It's time to name the day

THE GOVERNMENT IS still flirting with privatisation. The release of the long-awaited policy framework in early August continued the tease. Minister of public enterprises Jeff Radebe reiterated that it would sell state assets raising R40 billion by 2003-2004, but despite his promise to Parliament in April, he failed to name the dates.

Some have suggested that the commitment to dates and deadlines would have created difficulties for the ANC with its alliance partners on the eve of the local government elections. There may be truth in this, but the reluctance goes deeper than that. The longer the "engagement" goes on, the weaker the real commitment to privatisation of state-owned assets (SOEs), such as Telkom, SAA, Transnet, Eskom, is shown to be. According to the policy framework, privatisation is just one element of the chosen route of "restructuring". Although it sets out the potential economic rewards of privatisation, it also emphasises that many benefits in the form of provision of services to the poor can accrue in the corporatisation phase before full privatisation, when the state retains a controlling share in the enterprise.

This is the core of the matter. The role of restructuring, as the department has repeatedly said, is to unlock shareholder value in both financial and social terms. How it proposes to strike the balance between social and economic policy objectives remains unclear. Once the party of nationalisation, the ANC's conversion to the virtues of privatisation is incomplete. Its ambivalence is apparent in its reluctance to relinquish control over SOEs. The policy framework is signalling to investors that they will be subjected to social developmental objectives and regulatory conditions that are yet to be defined.

A whole section is devoted to discussion of the work of academics, such as Harvard University economist Dani Rodrik and former World Bank economist Joseph Stiglitz, who emphasise the key role of the state in the global alleviation of poverty. While current development economics theory does suggest a range of available options in addition to pure privatisation South Africa simply does not have the luxury of time to explore all these alternatives to the real thing.

South Africa needs large amounts of foreign direct investment to boost growth to at least 6 per cent per annum to reduce unemployment and ultimately alleviate poverty. Currently GDP growth is falling far short of this year's projected 3 per cent: the annual report of the South African Reserve Bank shows a meagre growth rate of 1 per cent in the first quarter of 2000 and 1.5 per cent in the second quarter. This feeble performance contrasts starkly with growth rates this year in other emerging markets such as Indonesia (12.3 per cent), Thailand (6 per cent), Malaysia (19 per cent), Korea (7.4 per cent), Brazil (5 per cent), Chile (6 per cent) and Mexico (12.5 per cent) posting powerful GDP performances in the first quarter of 2000.

The Economist (July15) criticised President Mbeki for micromanaging the privatisation process and this points to the absolute minimum condition investors expect - an absence of political interference in the agenda of what should be a market-driven process. If this condition is not met investors will simply turn away from South Africa to more attractive opportunities elsewhere. The tease will go on until the government is ready to admit that it cannot raise billions from investors by selling off state assets and retain control of them at the same time.

Raenette Taljaard is a Democratic Party MP and spokesperson on public services.