[STATEMENT]: APF statement – 15 August 2000 – APF rejects the Ministry of Public Enterprises’ “Accelerated Agenda Towards the Restructuring of State-owned Enterprises”

The text of another APF statement from when I was a Media Officer for the Anti-Privatisation Forum (APF). I worked on it with Nicolas Dieltiens, also an APF Media Officer at the time.


C/o AIDC offices, 3rd floor, COSATU House, Braamfontein, Johannesburg, 2017


The Johannesburg Anti-Privatisation Forum (APF) notes with concerns government’s recently released policy document, Policy Framework: An Accelerated Agenda Towards the Restructuring of State-owned Enterprises, released on the 10 August 2000 by the Ministry of Public Enterprises.

The centrepiece of the document centres on the need to privatise the “big four” remaining state-owned enterprises (SOEs): Denel, Eskom, Telkom, and Transnet. This step, the document claims, will have several advantages for the public at large, namely

  • Improved efficiency in service provision due to increased competition in these sectors as a result of privatisation. In other words, it is argued that the opening up of these sectors to market forces will lead to improved products and lower prices as corporate actors compete to attract customers. This is in contrast to the inefficiency that supposedly characterises SOEs at the moment as a result of their dominant market position or monopoly nature, and reliance on unconditional government subsidies for a great part of their income.
  • Job creation in the long-term as the newly privatised companies expand and thrive under the impact of competition, as well as increased investment in human resource development as increased competitive efficiency requires the development of “social capital” i.e. the use of education and training as a competitive advantage
  • A government windfall of over R50 billion as a result of sell-offs of the SOEs, which would be available for investment in government services and economic infrastructure. This is in contrast with the supposed drain on government resources that arises from the currently non-profitable operation of the SOEs.
  • Steps will be taken to ensure that the sell-offs of the SOEs “empower” ordinary people, rather than simply benefiting a few, by ensuring access to shares and to ownership for workers and communities.

Government further promises that labour will be fully consulted on this restructuring in terms of the National Framework Agreement on State-Owned Enterprise (NFA) agreed to by COSATU. As such, the process will be democratic and consultative, bringing all stakeholders on board. This has been welcomed by labour, which has often felt marginalized by the process of restructuring.

Whilst the APF welcomes government’s decision to consult labour about restructuring, however, it cannot in any sense give support to the planned sell-offs of the SOEs.

Even if the process is consultative, the overall project of privatisation is one that is fundamentally at odds with the interests of the broad working class and poor in South Africa. Although accelerated privatisation is doubtless a form of “transformation,” it is not a form of that will benefit ordinary people. On the contrary, its effects will be overwhelmingly negative and entrench inequalities in our country. Such a result cannot be viewed without grave foreboding.

The matter is not simply one of differing ideological perspectives on the future of the country. At stake is the structure and nature of South African society in the twentieth-century.

This becomes clear when we examine government’s arguments in favour of privatisation, none of which are convincing:

