YOU are encouraged to read RW Johnson’s excellent article ‘The slow process of dispelling ANC illusions about privatisation’ – www.politicsweb.co.za on 19th August, which brought into focus the oft repeated phrase attributed to the late Margaret Thatcher – “The trouble with socialism is that you eventually run out of other people’s money”.
Johnson probes the recent announcement by Pravin Gordham – Minister for Public Enterprises and Portia Derby, the CEO of Transnet to raise R100 billion from the private sector to be spent, we are told, to hugely expand and modernize the Durban container facility.
Another example of closing the stable door after the horse has bolted springs to mind – the ‘plan’ is to expand the Durban container handling facility from a claimed 2,9 million containers per annum to 11 million pa by 2032.
That, the duo says, requires R100 billion of investment, and follows a recent World Bank study of 351 ports worldwide which places Durban stone last and our other ports, Cape Town and Ngqura/Coega in the bottom four.
They would probably need a similar amount of spending if they too are to become competitive.
With Government debt servicing running at more than 80% of GDP (!) trying to borrow more money from overseas investors at high interest rates due to our Junk status isn’t a sensible option (!!) so the pair’s fanfare announcement that a major SOE is now going to do us all a favour by allowing the private sector to invest in the country’s infrastructure seems laughable.
Especially as no mention has been made of an equity stake or private sector management intervention in return for this mammoth investment; in fact quite the opposite if the statement from Transnet chairman Popo Molefe is to be believed that the State will “continue to own the assets” and presumably continue to (miss)manage them. So with no sell off in sight, what investor in their right mind would put billions of shareholders money into such a dodgy deal? And is there that much of surplus cash floating around anyway?
As Margaret Thatcher found out in the 1980’s when trying to privatise the UK’s loss making SOE’s, there was no appetite for investment in such entities while the management and union stranglehold remained in place: in fact the very elements that had caused the decline in first place. Sounds familiar?
Thatcher had the guts, courage and determination to take on the unions and eventually after many bloody battles, managed to knock these institutions into a shape that was attractive for the private sector to invest and manage, although it must be said, not always in the public’s interest.
While Transnet management, the DOE, and COSATU continue to follow failed socialist dogma, this will not happen here, so where is the money to come from in fulfilling Ramaphosa’s grand plan of putting the country back to work through a R500-billion infrastructure spend?
More dodgy deals like the highly suspect SAA ‘privatisation’ using PIC pension monies and IDC shady investments no doubt.
Eish.
