Parastatals future in SA needs debate

THE future of South Africa’s parastatals need serious debate, SA Institute of Race Relations President Sipho Seepe, said at the weekend.
This would help avoid the transfer of these entities from one department to another from being viewed as ‘ideologically driven’, Seepe said.

The country’s major state-owned enterprises include Eskom, SAA and Transnet.Seepe was responding to Friday’s announcement by Defence and Military Veterans Minister Lindiwe Sisulu that her ministry had begun negotiations with her cabinet colleague, Public Enterprises Minister Barbara Hogan, to shift Denel to her department from Hogan’s.The state-owned arms manufacturer lost nearly N$350 million last year.For example, Seepe argued, SAA, which had been bailed out by the state on a number of occasions, was suffering from management problems and it did not matter whether the airline fell under the Department of Public Enterprises or the Department of Transport.He suggested that the debate should be about whether management should be privatised.It was about a balance between retaining state control over an enterprise ‘and achieving efficiency’, he said, adding that the entity was ‘simply not working’, irrespective of where it was housed.Seepe said he was not sure whether there had been a paradigm shift in the way the relationship between the government and parastatals was managed, but the debate should be about how the parastatals could be effectively run ‘so they can become players in the challenge of job creation’.Before Maria Ramos left as Transnet chief executive, she had SAA removed from the transport parastatal’s ambit, and this contributed to Transnet’s better financial performance in recent years. Yet the government is still ultimately responsible for keeping the national carrier afloat.Sapa reported that Sisulu believed the performance of Denel, as well as that of arms procuring mechanism Armscor, needed to be exhaustively interrogated. This should produce effective command and control measures to produce a turnaround for the organisations.’I am aware that the defence industry requires an exhaustive interrogation, which must extend to every sector of the industry,’ she said.Sisulu, a key ally of President Jacob Zuma, is expanding her grip on the defence establishment at a time when the state-owned entity is seeking nearly N$2 billion in state support. It received a N$2billion bailout in 2006.Steven Friedman, the director of the Centre for the Study of Democracy, said he was ‘a serious sceptic’ when it came to this type of institutional ‘shuffling’, which he described as addictive for politicians.This included the suggestion that Eskom should move from public enterprises to the Department of Energy.Peter Vale, the Nelson Mandela professor of politics at Rhodes University, questioned whether it was sensible to shift the oversight function over Denel from the National Assembly’s public enterprises committee to the defence portfolio committee.’The problem is that defence committees are usually made up of people sympathetic to the project of defence, and will not have the skills (of oversight),’ he said.He noted that there had not been a serious study of the offset programme related to South Africa’s multibillion-rand arms deal, which he argued was related to poor parliamentary oversight mechanisms.Don Ross, a professor of economics at the University of Cape Town, said it could be argued from the government’s point of view that the national airline or Transnet, which provided freight services through the harbours, by pipeline and rail, need not be profitable, but there was little justification for the continued losses at Denel.’It is very hard to make a case for Denel. Why not source the arms from overseas?’Ross said there was an argument that a country needed a national airline to secure tourism supply and avoid unpredictable disruptions, but he was not necessarily convinced.-Business Report