To privatise or not to privatise? That is the question

If you’re a unionist you’d most likely prefer state ownership as that could translate to better stakeholder management dynamics where your members are concerned, having the government as the employer.

A capitalist would most likely choose privatisation becausethe opening up of a government function has the potential of more benefits for private players.

The aim here is not to argue whether privatisation is good or bad. Instead let us consider how as a country we can come to a determination that privatisation is or is not the solution.

The topic of privatisation is always preceded by a discussion on the failure of state-owned companies to perform at optimum levels. Take for instance Eskom. Many people have been calling for itsprivatisation because of mismanagement, corruption and delivery inefficiencies. Is that a legitimate reason for privatisation? Privatisation on those grounds alone would make almost all government companies candidates for privatisation, especially most municipalities.

When we call for privatisation because there is mismanagement or corruption we create an environment where there’s no accountability. We do not fix government problems by shifting them to private hands.

Part of the solution could be political leadership and oversight adjustments and hiring suitable management teams and giving them the resources they need.

We should have privatisation guidelines that we can follow to make sound decisions about privatisation. These guidelines would look carefully atthe country’s security and integrity. For example, no matter how our defense department fails we simply cannot privatise it with the hope that private players would make it work. The strategic importance of the government unit will need to be assessed. What would happen if local buyers sell this strategic asset to international players and leave the country weakened in that area?

The guidelines need to probe if part of the problem in government entities is specialised skills and how to rope them in.

For government to secure financial resources, we could always use some of the interest from investments managed by the Public Investment Corporation.

It could also be that government processes and policies are the ones making it difficult for the government entity to deliver service. That ought to be looked into and changed where possible through changing legislation.

These guidelines could assist in identifying whether or not the private sector has the capacity to manage the vacuum that the government entity would be creating.We need more tools to assess private capital’s readiness to lead in some sectors.

The private sector in many cases has shown it cannot self-correct and requires the intervention of regulators to bring balance and fairness. Consequently, I take the view that we cannot blindly privatise without satisfying ourselves that it is the only logical direction to take on a case-by-case basis at that specific point in time.

We deserve a well thought-out process that will guide us on future decisions on privatisation.