Is the snail's pace of the government's privatisation programme because of public enterprises minister Stella Sigcau's ineptitude or because of issues beyond her control?
Since Sigcau's appointment in 1994, four of the state's nine companies have been restructured - Telkom, Sun Air, the Airports Company and the Aventura chain of holiday resorts.
But Sigcau can take hardly any credit for these. The sale in 1996 of 30 percent of Telkom to Southern Bell Corporation in the US and to Malaysia Telkom was engineered, with little resistance from trade unions, by Jay Naidoo, the minister of posts and telecommunication. A clear obligation on the part of Telkom to meet targets for delivery of universal telecommunications service went along with the sale.
In contrast to the smooth privatisation of Telkom, the sale this year of the government's entire stake in the 15 loss-making Aventura holiday resorts was a torturous affair, strewn with unexpected obstacles. It took more than six months to conclude the deal with the Congress of South African Trade Unions' investment company, Kopano ke Matla. Last month, parliament resolved that the resorts, valued at between R45 million and R50 million, be sold to Kopano Ke Matla for R93 million. The R93 million includes Kopano's settling of Aventura's R22 million debt.
In terms of the deal, Kopano will hold 75 percent of Aventura, 10 percent will go to Aventura employees through an employee share trust and the remaining 15 percent will be held by the National Empowerment Fund. This fund seeks to establish a trust to administer assets and funds acquired through restructuring state assets.
Kopano had earlier threatened to pull out of the deal if the public enterprises parliamentary committee failed to finalise the resolution by the end of October. Sigcau has admitted the government's privatisation efforts have not advanced far enough but remains vague about specific timetables.
She had wanted monolithic transport giant Transnet, which owns SAA and the railway and harbour networks, to have been sold by now, she has said.
Transnet has signalled it would like to sell 40 companies over the next 24 months. A major stumbling block in the restructuring and revitalisation of Transnet has been its under-funded pension fund, which has been diverting scarce cash away from capital investment.
Sigcau has promised an announcement soon on how much debt and other liabilities could be taken on by SAA, retained by Transnet or handled under special arrangements underwritten by the government. Up to 49 percent of the shares in the newly incorporated SAA would be sold with up to 25 percent being held by an international airline.
According to Sigcau, much work has already been done to prepare for the restructuring of the forests belonging to the South African Forestry Company (Safcol) and the Department of Water Affairs and Forestry.
This includes finalising the National Forests Bill, covering Safcol's pension fund deficit and working out a detailed strategy for the sale of the business.
"The government expects to issue invitations to potential investors to bid for majority shareholdings later this year and to have completed restructuring by mid 1999," Sigcau has said.
The cash flow problems of Abakor, the abattoir business, had been eased by the government, which has had made further funding available and has agreed in principle to the conversion of certain of its debts into equity initially owned by the Meat Board.
There are plans also to "fast-track" privatisation of armaments manufacturer Denel's Ariel Technologies - to be listed on the JSE - and Aerospace, which would seek international strategic partners. However, no timetable has yet been finalised.
A management contract to prepare the Alexkor diamond mine in the Northern Cape for privatisation will also be finalised this year. All the preparations, Sigcau has said, were within the framework of Gear and the National Framework Agreement (NFA).
The NFA, agreed to in 1996, commits government to try to reach consensus over its strategies and policies on restructuring state companies with organised labour before implementing them.
But business has concerns about the extent to which the NFA compels the government to consult the trade union movement. Bill Lacey, a senior economist at the South African Chamber of Business, said the NFA was proving a hindrance.
The passing of the hotly contested Eskom Amendment Bill by parliament last month, for example, came only after detailed assurances to the unions that the Bill was not aimed at privatising Eskom and government had no intention to do so.
Restructuring the NFA should increase economic growth and development, meet basic socio-economic needs, reinvest the proceeds of restructuring in other income-generating assets, mobilise private capital, reduce state debt and enhance competitiveness and productivity of state enterprises.
The NFA is due for review by April next year but is unlikely to be abandoned. Government sources admit that reviewing it is so sensitive no one has even raised the issue yet. Government's privatisation adviser, Hong-Kong Shanghai Banking Corporation (HSBC), says it does not foresee any major change to the NFA. (HSBC was the British government's adviser on the privatisation of British Rail, which has been widely criticised.) "The NFA helped to break down suspicions on the part of labour about what (the) government's intentions were all about," says HSBC.
Events at the state's diamond mining corporation Alexkor indicate the suspicions are still there. In March, the National Union of Mineworkers (Num) and the United Association of SA threatened to distance itself from the government's appointment of Hatch Africa to advise the government on technical restructuring of Alexkor. In August, Num members went on strike over uncertainty about what the government intended to do with the mine. Workers agreed to suspend the strike after Sigcau agreed to send a fact-finding team of department officials to assess the position of the mine and re-examine union demands.
Mandla Msomi, the chairperson of parliament's public enterprises committee, admits that without the NFA nothing would have happened, but says: "We need to get the labour movement to stop being reluctant passengers, travelling along kicking and screaming.". Sigcau has vowed to set tighter time frames for privatising the state's remaining enterprises but tighter time frames may not be enough.
Besides resistance to privatisation from the labour movement, there also appears to be unresolved tension over how to balance parliamentary oversight of privatisation deals and the need to provide greater certainty to investors.
Although the details of the Aventura sale had been reported upon several times, Sigcau was made to pay heavily for the perception by the parliamentary committees that she had not fully involved them in all steps of the Aventura process.
Answering a question about whether there had been "broad enough consultation", Sigcau was forced to revisit the details yet again but warned: "I'm worried we may not be making a distinction between the consultation you'd have with a bill and consultation for privatisation."
Sigcau has expressed optimism that the government would make headway in the opening six months of next year. But unless she addresses stumbling blocks which have hampered the programme so far, her optimism may be in vain. - Cape Town