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South
Africa |
ECONOMY
Privatisation of state-run enterprises is taking place in many African
countries.
How’s it going in South Africa?
Privatisation is an abusive term in some circles, and the pronouncements made on the subject by cabinet ministers and government officials in South Africa, sometimes sounds like a riddle. They have introduced a whole new language code to describe the sale of certain state assets. Say anything, but don’t mention privatisation. This seems to be the basic if unstated approach.
The term, «privatisation», appears to have become something of a nasty word for the ANC-dominated government. It seems to have become almost as tainted as «apartheid». The Government prefers to talk about the «restructuring of state assets». Dialogue of this kind is presumably meant to pacify the Congress of South African Trade Unions (COSATU), the powerful labour movement and an important part of the ANC constituency.
But it’s not just COSATU unions who are objecting, although, as partners in the governing alliance, they constitute a case apart as they alone are invited to the proverbial smoke-filled rooms of the halls of power.
Union influence
The entire union movement has come together as an equal partner with business and the government, in fora such as the National Economic Development and Labour Council (NEDLAC). Business represents the interests of the generally affluent minority (those offering employment), most of whom were historically wary, if not downright hostile, to the ANC-led government. The unions represent the interests of the employees and the vast army of mainly unemployed dependants.
As COSATU‘s general secretary, Zwelinzima Vavi, is only too keen to point out, those with jobs are also the country’s «unofficial social security net». The COSATU unions gave money, time and human resources to the ANC election campaign on the basis of an understanding that government policies would favour «working class interests».
Moloto Mathapo, a COSATU spokesman, stresses the importance of the ANC to the South African working class and the need for COSATU to influence the ruling party’s policy directives. «There is no political formation in our country that understands the working class the way the ANC does. Strengthening the alliance with the ANC, is an essential part of the struggle».
Deepening schism over privatisation
But privatisation is at the heart of the ANC-led government’s strategy to meet the demands of the modern global economy. Its key allies remain sceptical. The deepening schism over privatisation can be traced to the government’s Growth Employment and Redistribution (GEAR) strategy, a neo-liberal, market-friendly economic policy that is akin to a self-imposed, home-brewed version of a World Bank structural adjustment. Adopted in 1996, GEAR advocates a tight monetary policy and a stringent fiscal policy, the restructuring of state-owned assets and the public service, job creation and effective service delivery, particularly to the poor.
Iraj Abedian, Chief Economist with Standard Bank (South Africa) and a co-author of GEAR, says COSATU‘s opposition to privatisation does not mean the policy is wrong. «COSATU is one of the many stakeholders in the economy and it may be justified in its protest. Every modern economy from time to time has to deal with industrial relations issues. That does not mean that the economy is collapsing. If German workers go on strike does it mean that the German economy is collapsing?»
Leslie Maasdorp, head of restructuring at the Department of Public Enterprises, says an extensive process of consultation took place before the government’s policy framework was adopted. He says: «If COSATU was unhappy, its leaders should have raised their concerns during the consultation process.» Before GEAR, the government advocated the Reconstruction and Development Programme (RDP) a people-centred policy similar to the Marshall Plan. The RDP was adopted by the alliance before the first democratic elections in 1994.
However, the policy was ditched under mysterious circumstances, though the alliance partners had viewed it as an extension of the venerable Freedom Charter.
Economic benefits of privatisation
Proponents of privatisation argue that its economic benefits include improved efficiency and productivity. They say it will help reduce the State’s debt, as well as unlock wealth and promote economic growth, especially because empowerment groups may benefit from the exercise. Both the South African Communist Party and COSATU dismiss the claim that empowerment groups stand to gain from privatization, or that they will help deracialise the South Africa economy. «The private sector, even if it includes black capitalists, is only interested in making huge profits, it is not elected by anyone and accounts to no one», says one South African Communist Party member, Temba Mapeseko.
COSATU‘s antipathy to privatisation is not new. In 1990, about two months after South Africa was set on course to democracy, the Congress threatened to march to the Johannesburg Stock Exchange if the apartheid regime proceeded with privatisation. One of its concerns was that an ANC-led government would stand to inherit very little in the form of public assets if they were privatised.
Mbeki’s government determined to privatise
Despite these long-standing differences, the Mbeki government has remained steadfast in its resolve to privatise. Last August it released a blueprint entitled: «An Accelerated Agenda Towards the Restructuring of State-Owned Assets», which spells out the processes of privatisation.
But COSATU‘s research wing and policy making think tank, the National Labour and Economic Development Institute (NALEDI), and the Independent Federation of Unions of South Africa (FEDUSA), responded by releasing their alternatives to the government’s guidelines. NALEDI‘s proposals include the establishment of a single national electricity distributor instead of the six regional distribution companies the government has suggested.
It also calls for a halt to the privatisation of basic essential services, such as water, health and education services. It favours competition in the telecommunication sector at the top of the market. FEDUSA‘s report, on the other hand, says that blaming privatisation for escalating job losses «amounts to oversimplification of the issues.»
The federation calls on the government to be transparent when dealing with crucial economic policy issues such as privatisation. «Government should be transparent in addressing its social objectives such as social welfare plans, job creation price subsidies, optimising of public goods and empowerment,» says Denis George, assistant general secretary of FEDUSA.
For the majority of South Africans, especially those who voted for the ruling party, its only a state determined to develop the country that will fulfil their expectations for a decent standard of living. However, the problem in South Africa is that the bulk of proceeds from privatisation will go towards servicing the apartheid debt, instead of improving and expanding social service delivery and economic development initiatives.
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