Hogan can argue privatisation is policy

Public Enterprises Minister Barbara Hogan recently suggested underperforming parastatals might be sold off. The reaction was shock and dismay from the ANC and alliance partners.

But the option of divestiture, the correct technical term, has long been part of ANC government policy.

This policy is contained in the policy framework document, “An Accelerated Agenda towards the Restructuring of State Owned Enterprises”. This was published in 2000 and is still the most comprehensive policy document on parastatals.

Jeff Radebe, then the minister of public enterprises, reminded in the foreword of that document that The Reconstruction and Development Programme itself in 1994 suggested a range of actions to transform parastatals.

One of the choices for government was whether the public sector should be ” … reduced in a manner that will enhance efficiency, advance affirmative action and empower the historically disadvantaged, while ensuring the protection of both consumers and the rights and employment of workers”.

“Reduced” in that context means either privatisation or closure.

As far as I know the comprehensive policy framework of 2000 has not been officially superseded, though privatisation has been put on the backburner.

Even in the Mbeki era, the ANC was never particularly enthusiastic about divestiture. By contrast it has nationalised both water and minerals.

Actually, it would be irresponsible of the ANC government not to sell underperforming businesses when bailing them out would waste money otherwise available for other things like housing and healthcare.

It could be argued that poorly performing parastatals need to be recapitalised to be attractive enough to find a buyer.

This kind of thinking comes about because people only look at the money that has been spent on these assets over the years. But because you have spent lots of money on something, it does not mean it is valuable. Ask anyone with an iskorokoro.

Can the government continually pour money into Denel, for instance? Would it not be better to close it or sell it? I know that it employs people, but at what price those jobs?

And not every State asset is strategic. What’s strategic about the SABC when the Broadcast Act obliges all broadcasters, public and private, to do the State’s bidding? Or is strategy in this context another word for propaganda?

SABC 3, which I understand is not performing its intended role of subsidising the other public TV channels and non-commercial radio, could easily be sold off. The resulting tax revenue from a successful channel could be used to beef up the public broadcaster.

As for Hogan’s “thinking aloud”, her criticism of the government she is part of for barring the Dalai Lama from the country shows she is prepared to speak her mind.

But this is not a case of Hogan thumbing her nose at government. She can justifiably say she was just reiterating government policy.

Reg Rumney

A journalist for more than two decades, Reg Rumney has just returned from Grahamstown to Johannesburg after spending more than seven years at Rhodes University, teaching economics journalism. He is keenly interested in the role of business in society, and he founded the Mail & Guardian Investing in the Future Awards in 1990 to celebrate excellence in South African corporate social responsibility. Most recently, as executive director of BusinessMap, he was responsible for producing reports on foreign investment, black economic empowerment and privatisation, and carried out research work in Africa on issues related to the investment climate. He writes on, amon other things, foreign investment and BEE, focusing on equity transactions.

View all posts