The South African Federation of Trade Unions is concerned at a report in Business Times, 30 July 2917, based on interviews with “an insider” at the Treasury, that officials are considering “some outright asset sales and partial privatisation of some State-Owned Enterprises”.
This arises from “the Treasury’s growing desperation to avoid further descent into growth-crippling ‘junk’ status – amid falling revenues, rising expenditure and ballooning debt obligations centred around state-owned companies such as Eskom”.
The “insider” hinted that their motive for this backdoor privatization, which he camouflaged by calling it “liquidating some of the government listed holdings”, is “to avoid a down-grade again. With about 700 state-owned companies and controlling stakes in listed entities such as Telkom – making up about 30% of the economy – the Treasury has no choice but to look at reducing the state’s role and creating room for further private sector involvement”.
The specific measures suggested include the sale of the government’s 40% stake in Telkom and getting the Industrial Development Corporation (IDC) to sell some of its stakes in Kumba Iron Ore, Sasol and BHP Billiton. The government has already sold its remaining 13.91% stake worth R23-billion in Vodacom.
Other SOEs being mentioned are Denel, Armscor and the Nuclear Energy Corporation of South Africa. Selling parts of Eskom and the SABC have also allegedly been considered, though the public broadcaster has already been partially privatized through the 2013 deal in which the SABC sold its archives to MultiChoice for about R500-million.
SAFTU demands that Finance Minister, Malusi Gigaba, one of those ANC leaders who likes to talk about “radical economic transformation”, immediately denies these reports that his officials are seriously considering policies that would be the exact opposite of what he is demagogically calling for.
Even the ANC’s existing policies do not include privatization and efforts by President Mbeki to implement it floundered under the weight of opposition from workers and consumers. So there is no way the minister could conceivably reconcile such measures with either ANC policy or his own rhetoric about transformation.
SAFTU knows that most SOEs are in deep crisis, and this may make the idea of privatization appear more reasonable, but the responsibility for this crisis is not because they are in public ownership, but because those in charge of these public assets have adopted all the worst features of capitalism – profiteering, corruption, looting and mismanagement.
Privatisation will do nothing to solve these problems and will in the long-run lead to an even bigger crisis, as the new private owners will be motivated purely by the need to maximize their profits. Inevitably jobs will be shed, prices for consumers will rise and service will deteriorate. You only have two look at the crisis in South Africa’s privately owned mining industry to see that privatization is not the answer.
And corruption will continue unabated because it has never been confined to public enterprises, as the new revelations in the Gupta emails has already exposed, with a growing number of big private companies being implicated in collusion with corrupt SOE executives.
The answer to the crisis must be centered on rooting out corruption across the board and reforming the public sector, so that the SOEs really do belong to the people by being placed under democratic control by the workers, communities and society at large. Officials must be answerable to elected boards and subject to recall if they veer from their mandate.
This will also require that key industrial and financial monopoly industries are nationalized, also under workers’ control, so that the economy as a whole is run for the benefit of all South Africans, as envisaged in the Freedom Charter and not for the profits of a tiny elite.