9 February 2010
editorial
Johannesburg — WHAT to do when yet another state-owned enterprise is found to be in "terminal decline", the result of chronic underfunding, gross mismanagement and negligent oversight by government?
Why, pass legislation restoring elements of its past monopoly status, of course, then throw good money after bad in the hope that a taxpayer-funded bail-out to the tune of billions of rand will somehow make the symptoms go away without ever having to treat the disease.
That is the cynical response to the communications ministry task team's report on the affairs of state-owned signal distributor Sentech, a reaction with which it is easy to sympathise. There is a pattern, after all, of South African parastatals being mismanaged into the ground or brought to their knees by political interference and corruption, only to be bailed out and the management and board replaced at great cost.
Structural deficiencies and policy flaws are seldom if ever addressed, setting the stage for a repeat performance a few years down the line.
The uncomfortable reality, extracted from the government by means of parliamentary questions by opposition parties, is that a breathtaking R242bn was spent on rescuing parastatals over the three financial years to the end of March last year. While power utility Eskom clearly accounts for the bulk of that, it is hard to find a single parastatal that hasn't become a severe drain on the fiscus, and the prognosis for the coming three years is as bad, if not worse.
It is as clear as daylight that the model is fundamentally flawed, or the political will to implement and oversee it properly is sadly lacking, or both. Unfortunately, changing the model in terms of which state-owned enterprises are managed, without ensuring that the political will is in place to ensure it is a means to a specific end, will be a waste of time. That is why African National Congress treasurer-general Mathews Phosa's suggestion that parastatals be run as government departments is a red herring.
The rationale for "commercialising" enterprises such as the SABC, SAA, Transnet, Denel and Sentech was to improve their efficiency by running them along business lines and subjecting them to market disciplines. This has not worked, in most cases, because the government has not been prepared to allow them to experience the consequences of failing to be competitive. Hence the never-ending cycle of bail-outs and pseudo-restructuring. Absorbing them into the various government departments would not resolve the underlying inefficiencies, it would just make the losses less transparent.
Similarly, passing legislation forcing the SABC to use Sentech's services and pumping more money into it without a comprehensive and independent review of its raison d'être would be to simply perpetuate the mistakes of the past.
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