|
|
South Africa: New Jump Left As Erwin Dreams of Bigger State?
 |
 |
|||||||||
|
||||||||||
|
|
|||||||||
|
||||||||||
Business Day (Johannesburg)
15 May 2008
Posted to the web 15 May 2008
Linda Ensor
Cape Town
The outgoing administration of President Thabo Mbeki could leave a vastly expanded role for the state in the economy if Public Enterprises Minister Alec Erwin gets his way.
Speaking in Parliament yesterday, Erwin outlined his vision of a multiplication in the number of state-owned enterprises, which would drive a strategic plan to re-industrialise parts of the economy.
It was Erwin who persuaded Mbeki to abandon privatisation, a decision that handed Eskom its subsequently mishandled monopoly role in electricity generation.
Erwin was unrepentant yesterday, arguing that the new enterprises would be "the vanguard of the developmental state".
In his vision, not only would state-owned enterprises such as Eskom, Transnet and the developing nuclear industry grow hugely through their infrastructure programmes, but a host of state-initiated companies would be set up around them to supply the equipment and components required for their capital investments.
In addition, the state would kickstart new industries in other areas, such as advanced technology and specialist manufacturing, Erwin said in his budget vote speech in the National Assembly.
State intervention would be required to develop new capacities, products, technologies and infrastructure which would not arise from the normal workings of markets.
Areas of new investment could be in the technologically advanced manufacturing initiatives being undertaken by Denel, the Pebble Bed Modular Reactor , the wider nuclear industry, Eskom's pressurised water reactor programme and in carbon-emission reduction technologies.
Erwin vehemently rejected as "gloomy and depressing" suggestions made at a media briefing that his plan would see the tentacles of the state extended octopus-like into every corner of the economy, squeezing out the private sector. He argued that the involvement of state-owned enterprises in big investment projects underpinned by a long-term, state-devised growth plan would be a catalyst for private sector engagement.
The government and the state-owned enterprises plan to invest about R568bn over the next three years. But the public enterprises department estimates the cost of doubling electricity capacity over the next 16 years, including nuclear power, at about R1,3 trillion. Local sourcing of supplies for this would limit the programme's negative effect on the balance of payments and reduce its vulnerability to global market conditions.
"What is proposed is that the state forms enterprises, owns them as a shareholder, carries out strategic activities and this actually has the longer term economic effect of opening up far more opportunities for the private sector.
"It would be unwise for a developing country to expect the private sector would take on massive developmental challenges. They are not in a position to do it. We have to be prepared to co- invest and to develop a range of second, third and fourth tier suppliers. The private sector and market forces alone will not be capable of such a long-range strategic response," Erwin said.
"Piecemeal and episodic attempts do not provide the critical mass of science, technology, investment and skill to compete with other economies that are co-ordinating their effort."
A government department, perhaps public enterprises, should be mandated to manage a strategic "development portfolio" of state-owned enterprises in key sectors. To achieve this, Erwin said, the mechanisms for setting up new state enterprises would have to be reformed to make the process easier and more flexible, though cabinet approval for their establishment would still be necessary.
He also proposed freeing the state financing of these enterprises from the constraints of government's budgetary cycles, so that it was more commercially focused.
A less-public form of parliamentary oversight to protect the confidentiality of strategic and commercially sensitive information might also be advisable.
He stressed that companies such as Denel and SAA were in critical need of capital, and talks were under way with the t reasury about this.
|
"The balance sheets of state-owned enterprises in the infrastructure-build programmes are stretched to the limit. All retained earnings are being ploughed back into the enterprise, which is further leveraged. It is my view that we face a key strategic decision to support and invest in the state-owned enterprises."
| |||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Copyright © 2008 Business Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here. | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Make allAfrica.com your home page | RSS Feed | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Top | Site Guide | Who We Are | Advertising | Search | Subscribe | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Questions or Comments? Contact us. Read our Privacy Statement. | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
