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Catching on slowly to a growing ide... Selling the message of buying into priva... Public sector shies away from rivalry at... State finds its infrastructure by anothe... Battling to uphold the profit principl... |
Bureaucrats get a kick up their parastatalsLEAN, mean and state-owned. This is not a euphemism easily applied to South Africa's public sector, where many dinosaurs remain mired in inefficiency, red ink and are subjected to the whim of political objectives. But amid the slumbering bureaucracy there are an increasing number of corporations who are turning the parastatal sector upside down. They are largely led by a new generation of hard-driving executives who apply private sector fundamentals to their companies. While they do not have carte blanche from Pretoria - empowerment objectives remain an important milestone in the privatisation process - they seek to achieve these by relying on one principle only: to run efficient, profitable organisations that do not rely on hand-outs. The list of these entrepreneurs is still relatively small, but it includes some powerful names: Telkom chairman and acting chief executive Dikgang Moseneke, Eskom chairman Reuel Khoza, Airports Company chief executive Dirk Ackerman, IDC chief executive Khaya Ngqula and Sun Air managing director Johan Borstlap. Even at beleaguered Transnet some names spring to prominence - Spoornet's Mafika Mkwanazi and Autonet's Peter Mageza - but their efforts are largely overshadowed by the ever-increasing financial malaise at the state-owned behemoth. Transnet, which is set to report large losses in its 1996/97 financial year, stands out among those parastatals struggling to make the transition to the new environment, along with the SABC, Post Office, Armscor, Safcol, Aventura, Mossgas and Alexkor, all of which have a long way to go before they truly can be said to be on the road to commercial efficiency. What separates the weak from the strong, the efficient from the laggards? Trends are hard to discern but some traits provide a clue. Public sector corporations under the control of operational ministries tend to have a clearer focus than those reporting to Stella Sigcau's Department of Public Enterprises. In the late 80s the ministry was created as a temporary measure to provide the late Wim de Villiers with a means of control over parastatals. The department outlived De Villiers and, as a result, Sigcau's ministry now has direct political control over Transnet, Safcol, Eskom, Alexkor, Denel and Aventura. With the notable exception of Eskom, none of these companies can be labelled a commercial success, a fact most analysts blame on the lack of operational experience in her department. For example, the appointment of seven black executive directors - some of them political appointments, others not sufficiently qualified - has cost Transnet dearly as the group is set to report its second consecutive financial loss in the 1996/97 financial year. The Department of Transport has frequently bemoaned the fact that Transnet, as the country's largest transport entity, does not report to it, thus making the creation of an integrated transport strategy more difficult. Another example of political expediency is the public service obligations imposed by the IBA on the SABC - obligations which are now being reviewed after the SABC has run up huge losses in meeting them. Traditionally, the cosiness between the executive suite and a ruling political party fosters not only inefficiencies and inflation, but outright corruption. This was all too frequent during National Party rule and is also evident, albeit on a more limited scale, these days. Pieter van Huyssteen, head of corporate finance at Price Waterhouse, makes a simple observation: "If political objectives are part of the aims of restructuring then any benefits, if any at all, are short-term. If the aims, however, are efficiency, effectiveness and commercial viability, the reforms will yield long-term economic advantages." Even if the corporation reports directly to their operational ministry (Sun Air and Airports Company to the Department of Transport; Telkom, Post Office and SABC to Communications; the IDC to Trade and Industry) success is not always guaranteed, but it certainly comes more easily. It is likely that an official in the Department of Transport, for example, would have a reasonable understanding of the operations of Sun Air and would not impose political objections against purely operational decisions. Another differentiating factor is the success of the commercialisation drive that was implemented in the public sector at the beginning of the decade and was always meant to proceed privatisation. Many parastatals were given a mandate to operate efficiently and were given no recourse to state funding. Eskom stands out in this respect - it cleaned up its balance sheet and boosted profits while at the same time embarking on a huge electrification drive. Transnet's previous management, on the other hand, failed to find a long-term solution to its pension fund deficit and saddled the new regime with a R13-billion shortfall.
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