In his 2020 Budget speech, then Finance Minister Thapelo Matsheka undertook to review the performance of parastatals to ensure that they are fit for purpose. Part of the review would ensure that there was no mission creep in what they were doing. He also indicated that the Government owns about sixty parastatals and that on its own, should give you an idea of how outsized our public sector is.
The vexing issue of parastatals would pop up again on the occasion of Matsheka’s 2021 budget speech. It must be pointed out that he dedicated quite a sizable portion of his speech to these institutions. This time around he spoke about the need to restructure them to avoid unaffordable bailouts. He indicated that some of them have been earmarked for privatisation while some could be closed down.
It has been almost a year since Matsheka threw down the gauntlet on parastatals. His successor should be making her maiden speech on the first Monday of next month if long held tradition is anything to go by. The state owned enterprises gobble up scarce resources and it will be interesting to hear perspective on both their restructuring and privatisation thereof.
We always have to remember that the conditions that initially justified the establishment of parastatals no longer apply because the private sector has come of age since independence. That being the case we should stop deifying state owned enterprises because the business that they are involved in such as financial services , telecommunications , business advisory, insurance , abattoirs , aviation , rail and electricity can -and are- in this day and age , carried out effectively and viably by the private sector. If anything, many of these parastatals not only serve to crowd out the private sector but also drain the fiscus.
The biggest mistake that the government has been making over time is to try and remake society. Inevitably, when you try to remake society, you ending up doing too much in the process and achieving very little on the other hand. . We have already seen that instead of winding down state owned enterprises, the government rather finds itself saddled with even more. So it does not appear as if the appetite for SOEs has dissipated. The only thing that limits that appetite is the increasing scarcity of resources to bankroll SOEs and this is seen in a series of budget deficits that we have experienced in the last few years.
Government is yet to grasp the reality that they can do more for economic progress by doing less. They should realise that that they do not have to be front, left, front and left for the economy s to grow. They just have to be true to the principle of limited government and not be tempted to entrench themselves in our lives.
Privatisation therefore is a route to real and direct empowerment of people. It gives ordinary people the opportunity to own property and earn profits and dividends. It gives them freedom instead of conditioning them to look to government as a permanent solution provider.
So we will be waiting with baited for the Minister of Finance to make a move on privatisation.
