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Cosatu now open to idea of some SOEs being partially privatised

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Sizwe Pamla
Sizwe Pamla

Labour federation Cosatu has made a 180-degree about-turn on the subject of nonperforming state-owned enterprises (SOEs), saying some of them can benefit from partial privatisation.

Known for its opposition to privatisation – on the grounds that it could lead to job losses and the extraction of profits by business – Cosatu says partial privatisation should be carried out to prevent ailing SOEs from suffering further financial distress and having to rely on bailouts from government.

This is the message that the federation’s spokesperson, Sizwe Pamla, says it will take to its upcoming political council meeting with its alliance partners.

The meeting is set to take place on Sunday.

Just last week, national carrier SAA reportedly lost R50 million daily during the eight-day strike by some of its workers, who were demanding an 8% salary increase.

This, despite the cash-strapped airline having failed to make a profit in years and amid fears that it might not even be able to pay salaries for November.

Read: SAA on brink of collapse – even R2bn from state unlikely to save it

Last week, Auditor-General Kimi Makwetu said audit outcomes for SOEs were the worst they had ever been.

“The overall audit outcomes of the SOEs regressed when compared to the previous year, and significantly regressed over the last five years. Confidence in the ability of the executives tasked to manage the affairs of SOEs has similarly regressed over the past years,” Makwetu said.

Read: Billions lost and wasted: Makwetu urges leaders to entrench culture of accountability

Finance Minister Tito Mboweni has called for SAA to be shut down in order to start a new airline, while Public Enterprises Minister Pravin Gordhan said there was no money to meet striking workers’ wage demands.

Speaking to City Press, Pamla said SOEs urgently needed to be turned around.

“There has to be a comprehensive plan. Treasury needs to set out conditions which all the SOEs need to abide by. There also has to be a strict regime for those who run the SOEs because, collectively, we all agree that they should remain under state ownership,” he said.

“However, there has to be a process that identifies strategic SOEs because, as much as there are SOEs where we see no role for the private sector whatsoever, there are those where you can say: ‘Maybe we can invite the private sector as a minority partner.’

“The involvement of private investors could inject much-needed technology, capital or whatever else that is needed to revive the SOEs’ fortunes,” said Pamla.

He called for measures to be put in place to stop the siphoning off of funds by SOE officials, saying those entrusted with overseeing these entities ought to go a step further and actively recoup funds that had already been mismanaged.

“These SOEs have to prove that they have a plan to recover the money that has been wasted or looted because, if we are to go forward, there needs to be a finalisation of this chapter that we have experienced with regard to SOEs – a chapter of looting.”

Pamla called for SOEs to undergo forensic audits to uncover the root causes of the corruption there.

He said the federation would propose to its alliance partners at this week’s meeting that SOEs should remain state-owned, but moves should also be made to identify those that could benefit from privatisation.

“SOEs need to be cleaned up. We need to ensure that they do not keep haemorrhaging money. We also need to develop a funding model that is going to make sense to all concerned. This would include identifying certain SOEs that could benefit from partial privatisation.”

Pamla said identifying which entities could benefit from partial privatisation would entail “a collective process, meaning that the final decisions have to be made at an alliance level. We have to come up with a process that allows us to identify those SOEs. We will then develop common ground as we move forward; so far, we have not done so.”

Cosatu has been vehemently opposed to the privatisation of SOEs and was particularly critical of a 2016 presidential review committee on SOEs which recommended that some be phased out, while others be partially privatised.

At the time, the federation said the report was deeply troubling and would “find stiff opposition from the workers”.

And, when government announced its intention to unbundle and restructure power utility Eskom into three separate business units, Cosatu was equally emphatic, stating: “We will fight the back-door privatisation with every weapon at our disposal.”

Pamla said the general sentiment had not entirely changed as the federation was still calling on government to maintain its majority ownership of SOEs.

He reiterated that Cosatu would support partial privatisation only for those SOEs deemed in need of this.

“Generally, these SOEs are supposed to help government with developmental agendas. At the centre of that is employment creation, so we cannot have these SOEs cutting jobs the way we have been seeing.

“But there has to be a process that also talks to how you take these SOEs forward in a way that does not place innocent workers in the unemployment line.

“There are a number of ways to achieve this, but, generally speaking, we have to turn them around while trying to keep them under government control.”

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