Privatisation of SOEs is key to growing our economy 

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Photo: Xinhua

The time has come for the privatisation of State-Owned Entities (SOEs), whether in part, fully or in partnership with the private sector. Government has proven over the past two decades that it is unable to manage SOEs efficiently.

It will come as no surprise when I say that SOEs have become cash cows for a select few, and have sapped billions of Rands in government resources.

The recent revelation from Finance Minister Tito Mboweni, in response to a written parliamentary question, further drives this point home. He disclosed that the government has spent a shocking R187.4 billion on bailouts for state-owned entities over the last 20 years, from 2000/01 to 2019/20.

The political interest in SOEs is obvious, due to the fact that they provide services that are core to the wellbeing of the country, its people, and its economy, but the government has to stop making purely political appointments.

The apex issue is government involvement and, in particular, “political’ meddling in the process of appointing not only Boards but the management teams of our SOEs.

It was a good step to corporatise Eskom, thanks to Minister Tito Mboweni’s reluctance to kowtow to political interference by his own political home. However, the shareholder (the state) must then be hands-off after making the right leadership appointments and allow them to do their work without political pressure. This is not only an Eskom-issue; there is an SOE-wide chronic leadership vacuum.

The responsibility to lead SOEs must come from the industries themselves and they need leaders with tremendous tenacity and depth of experience in their respective fields.

If we continue to ignore the expertise and the voices that are eager to change the state of our SOEs, government is simply saying to South Africans that they must continue to pay up, as taxes rise and state income declines.

The recent news of South Africa possibly slipping into a technical recession and the country having over 51% of our GDP wiped off, did not come as any surprise.  It is sadly indicative of what is yet to come with regards to our credit rating and the management of the fiscus.

As the IFP we know that we can grow our economy and develop the local market.  We need to place our resources and strengthen our efforts in building capacity in the hands of the people who reside in our townships, and in our rural areas. If we are to turn around SOEs, legislation must change with regard to the supply chain management processes.

Oversight mechanisms must be more than just a rubber stamp. We can no longer afford for “oversight” to be just another buzzword to cushion corruption.

Partnerships are not only the responsibility of the private sector. If we are to improve, and grow our economy, we need to partner and develop small, micro and medium enterprises using our own resources and universities. Then we can open up the space for new entrants to stimulate the market and to compete with and improve our SOEs.

According to a nationwide survey conducted on entrepreneurship, results indicate that entrepreneurship education in South Africa is in its developmental stage. However, it is perceived as important in elevating the profile of any institution, and there is increasing commitment from institutions in academic, research and outreach to offerings in entrepreneurship.

Innovation through the creation of new companies and new business areas are seen as key factors to achieve economic goals at the local, regional, and national level.

A restricting factor is the availability of competent individuals to manage projects and become entrepreneurs. Universities can address this need by increasing the motivation and competence of their graduates to become key persons in innovative and entrepreneurial activity.

We need not look further afield when we have already invested millions in our research institutions, and we can look to them to provide credible, costed solutions, which may assist the state in moving out of the economic slump we are currently in.

Furthermore, the IFP firmly believes that the development of our local economy will impact more lives and lift more people out of despair. However, we cannot do this alone. As the state, our focus must be on partnering with the private sector and in so doing, work to attract foreign direct investment.

No longer should South Africans view the private sector as a wholesale sell-off of our identity and political values as a country – but rather, see the private sector as a partner in our prosperity.

The hard truth is in fact that economic salvation promised by political freedom three decades ago has not materialised. This, despite all the promises, all the talk-shops and all the resources, which have been dumped into the hands of the few and not the many.

It is therefore high time that government pulls the plug on any further spending on crumbling SOEs, and invests our scarce resources where they will have the biggest impact – in the hands of the people who reside in our townships, and in our rural areas.

Velenkosini Hlabisa, MPL, is the IFP President and the Leader of the Official Opposition in the KwaZulu-Natal Provincial Legislature.