Put the SOEs out of their misery

John Kane-Berman says having companies in state hands is an invitation to political meddling and abuse

Put state companies out of their misery once and for all

The skulduggery in and around state-owned companies is daily becoming politically more ludicrous and economically more damaging. Since such companies are key "centres of power", the deployment of cadres to capture them has long been an objective of the African National Congress (ANC).

Such capture is a key component of the National Democratic Revolution to which the ANC, the South African Communist Party (SACP), and the Congress of South African Trade Unions (Cosatu) are committed. Even those now aghast at what has happened, among them Pravin Gordhan and Trevor Manuel, must be presumed to have shared that commitment.  

State capture by the ANC has always been an abuse of power. It has now got totally out of hand. Abuse of power is itself being abused. Nowadays the advancement of the Revolution plays second fiddle to looting and plundering. An early sign was the diversion of funds from Eskom to Chancellor House, courtesy of the Hitachi company. The ANC is no doubt still a beneficiary of the diversion of funds from state companies via one channel or another.

What now seems to rile the ANC, or at least some of its members, is that some of the looting threatens the stability of public finances while benefiting a particular set of politicians and/or their benefactors and/or business associates much more than others. Another possible cause of concern is that more and more voters are wising up.

As long as President Jacob Zuma is in charge, the chances that state companies will be put beyond the grasp of politicians are slim. But the damage done to them, and to the economy, is a compelling argument for what should be done the moment he no longer rules the roost. As many of these companies as possible must be put as far beyond the reach of politicians as possible. Permanently. So that it can never happen again.

Privatise the lot. SAA should be sold to anyone who will buy all its liabilities. One dollar seems about right. Two with a bit of luck. Denel and its shares in subsidiaries can also be sold. Neither the airline nor arms manufacturing companies have any connection with the government's supposed "development" agenda. Eskom can be confined to ownership of the grid, all its power stations being auctioned off. Petro SA should be closed or sold before it loses even more money or makes an even bigger fool of itself than it has already has.

Among other assets that could be sold is the Airports Company of South Africa. Even though it makes a profit, there is no need for the state to run airports. Even the French are flogging theirs. Nor should travellers be compelled by high airport charges to finance our airport company's ambitions abroad. South Africa's excessively expensive harbours could be housed in a listed company, which could then invite tenders from private operators to run them.

Transnet itself could be broken up. Like Eskom, it could retain ownership of the national network. But then, following the British model, private-sector passenger and freight operators could run trains on the rail network. Moribund Shosholoza Meyl would do better in the hands of a private operator. As for the Blue Train, why is the state running a luxury train for rich tourists anyway? If Rovos will not buy, sell it to Orient Express. As soon as Mark Barnes has fixed the South African Post Office, that too can be sold.

The proceeds of privatisation should be used to reduce public debt. But the benefits would be even greater. Companies subject to the disciplines of a competitive market would provide better services to consumers than those subject to the whims and greed of politicians. They would pay rather than consume taxes. And they would be run by real capitalists risking their own money, not by pseudo-capitalists gambling with the taxes paid by ordinary people.     

* John Kane-Berman is a policy fellow at the Institute of Race Relations, a think-tank promoting political and economic freedom.