Home South African ANC: Bolster weak SOEs, involve private sector

ANC: Bolster weak SOEs, involve private sector

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The ANC has reaffirmed its commitment to allow for greater private sector participation in state-owned enterprises in a bid to attract investment and boost economic growth.

ANC president Cyril Ramaphosa. Picture: AP Photo, Themba Hadebe

SOUTH Africa’s governing party, the ANC, has reaffirmed its commitment to allow for greater private sector participation in state-owned enterprises (SOEs) in a bid to attract investment and boost economic growth.

However, some within the ANC tried to push back against this, fearing it could encroach on the party’s political mandate to advance the state’s developmental agenda.

But this ideological wrangling could possibly rub the wrong way with some within the government who are pushing for the disposal of underperforming SOEs that continue draining the fiscus.

Closing the ANC 6th National Policy Conference on Sunday, party president Cyril Ramaphosa said the delegates discussed the respective and complementary roles that both the public and private sectors should play in the development of the economy.

Ramaphosa, however, said they have called for the state to be strengthened, and for SOEs to be stabilised.

“We recognise that the private sector should continue to play a role in creating employment and other livelihood opportunities, and as should the public sector,” Ramaphosa said.

“And we have proposed a range of measures to unlock the huge potential of businesses of all sizes to emerge, grow and thrive.”

Ramaphosa’s affirmation of the private sector’s role was a reiteration of his February State of the Nation Address where he said the government did not create jobs, business created jobs.

Economic transformation came into sharp focus by the party delegates at the policy conference over the weekend.

The recommendations taken at the policy conference will go back to the party’s branches for discussion before being brought to the 55th National Conference in December for further deliberation.

Head of the ANC’s sub-committee on economic transformation, Mmamoloko Kubayi-Ngubane, on Saturday said other party members were of the view that some SOEs did not have a strategic role to play in terms of development, and thus should be “offloaded”.

However, Kubayi-Ngubane said there was consensus that the government must protect SOEs.

“We acknowledge that the private sector has a role to play, but it should not undermine the role of the public sector, especially because for us it’s about the majority of the people and being able to drive a developmental agenda,” she said.

“The commission (ANC’s economic transformation sub-committee commission) says to us, we should not go to a point where we depend on the private sector to fulfil our mandate, because it becomes difficult and therefore it would be an issue …”

Last week, Ramaphosa said the government would accelerate greater private investment in power-generation capacity by removing the licensing threshold for embedded generation completely.

The government has started disposing of its majority stake in the national carrier, South African Airways, to a private investor consortium as part of reforms to encourage private sector participation in strategic sectors of the economy.

The private sector is also being brought into the port and rail freight network to aid the ailing state-owned logistics firm, Transnet, which is plagued by operational challenges.

The ANC’s economic transformation sub-committee commission also discussed as a priority the issue of energy security and the just transition.

Among policy proposals at the conference, the ANC wanted the government to declare a “national crisis” on South Africa’s unemployment rate, as 34.5 percent of the working-age population are without jobs, the highest rate in the world.

The conference affirmed women’s participation in the economy and directed the government to use public procurement as a tool for transformation and increase set asides to 40 percent for women, while also recapitalising development finance institutions.

The delegates also resolved on fast-tracking the establishment of a state bank, and also pursuing other political parties to support the Land Expropriation Bill through the amendment of Section 25 of the Constitution.

The issue of nationalising the South African Reserve Bank (SARB) was also a hot topic among discussions and the ANC called for the central bank to intervene in sectors that can support job creation.

ANC delegates were of the view that there is more that the SARB should be able to do to boost economic growth, above and beyond its price stability and monetary policy mandate.

Kenneth Creamer, an academic economist at Wits University’s School of Economics and Finance, said the state ownership of the SARB was thoroughly discussed, but was not an immediate priority for the country.

Creamer, who has been a member of the ANC technical team in the economic transformation sub-committee for 30 years, said there was no question of trying to compromise the independence of SARB, but rather a concern regarding the historical anomaly that SARB has private shareholders, unlike most other countries.

“There is a view that that might compromise the way that the bank is perceived by ordinary South Africans, when it is meant to be a state-owned bank,” Creamer said.

“So in the long run, it would be better to secure its independence but given the number of priorities that we have in this country, that was not seen to be the number one priority.

“And it’s a question of timing and dealing with all the modalities regarding ensuring that speculators are not the state ownership of the central bank to profit unduly from that process,” he said.

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