The AIC (previously known as the Australian Investment Corporation) has sponsored a conference currently being held in Sandton on privatisation. Privatisation is presented as a means to boost economic growth, create jobs and eradicate poverty plaguing South Africa and the African continent as a whole. Privatisation is also punted as a means to increase service delivery and management skills through private sector involvement in the public sector. The Privatisation Africa 2000 Conference is presented as an attempt to exploit new investment opportunities in the post-privatised and restructured African state-owned assets. The conference is intended to link African business and politics to create a lucrative climate for investment. All of the above are based on the notion that the public sector is corrupt, inefficient and incompetent, a liability, that only the logic of private capital accumulation can deliver goods and services to the public. Below we demonstrate that all this is a fallacy.
Efficiency and competition
It is claimed private companies prevent wastage better than their public counterparts because there is competition. If this argument was true, then South Africa would not be paying such high prices for its medicines. The pharmaceutical industry is in the hands of the private sector and is efficient insofar as distribution, packaging and sales are concerned. But for the majority of our people, there are no affordable drugs available. Therefore, the SACP asks – efficiency for who? For the majority of our people in the continent, efficiency must mean social efficiency – efficiency and sufficiency in meeting basic needs timely.
Where water provision has been privatised in the United Kingdom, the experience has been of increased rates. And cost-cutting by the private Thames Trains in London led directly to the train smash in Paddington Station in London in January this year. The company had refused to pay the 5 million pounds for a safety upgrade that would have prevented the disaster an inquiry found. Even the World Bank has admitted the decreased efficiency of service delivery after state utilities were privatised in Senegal. According to the World Bank, the only measure of success of privatisation in Africa is the quantity of privatisation but not its social impact. As we know, privatisation in Africa has led to price increases, job losses and lack of access by the poor to social services, thus exacerbating poverty rather than eradicating poverty.
Price restraint
Privatisation of services leads to increases in the rates charged to
consumers. Rates may remain stable in the short term
but this has invariably been followed by above inflation level increments.
Private corporations consider their purchases of state utilities as investments.
And as such, they are compelled to recoup the cost of their investment
as well as to pay out high dividend payments to their shareholders. Capitalist
logic necessitates fee increases, price rises being the key to financing
the
investment.
Corruption free
Privatisation in transitional societies is accompanied by rampant corruption, more so than what had prevailed before. Post-Soviet Eastern Europe bears testimony to the dangers of auctioning off the family jewels in the mad rush to comply with global economic hegemony. In Slovakia, privatisation corruption was dominated by criminal forms such as extortion, intimidation, bribery, the winning bid depending more on patronage than the actual price paid. Africa, including South Africa has already experienced massive corruption in the process of privatisation and economic restructuring. To get a sense of the levels of ongoing corruption in the private sector, the total monetary value of the fraud currently being investigated by the Office of Serious Offences and the Commercial Branch of the SAPS is in the region of R18 billion, which equals about 10% of South Africa’s government annual budget.
Worker’s jobs will be protected
The private buyers of public enterprise make the new asset profitable by cutting back on costs deemed unnecessary such as safety and environmental monitoring, and by cutting jobs. While dividend payments to shareholders may increase, large-scale retrenchments of workers are implemented. It is also an attack on the ability of trade unions to organise labour. Worker solidarity is thus hampered and the ability for unions to respond decisively to disputes structurally censored.
Defend, extend and strengthen the public sector
One would have thought that given the rampant nature of poverty in Africa, the AIC conference should have in the first instance focused on the eradication of poverty in Africa. At the very least, the conference should have discussed a partnership between the African post-colonial state and private capital in the daunting task of sustainable and people-driven African economic growth and justice.
In the current period, there is a role for the private sector. Even more importantly there is a role for a socially or co-operatively owned and controlled sector. But these sectors must operate within the context of a democratic state-led programme for reconstruction, development and social justice. This argument is not only relevant for South Africa, but for Africa as a whole because of similar conditions of massive poverty, unemployment and low industrial development.
To place the challenge of the continent as that of privatisation is
really to set up the continent for sale, to be plundered by transnational corporations at the direct expense of the poor. rivatisation
in Africa, as evidence shows, has led to private plunder of the very meagre
public resources the continent has sought to build after independence.
As the SACP we are picketing this conference, because it is a display of
private capital ’s arrogance in ignoring the real challenge of the continent.
We say, Africa is not for sale. Restructuring state assets must be subordinate to
major infra-structural growth and development, poverty eradication and inter-state cooperation in the continent.
CONTACT
Mazibuko K. Jara (surname Jara)
Department of Media, Information & Publicity
South African Communist Party
Tel: 27 11 339-3621/2
Fax: 27 11 339-4244
Cell: 083 651 0271
Email: sacp1@wn.apc.org