Trade and Industry

Saturday, 15 June 2002

Debating Privatisation of Network Utilities in South Africa: Theories, Fables, Facts, Other

  • Year: 2002
  • Organisation: TIPS; UCT
  • Author(s): Melvin Ayogu
  • Countries and Regions: South Africa

The government of South Africa comes across clear in enunciating its goals for the reform of public enterprises. According to the Minister of Public Enterprises, “restructuring” is the generic term taken to represent the set of strategies employed by the state to ensure that public enterprises in South Africa are “efficient, effective, and powerful engines of socio-economic development…. Restructuring aims to maximise the contribution that these state assets can make to development through the integration of public, private and social capital and expertise.” (RSA 2001a, 1) In its vision for restructuring, the government declares:

Development cannot be measured only by financial criteria, and restructuring is not a means of improving government finances and enterprise efficiency at the expense of the poor. Rather, the success of restructuring will be measured by its contribution to improving the standard of living of the majority of the population. The goal of restructuring should therefore be sustainable economic and social benefits. (RSA 2000a, 14)

The post-apartheid government of South Africa inherited over 300 state-owned enterprises (SOEs), with four of the firms accounting for 86% of aggregate turnover, 94% of total income, 77% of all employment, and 91% of the total assets of these
enterprises. These “key enterprises,” as they are collectively described in the government's Policy Framework Paper, are in telecommunications (Telkom), energy (Eskom), transportation (Transnet), and defence (Denel). None of these firms are slated for outright privatisation in the near future. The debate is joined around the wisdom of the government's model of reform, its so-called “matrix of options.”