  • It is simply not true that government provided services and goods are inherently inefficiently produced or of poor quality. On the contrary, international experience shows that government is the most effective provider of the basic services and infrastructure necessary to economic and social development. Goods such as electricity and telephone landlines and railway transport simply cannot be produced effectively by a free market, for the simple reason that such goods are technical monopolies that do not lend themselves to competitive operations. Crudely, consumers do not have a choice of service provider in this sector, as the technology used means that a monopoly supplier is a precondition for the effective operation of such services. The only effect of privatisation is to replace state-owned monopoly with a private monopoly.
  • This can only have a negative effect on ordinary people: whereas an SOE providing key services can be cross-subsidised by revenue generated in other government operations – thereby keeping prices low- a private company can think only of the bottom line and therefore will always be forced to raise prices of these goods above that at which they are available from government. Government’s own figures indicate a 50% increase in electricity costs will result from privatisation of this sector. In other words, the argument that privatisation will lead to more efficiency and lower prices due to increasing competition is nonsensical as these sectors do not lend themselves to competition in the first place.
  • Further, implicit in the notion of privatising such services, is the principle that goods will become provided as commodities to consumers, rather than social rights to citizens. The State abdicates its responsibility to provide goods to its entire people, regardless of their income, in favour of private companies that always operate on the basis of payment for goods and services and on the basis of profit making. The massive levels of poverty in our country mean that vast sectors of the employed and the unemployed are excluded from actually purchasing such goods or services, and, hence will not be in any way benefit from increased efficiency in service provision. On the contrary, the “free market” will eradicate the poverty and inequality inherited from apartheid capitalism.
  • The only SOE mentioned that could benefit from increased competition is Denel, the arms manufacturer. Given that Denel is a producer of fearsome weaponry designed to kill and injure people, we fail to see how ordinary people can possibly benefit from its privatisation. Such equipment costs far more than the ordinary person can afford, and, in any case, is produced at the cost of increased development. A single bullet costs in the region of R800. Given that government will continue to purchase arms Denel will continue to be an item in the Budget. Hence there are no savings in government spending in this regard. Further, given that – notwithstanding government’s commitment to shrinking the overall Budget- defence expenditures show consistent growth, spending on guns and bullets will continue to crowd out social spending on pensions hospitals etc.
  • Privatisation is invariably associated with job losses. Indeed, the restructuring of SOEs in South Africa has been an ongoing process for much of this decade and has been a major contributor to the job loss crisis in our country. This includes more than 25,000 jobs lost in Eskom and Telkom. And government’s new Policy Framework is accepts that further job losses are inevitable. Given that unemployment has assumed the proportions of a social crisis in South Africa, it is thoroughly irresponsible for government itself to instigate further job losses. Further, in accepting that job losses are inevitable in the restructuring process, government has shown bad faith with COSATU, which on May 10 2000 launched a major campaign against job loss in South Africa.
  • The claim that deregulation could actually create new, and, note this well, “quality” jobs in the privatised sectors is a leap of faith with no empirical backing. Whilst such a result may spring readily from the supply-demand curves of mainstream neo-liberal economists, it will not take place in reality. Corporate growth in South Africa and elsewhere over the last decade has been correctly characterised as “job loss growth,” in that industrial restructuring has been premised largely on increased capital intensity and on the intensification of work, leading, in the later case, to employees doing more work. In the context of static demand for goods, this leads to workers either working themselves out of a job or suffering from the enormous burden and suffering of an ever-growing workload. Where jobs have been created, these have invariably been “flexible labour” i.e. casual jobs provided through sub-contracting or labour-broking or short-term employment, typically without job security, benefits or real union rights. Such jobs trap a layer of the working class in working poverty and undermine the conditions of organised workers. To see such developments as empowerment or as evidence of consultation is simply ludicrous.
  • “Empowerment” schemes that centre on incorporating popular constituencies into co-ownership of the privatised SOEs cannot “empower” any but a small elite. Ordinary working and poor people will be excluded from such ownership, and, further, such ownership will not any way ameliorate the overall negative effects of privatisation. What it will do is fiddle with the composition of the rich who will make profit from such restructured entities at the cost of social development, jobs and working conditions.

In short, we reject unequivocally the planned sell-off of State assets as against the interests of the broad working class. It will lead to massive job losses, deteriorating working conditions, and fail to deliver the goods to the broad mass of the South African population. At issue here is not the process of restructuring SOEs, but the very principle of doing so.

We reaffirm instead that it is government’s duty to provide infrastructure and basic services to the broad working class and poor in order to promote social equality and empowerment. Further, noting that privatisation follows directly from government’s neo-liberal macro-economic plan, the Growth, Employment and Redistribution Strategy, or GEAR, we call for an immediate reversal of this programme, whose effects include the deregulation of trade and capital barriers that has led to deindustrialisation and capital flight, cuts in social spending, and the rise of unemployment and flexible labour.

Privatisation can never benefit ordinary people. That is why the APF will fight to the last to halt this process. We call on all unions and community structures affected by privatisation to join us in the struggle against privatisation. Only popular struggles by the broad working class can stop privatisation. Only an equitable social order – one that is not dominated by the logic of profit-making – can satisfy the needs and desires of ordinary people.

Issued by the Johannesburg Anti-Privatisation Forum.

Affiliates of the Forum include Nehawu (Wits University), South African Students Congress, SACP (Central JHB), SANCO, Democratic Socialist Movement, Workers Organisation for Socialist Action, Keep Left, Wits University Post-Graduate Association, Campaign Against Neo-Liberalism in South Africa, SA NGO Coalition, Jubilee 2000, SA Graduates’ Development Association, Wits University SRC, Soweto Electricity Crisis Committee, Ecumenical Services on Socio-Economic Transformation, Gauteng Hawkers Association, Evaton Reconstruction Forum, Keep Left, the S26 Collective, Independent Municipal and Allied Trade Union, the Alternative Information and Development Centre, and Bikisha Media Collective.

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