Privatisation an Option for SOEs?

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By Wezi Tjaronda WINDHOEK Privatisation as a reform option for State Owned Enterprises (SOEs) received mixed reactions at a meeting this week on whether or not parastatal reform would be successful for Namibia. Privatisation, which is the transfer of ownership from government into private hands, is one of the reform options as far as the SOEs are concerned. At a time when parastatal reform is on the lips of many, privatization, liquidation, enterprise reform and private-public partnerships are four ways in which parastatals can be reformed. Due to the public perception that some SOEs are bureaucracies that are plagued by ineffectiveness, inefficiencies, corruption and incompetence as well as being a drain of public resources, around 7 000 companies were sold or liquidated in the 1980s alone. In Africa, 2 270 privatisation transactions took pace between 1991 and 2001. While privatisation may seem a better way of disposing of companies that do not make money, commentators have it that the process benefits the rich rather than the poor, thereby widening the gap between the haves and the have-nots. Others though feel that loss-making SOEs that compete with the private sector should be done away with. Johan de Waal, DTA Member of Parliament said instead of running a hotel such as the Windhoek Country Club and Resort, the government should be investing money in infrastructure, which the country badly needs. The Country Club was built by private entrepreneurs, whose loan was guaranteed by government. When the entrepreneurs were declared bankrupt, the government was forced to take responsibility because of the loan guarantee. “The government should invest money where the private sector is not active,” he said, adding: “There is no reason why we can’t tell the personnel of Windhoek Country Club to take over the company.” De Waal added that privatisation must have a reason. “We must first decide on a vision – what is the rationale behind keeping it. What does government want to achieve by maintaining them,” he said. Supporting this stance, Mike Hill of Pupkewitz Holdings was also of the view that the government should scrutinise the SOEs and see if it needs all of them and not embark on a reform process. “We don’t need Air Namibia as it is. We should see to it that we don’t just reform something that can’t be reformed,” Hill said. But South African High Commissioner, Timothy Maseko wondered how South Africa and Namibia could talk about privatisation when the majority of these countries’ populations have no education. He said topics such as these were fit for Nordic countries, which have homogenous populations with equal opportunities to education. “How do we speak of privatisation in South Africa as many people come from the foot of the mountains with no education and today we stand up and say priva-tisation,” he queried. While the government could have made mistakes over the 15 years it has been in power, Maseko said, its political vision was unquestionable. Maseko urged Namibia and South Africa to hasten interactions to find a way forward. Harald Schutt of Team Namibia had it that instead of talking about privatisation, which puts more financial resources in the hands of the rich and disadvantages the poor, SOEs need to have marketing mechanisms that will expose them and make them competitive. The privatisation experience of Zambia, Namibia’s neighbour is that the economy is now more foreign-based compared to what it used to be before the reform process started, to an extent that the government is now trying to put up legislation that will empower the indigenous population. High Commissioner of Zambia Griffin Nyirongo said the vulnerability of SOEs was exposed after the 1990s due to the free market economy movement into which Zambia entered due to economic recovery programmes of the International Monetary Fund and the World Bank. Zambia then embarked on reform, which included privatisation, floatation of shares, private-public partnership, liquidation and commercialisation because of the heavy toll the SOEs exerted on the country’s resources. Although the process brought about retrenchments of staff, the phenomenon of employing people as casuals as opposed to full-time workers, and the relocation of companies elsewhere, privatisation, said Nyirongo, has had its own successes. “At the height of privatisation, production in mining dropped from 800 000 tonnes to 250 000 tonnes. But today, production has doubled to 500 000 tonnes and it is projected to double again,” he added.