To privatise or not to? This is a critical conversation South Africans are having amongst themselves, as it is evident that SOEs (State Owned Enterprises) are being deliberately made to fail by the current regime. In fact, the process to sell SAA (South African Airways) has started a while ago and current talks about unbundling Eskom and allowing private players within its businesses — effectively privatising it, are almost conclusive.
The prevailing views amongst South Africans regarding the issue of privatisation are informed by political ideologies. In general, privatisation is wholly perceived in a negative light. Perhaps, that should make sense in a case of South Africa, due to the practicalities of who benefits from privatisation. Who are the winners and losers?
When you talk about privatisation in the South African context consideration must be given to our challenges with kleptocracy, government maleficence, incompetence and corruption within the current regime. Privatisation in this case may well mean handing over the assets of the state to the connected elite, which would breed more inefficiency and inequality.
On Critical Conversations with Mphumzi this week, we were reviewing an article by David Parker & Colin Kirkpatrick (2005) “Privatisation in Developing Countries: A Review of the Evidence and the Policy Lessons”. The authours state that privatisation is widely promoted as a means of improving economic performance. That is the only premise promoters of privatisation rely upon. Therefore, in a case where international institutions such as the International Monetary Fund (IMF) and the World Bank encourage developing nations to privatise state owned enterprises, their only premise is that privatisation has incentives for improvement of economic performance.
The authors argue that the premise for privatisation, at least as depicted by empirical evidence is controversial. Whether privatisation in and of itself improves economic performance is debatable. There have not been any adequate studies that have investigated that question sufficiently in the developing world to have a consensus. We encourage you to find the article and inform yourself on the topic of privatisation in developing countries.
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MPHUMZI TODAY 