Revolution or Regression: The Impact of Private Sector Control on SA's Developmental State

Khaya Magaxa

The whole concept of revolution in the context of left politics is always about radical transformation of society politically, socially and economically for the benefit of the majority who have been marginalised by the previous regime.

Ordinary masses participate in the revolution not out of excitement or popularity, but to see fundamental changes in their lives and future generations. A revolution ought to engender a state that is developmental for the realisation of these genuine aspirations.

The leading democratic and revolutionary movement, which enjoyed the overwhelming majority support of our people in our South African context, the African National Congress (ANC), for many decades correctly theorised the nature of our oppression in SA and concluded that it is Colonialism of a Special Type (CST).

What does CST mean in short?

It is a form of colonialism where both coloniser and colonised live in the same country with a political and economic system structured to benefit the coloniser (white minority) whilst oppressing and exploiting the indigenous majority (black majority), including exploitation of our country’s natural resources. British imperialists didn’t have to directly run South Africa because the white minority regime within the country fully represented their imperialist interests.

The ANC-led Alliance did not just analyse these material conditions but developed a resolution to resolve this unacceptable injustice against the black majority. This resolution is the National Democratic Revolution, which is a mechanism to address the legacy of colonialism of a special type.

Therefore, what is revolutionary about the ANC is not just the commitment to this NDR program of radical transformation, but it is the unapologetic execution because it’s the only scientific solution to address the legacy of colonialism of a special type. It can only concentrate on its historical plan and program and execute it, or else abandon its historical mission and collaborate with the enemy of the NDR. There is no middle road in the revolution. One can only apply tactics in the process without losing the strategic objective.

The 1994 democratic breakthrough provided an opportunity through popular support by the masses of our people for the ANC-led government to radically deal with the legacy of apartheid and transform SA for the benefit of our people. We got access to the state power to change the lives of the black majority who have been marginalised and subjected to endemic poverty. We sought to create a developmental state to promote both economic growth and development to tackle race, class and gender inequalities that have been created by colonialism of a special type.

Building an

d strengthening state-owned companies is always central in the process of advancing this national democratic revolution, since private capital is not reliable and inherently opposed to this particular programme.

Whilst one cannot undermine the massive strides led by the democratic government towards improving the socio-economic conditions of our people but there has been a consistent reversal of those gains.

The Growth, Employment and Redistribution policy that was introduced in 1996 is among those major reversals that still have a huge impact towards retarding the NDR and continues to be a major contributing factor to the general poor performance of the ANC. It seems none among the current key leaders of the movement learnt any lessons from this reality; instead, the will to continue to deepen this disaster is the order of the day.

The current economic trajectory is at a point of stagnation, and the growth projections are significantly low at less than 1.4 per cent for 2025. Whereas the debt-to-GDP ratio remains at an all-time high above 76 per cent, and the related debt service costs are above 22 per cent. Levels of unemployment remain around 40 per cent, and youth unemployment is at more than 65 per cent, including graduate unemployment.

The levels of inequality are astonishingly high. These factors compound the problem of deepening poverty; hence, the generalised crisis of social reproduction remains prevalent in our country. The resolution of these structural problems in a relatively sophisticated and resource-rich developing nation requires a radical economic reconstruction approach.

Rather than pursue this economic re-orientation, our leaders are hopelessly trapped in market-based economic reforms. Let us take this current hyped-up programme called Operation Vulindlela, which our President is extremely passionate about.

Let us ask a question as to what the class and political content of Operation Vulindlela is as an economic intervention implemented by the state? The name Vulindlela needs no explanation. The literal meaning is about opening the way….in this case, for business in state-owned enterprises (SOEs).

Let us take a closer look at what the President defines as a premise for the reforms, I quote: “At the centre of the plan was a bold agenda of economic reform, focused on addressing the long-standing constraints which have held back economic growth for more than a decade. This included reforms in the energy, logistics, water, and telecommunications sectors, as well as reforms to the visa system, which were identified for their impact on growth and job creation. Operation Vulindlela was established as a joint initiative of the Presidency and National Treasury to accelerate the implementation of these reforms, with a mandate to instil a new sense of urgency and a new way of working across government.”

We are informed that the economic reforms are meant to improve efficiencies in our state-owned enterprises by introducing private sector participation. It is a fallacy that the private sector is more efficient and ethical than the public sector. Corruption in the state is initiated by the private sector (corruptor). It is shocking how the Presidency and National Treasury have outsourced the responsibility of economic transformation to the private sector. It is not in the DNA of the private sector to create jobs and transform the economy.

However, it is a common cause that the problems of poverty, inequality and unemployment are a result of the concentrated wealth in the hands of exploitative and greedy multinationals. Having served as a Chairperson of the Portfolio Committee on Public Enterprises, we continuously and fearlessly emphasised from day one that corruption in these state-owned enterprises is brought by private business.

