In the early 2000s, a report by a British consultancy recommended to the SA government that our state-owned logistics industries should be run by the private sector. In terms of this recommendation, the state would continue to own the ports and rail infrastructure but concession the operations to private operators.
Twenty-five years on, the ANC’s successive governments have balked at the idea. Even the most liberal administration under Thabo Mbeki paid lip service to it.
Mbeki managed to shepherd the restructuring of state-owned enterprises through the National Economic Development and Labour Council (Nedlac). In the 2000s, before his ousting in 2008, he allowed Transnet to sell its noncore assets (read: the insignificant bits) to the private sector. Huge chunks, such as the passenger services, were just moved off Transnet’s balance sheet to other government departments.
These light privatisations failed to achieve any real benefits for consumers. They failed to inject competition or expand consumer choices. The absence of economic regulation — in rail — ensured that Transnet got away with murder, overcharging its captive bulk commodity customers. Consequently, they missed commodity boom cycles.
Talk that Ngqura, SA’s newest port, would serve as a pilot for private sector participation came to naught. Curiously, outside our borders, Transnet was happy to explore partnerships with private players and other governments.
Several Transnet CEOs also conspired with politicians to stall the corporatisation of the Transnet National Ports Authority (TNPA). This meant that for years Transnet’s underperforming divisions, such as its rail operations, could continue being subsidised by TNPA, effectively a rent-collecting landlord.
Grudgingly, a year ago, Pravin Gordhan, the late public enterprises minister, agreed to corporatise TNPA. It now has a board but remains a 100% subsidiary.
Last year, Transnet’s management bungled the concessioning of Pier 2 of the Durban Container Terminal, a part of the Durban Port, Africa’s busiest port. As with most major transactions run by SOEs, this deal is now before law courts for review.
It took several years, including rolling power outages, for the government to license independent power producers. They have come too late to save the day. Now, the contingent liabilities are sitting at hundreds of billions.
The near-collapse of Transnet has not jolted the government into action. Instead, the government appears happy to cherry-pick easy wins. It wants private sector money, but is unwilling to part with the control of ports and railway operations, by far the most transformative act that could unlock growth.
The reason for this start-stop-start is simple: the ANC, which has dominated the political scene for three decades, has yet to overcome its mistrust of the private sector. Two years of a partnership with business have not convinced its government deployees that the private sector can be a force for good.
Every time it has an opportunity to hire a CEO, its instincts gravitate towards statists. It hires like-minded individuals; people with a strong government and public sector credentials. Those don’t have to be converted. They know what is to be expected of them. Cases in point are the several recent CEO appointments at Transnet, where all the appointees were either part of the establishment or had strong public sector backgrounds.
It is time the ANC overcomes its fears. It needs to concession our container and bulk commodity ports and rail operations in the interest of growth.
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