by the ANC-led government.

In 2000, the government seemed to be dead set on privatising the country’s state-owned assets by 2004. At the time, the country’s “big four” parastatals — Eskom, Telkom, Denel and Transnet — were in the government’s crosshairs. Telkom was listed on the JSE in 2003 and government reduced its share in the company to 39%.

More recently, the government chose to relinquish its majority stakeholding in SAA, after it became the first parastatal to go into business rescue. The Government has also forged ahead with the restructuring of Transnet and Eskom. The unbundling of the latter entity is expected to be completed by the end of 2022. 

The policy document underlines the ANC’s efforts to broaden the private sector’s share in the country’s economy, a position that has been at the centre of President Cyril Ramaphosa’s recent public pronouncements.

In his State of the Nation address, the president was at pains to emphasise the strategic importance of the private sector in lifting the country’s economy out of the Covid-induced slump, famously declaring: “Government does not create jobs, business creates jobs”.

The ANC policy document suggests that the private sector must be leaned on to fund much-needed infrastructure, making investments that “reflect its share of the economy”.

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Sarah Smit
Sarah Smit
Sarah Smit is a general news reporter at the Mail & Guardian. She covers topics relating to labour, corruption and the law.

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