How do we then absolve them as primary corruptors and only deal with secondary aspects?

It is like treating symptoms whilst ignoring the root cause! What we are not being told is that these economic reforms are part of the structural reforms that are attached to the World Bank and International Monetary Fund loans that our government is addicted to.

South Africa has recently been awarded a R26 billion loan from the World Bank to boost South Africa’s infrastructure. The Minister of Finance hails the partnership with the World Bank as being key to speeding up the reforms vital to transforming the infrastructure landscape. It is because of these World Bank loans that South Africa had to close some of its coal-powered stations in order to make space for renewable energy, which was the main reason for the self-engineered load-shedding.

Same as the self-engineered crisis that was created at Transnet ports and railway lines, to create an emergency and support the World Bank loan conditions, to make space for the private sector in Transnet.

Noam Chomsky exposed that “standard technique” by neo liberal fanatics of defunding state-owned entities, “make sure things don't work, people get angry, you hand it over to private capital".

This is the glue that unites neo-liberal bedfellows under the Government of National Unity currently. Collapse the state's developmental capacity and hand over public resources to the private sector. This is an antithesis of a developmental state that controls the commanding heights of the economy. We have recently seen the launch of a partnership between Transnet and Gibela, where the Gibela consortium will be manufacturing trains for Prasa.

It is disheartening to witness the state abandon its own manufacturing and industrial capabilities in state-owned enterprises in favour of the private sector. Transnet has the manufacturing capabilities to build the trains, and has manufacturing hubs, engineering schools and highly skilled artisans who are idle, because there are no orders from Prasa.

In the same vein, Denel has advanced industrial and technological capabilities, even the capabilities to manufacture a South African vehicle or an aircraft. Denel is a world-renowned company in the defence industry; however, due to the efforts to de-industrialise and weaken state-owned enterprises, we have lost some of the best engineers because the state does not promote or support these state-owned enterprises.

The Portfolio Committee on Public Enterprises has been consistently calling for diversification at Denel to drive industrialisation and create jobs, but no one cared to listen. Instead, the solution by neo liberal reactionaries and enemies of the NDR was to sell the entity to private sector sharks.

When I was Chairperson of the Portfolio Committee on Public Enterprises, I was shocked by the constraints and legislative impediments that hamper the efficiencies and competitiveness of state-owned enterprises. The post democratic South African government has always aimed to build a strong, capable and ethical developmental state.

However, the National Treasury has been at the forefront of implementing regulations to decapacitate the state, and that has resulted in the failures and inefficiencies in state-owned enterprises.

Some of the impediments include:

• The National Treasury is deliberate in creating a conducive environment for the private sector to conduct business and prosper.

• The regulatory burden on state-owned enterprises is too cumbersome, about the red tape that Transnet and Eskom should follow to buy simple parts for maintenance, hence rendering them inefficient and uncompetitive.

• For years state state-owned enterprises were prohibited from intra–state collaborations. One Group CEO of Transnet reported that National Treasury did not approve them working with the CSIR on a research project, and they were forced to source three quotations.

Furthermore, we have seen the emboldened resolve of the state to break down state-owned enterprises into smaller pieces through a neo-liberal policy of “deconcentration”. This policy is what informs the implementation of Operation Vulindlela, which will result in state-owned enterprises having reduced balance sheets and hence, being unable to undertake major infrastructure projects, and entirely depend on the private sector.

A further extension of the mandate of the Department of Trade, Industry and Competition, was meant to address the so-called uncompetitive behaviour of “state-owned monopolies” in the network industries, hence the agenda to make space for the private sector.

The state is obsessed with public-private partnerships and is vehemently opposed to public-public partnerships. It can only mean that there are no profits and kickbacks to be made when two state-owned enterprises collaborate. The 6th parliament portfolio committee on public enterprises was repeating this cry like a broken record, with no one listening among those who hold power.

It is also against the constitutional imperatives of co-operative governance to prohibit collaboration between state-owned enterprises, particularly for the public good of society. In the final analysis, Operation Vulindlela is not only about the reversal of the gains since our democratic breakthrough, but a voluntary exercise to hand over the little we have for the benefit of the black majority to the beneficiaries of colonialism of a special type.

It’s a bold and aggressive plan to abandon the National Democratic Revolution and continue with racial inequalities. We are weakening and liquidating the only developmental and catalytic instruments at the disposal of the state to transform the economy.

If the state does not have the ability to effectively implement its policies and achieve its goals, it can never pursue the NDR through the private sector.

* Khaya Magaxa is the former Chairperson of the Parliamentary Committee on Public Enterprises. He writes in his personal capacity.

** The views expressed do not necessarily reflect the views of IOL, Independent Media or The African.