Government chose chaos and collapse over privatisation – but will end up there anyway
South Africa’s key industries are increasingly turning to the private sector to try and restore some semblance of functionality.
However, this cannot be called privatisation, says Intellidex chair Stuart Theobald, because state assets are not exchanging hands and being sold off to private companies.
Instead, the government has stuck to its ideology of state control and monopolies, which has resulted in a chaotic and unmanaged exit from industries like logistics, infrastructure and power production through mismanagement and collapse.
“Privatisation would, in retrospect, have generated far more value for the state while the assets it operated were still worth something,” Theobald said.
“This exit might have happened much sooner, but the government has been content to continue pumping funding into the unprofitable businesses, despite the damage done to the national balance sheet in the process.”
According to Theobald, it is unclear how many of South Africa’s 700 or so state-run companies are functioning – but of those assessed by the Auditor-General, only two came out with a clean audit.
The collapse of SOEs over the last decade has been evident, with Eskom and Transnet being the poster children for critical state failure.
Increasingly, both these companies and the sectors they operate in are falling into private hands – with the government itself pushing for greater private sector involvement.
But other sectors are also in the same boat.
The Post Office has collapsed and has been put into business rescue, and the SABC is on its way down the same path.
SAA has had a long history of abject failure, needing billions of rands of government bailouts over the last decade, and only recently re-emerging with any prospect of proper functioning.
In all these cases, the private sector has managed to keep services going. Couriers, although stepping on the SAPO’s toes, have ensured deliveries can actually happen in South Africa – while the SABC is only one of many broadcasters operating in the country.
South Africa’s local airline industry has also managed well enough without SAA – and state-run Mango’s ongoing absence in the sector has hardly made headlines as the government dithers on its future.
Theobald stressed, however, that the change – from public to private – has not been one of ideology in government but rather one of necessity. It was not a planned exit; it had to happen to save the economy.
“If the government did not close the taps, the whole state would have ended up in default, resulting in a crisis that would have handed sovereignty to our lenders,” he said.
However, the state’s chosen path – the chaotic and unmanaged collapse of various industries – has come at a significant cost, especially to social services. Near-permanent load shedding, crumbling infrastructure, and all the social ills that accompany them are the consequences.
Regardless, the analyst said the end result will be the same and benefit South Africa.
“The result (of state-run to private) is an economy with the potential to be far more competitive than ever before…In the long run, we will be better off for it,” he said.
“What we really need, though, is a government that has not ended up in this position by default and against its ideology. What we need is a government committed to making it work effectively and regulating it accordingly.”
Read: SOEs are bleeding South Africa dry – and give nothing back
Loading ...