Johannesburg - Deputy President Cyril Ramaphosa’s official trip to China this week has given perhaps the strongest indication yet that the government is seriously considering that country’s model of selling off some of its ailing state-owned enterprises (SOEs).
The visit comes as debate rages within the ANC and its alliance partners on whether the government should consider recapitalising embattled SOEs, such as Eskom, by privatising minority stakes in the companies.
Such a move would see about 30 to 40 percent sold off to private shareholders and the government retaining a majority stake.
The visit also coincides with the conclusion of the privatisation of many Chinese loss-making SOEs, particularly those involved in non-strategic sectors.
A significant part of Ramaphosa’s trip was dedicated to an assessment of how that country is running its SOEs and high-level talks with the executives of these.
Ramaphosa held talks with the chairperson of the Chinese State-owned Assets Supervision and Administration Commission and also visited some of the enterprises in Qingdao and Shenzhen.
He was accompanied by Public Enterprises Minister Lynne Brown, Deputy Finance Minister Mcebisi Jonas and executives of some South African SOEs.
But the potential privatisation of some parts of the country’s SOEs remains a divisive political issue, with the ANC’s alliance partners, the SACP and Cosatu, among the staunchest opponents of any form of privatisation of the assets.
Following its national executive committee meeting in May, ANC secretary-general Gwede Mantashe confirmed the debate within the ANC was about whether the Chinese model should be an option, though he disagreed this was privatisation.
It’s an ideological minefield, which may see the ANC resorting to using its weight in the alliance to save bleeding SOEs like Eskom, SA Airways and the SA Post Office.
The level of paralysis at these entities last year resulted in their being moved from Brown’s department to the Treasury, where Ramaphosa is overseeing their turnaround. SACP leader and Higher Education Minister Blade Nzimande was also a member of Ramaphosa’s delegation to China.
The SACP’s discussion document for its recent special national congress alluded to “the resurgence of a cautious but determined privatisation agenda of Eskom”.
“When there is not a direct privatisation agenda, there is often an agenda to milk the state-owned companies’ procurement programmes – current examples include exorbitant prices exacted corruptly from Eskom for coal and diesel supplies,” the document noted.
The party had also responded angrily to suggestions that parts of Eskom might be sold off to recapitalise the struggling utility, leading to its central committee inviting Brown to address its meeting last month. Ramaphosa was appointed by President Jacob Zuma to head the “war room” to tackle the country’s power crisis earlier this year.
The war room has been tasked with turning around Eskom and coming up with ways to solve the country’s power crisis.
It has already resulted in a shake-up of the company’s top management, which saw Tshediso Matona removed and replaced with acting chief executive Brian Molefe.
Former board chairman Zola Tsotsi was also forced to step down and was replaced by Ben Ngubane, also in an acting capacity.
SAA has had its own fair share of turbulence, with the company forced to shut down some of its loss-making routes and renegotiate contracts as government bailouts dry up.
The SA Post Office, which was hit by a lengthy strike last year, is struggling to keep afloat and is failing to pay its suppliers.
Eskom’s troubles have probably been felt the hardest, with regular load shedding affecting citizens’ daily lives and hurting the economy as the parastatal struggles to keep the lights on.
However, political economist Moeletsi Mbeki warned that Chinese SOEs were originally created to serve the Chinese people, whereas the South African ones were still based on the model created by the National Party government to serve a minority.
“They need to think carefully about that because what works in China could not necessarily work here,” said Mbeki.
He said the SACP did not have any power to stop any decision of the ANC if it decided to implement such a model.
SACP spokesman Alex Mashilo said the party’s special national congress had resolved that the SOEs had to be strengthened, and any form of privatisation would go against this resolution.
The Sunday Independent