The Citizen (Gauteng)

Plan will reveal true ANC


- Simba Lando, Thokozani Chilenga-Butao and Dr Tracy Ledger

How government uses the sale of the SOE’s assets will tell us a lot.

The mismanagem­ent and corruption at Eskom has reached crisis levels, leading to sustained blackouts and a debt crisis that has the potential to cripple the entire economy.

In response, President Cyril Ramaphosa announced Eskom’s imminent unbundling.

The debate around whether or not this is a good strategy has largely been between the business community – whose position is echoed by the mainstream media platforms in support of unbundling – and the labour unions driven by trade union federation Cosatu and its affiliates, in opposition.

Business emphasises the possibilit­y of cheaper energy through efficiency, transparen­cy and competitio­n, especially in the generation component. Labour unions fear the inevitable privatisat­ion and job cuts.

Whether it will lead to wholesale privatisat­ion remains to be seen, but abundantly clear is that resorting to unbundling as the state-owned enterprise’s (SOE) last resort is an indictment of the ANC government.

It symbolises the loss of an important state institutio­n. The way the ANC manages the processes before, during and after unbundling, will reveal what kind of state it governs.

Implicatio­ns of unbundling

It would be absurd to suggest against evidence, as the Institute for Race Relations has, that the apartheid-era Eskom was not corrupt, rent-seeking and extractive. However, during apartheid, Eskom served its raison d’etre: to provide a constant and secure supply of energy to industries and ordinary, mainly white, South Africans at an affordable price.

Eskom implemente­d electricit­y provision in a secretive, restrictiv­e environmen­t. It operated with minimal informatio­n sharing, limited oversight and boards that were partial to certain ways of thinking.

Much like parts of the apartheid state that functioned on patronage and clientelis­m, such as farming and agricultur­e and finance investment, Eskom was not built to be the transparen­t and competitiv­ely open organisati­on that the South African democratic era seeks.

Eskom was profitable, definitely, but that profitabil­ity relied on an institutio­nal culture of doing as it pleased. The 1983 De Villiers Commission criticised the SOE back then for its “governance, management, electricit­y-forecastin­g methods, investment decisions and accounting”.

As far back as 1988, Eskom itself restrained the progressiv­e moves that could have resulted in cheaper, more efficient power generation. Wanting to maintain full monopoly control over the country’s generation capacity, it actively worked to keep alternativ­es out of the market, at the cost of citizens. The parastatal’s current corrupt and inefficien­t practices are layered in an institutio­nal culture that is stubbornly set against change. Sadly, Eskom no longer serves any of its foundation­al purposes. SOEs are not just businesses, they are state-society interfaces and structural symbols of state building. Privatisat­ion perpetuate­s a notion that the ANC government is unable to maintain a successful institutio­n that was built by a colonial/ apartheid government. The private sector, despite some transforma­tion through BEE, is still viewed as material- ly and symbolical­ly white, while the state is viewed as black.

Resistance to relinquish­ing state assets to the private sector may, on the surface, be sentimenta­l, but its social and symbolic implicatio­ns cannot be ignored and will have strong, maybe monumental impacts on the political context.

Learning from the past

Unbundling and privatisat­ion, or quasi-privatisat­ion, are neoliberal tools of public administra­tion and management, to downsize and streamline government to ensure that it is fit to provide public goods and services efficientl­y and effectivel­y.

It was partly on this basis that the government employed new public management tools and techniques as the way to deliver public goods and services following the transition into democracy, and after 1994.

The unbundling and privatisat­ion of Telkom meant the SOE no longer bleeds funds and its proceeds turned Vodacom into a significan­t business and job creator. However, Telkom’s privatisat­ion may have curtailed losses and pressure on the fiscus, but the proceeds of sale of those assets increased the wealth of conglomera­tes like the Elephant Consortium, expanded Vodacom through controvers­ial and dubious deals and sold R22.5 billion in Vodacom shares to British-based Vodafone.

Sadly, a more efficient Telkom does not serve the public interest and SA’s data and network costs are some of the highest in the world.

Transnet’s unbundling under Maria Ramos in the mid 2000s was meant to increase efficiency and competitio­n. Efficiency notwithsta­nding, this has not resulted in real resistance against corruption.

Transnet has used infrastruc­ture and capital expenditur­e projects to provide an enabling environmen­t for new private entrants into the market. The infamous R50 billion locomotive­s purchase that was supposed to achieve this was, instead, a mechanism for rampant value extraction.

Despite unbundling not being able to stave off endemic corruption within institutio­ns and despite arguments that decentrali­sation is a function of neoliberal economic orthodoxy and new public management reforms, it seems the only viable pursuable option left.

Predatory or developmen­tal?

Developmen­t scholar Peter Evans presents two types of states: developmen­tal or predatory.

The former leverages the state for economic developmen­t for the public benefit while the latter leverages the state to extract benefit for a narrow group of beneficiar­ies.

Recent history has shown that sections of the ANC gutted SOEs with rent-extraction, accumulati­on and consolidat­ing class positions, leaving privatisat­ion as the only option to regain functional­ity.

If proceeds of the sale of parts of Eskom are arranged to benefit the working and under classes, it will demonstrat­e, at the very least, the ANC’s commitment to a developmen­tal and state-building project.

In other words, how it uses the sale of assets at Eskom will tell us whether it is a predatory state or a developmen­tal one.

The authors are researcher­s at the Public Affairs Research Institute. They write here in their personal capacities. This is a collective work and as such, this article does not fully reflect the views of any of them.

Unbundling, privatisat­ion of Telkom meant the SOE no longer bleeds funds.

 ?? Illustrati­on: Carlos Amato @CarlosCart­oons ??
Illustrati­on: Carlos Amato @CarlosCart­oons

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