Tuesday, September 22, 2020

Government needs to expedite privatization processes

There is no need to emphasize the fact that the world over, Privatisation is a public reform process that is universally loathed.

Workers and politicians alike look at it with determined suspicion that borders on hatred.

At least on this one there is consensus that the process leads to job losses.
History shows that for many countries, privatization was never a voluntary process.

It was a dose administered from outside, ostensibly by the World Bank and the International Monetary Fund as part of their Structural adjustment Programmes.

Before any money could be doled out, the IMF and World Bank insisted on a package of reforms.
And in every case study there has been privatization sat at the centre of the package.

For good or for worse, Botswana has been a different case.
In Botswana the process came about voluntarily.

The government, on its own volition, said it wanted to introduce the reform.
We were told privatization was necessary because it would improve efficiency.

Although that on its own was a boon in as far as it gave government all control with regard to the scale and pace with which reforms were to be implemented, there was at least one outstanding handicap, which, to this day, has haunted the process of privatization in Botswana; there was no law with which the process was to be driven.

To many commentators, it appears privatisation in Botswana was not a well thought out exercise.
It was a half-hearted undertaking, which was used to buy time and also to play to the gallery.

Last week, Kenneth Matambo, the Minister of Finance and Development Planning, was at pains to explain to parliament on the progress made so far on privatization exercise.

Privatisation, for such entities like Air Botswana and Botswana Telecommunications Corporation (BTC), seem to be making no headway.

The minister would not even bring himself to acknowledge the amount of potential that remains locked by government’s continued exclusive ownership of such entities.

It was sad listening to Matambo sing the sun-beaten old song of a botched sale of Air Botswana and, of course, how little BTC has moved towards full privatization.

There have been temptations to blame PEEPA for lack of progress.
In fact, many analysts have fallen for this trap.

The truth of the matter is that PEEPA is only an advisor.
Beyond such an advisory role, PEEPA has no substantive power.

If people in government, or should we say the empire builders controlling ministries, do not act on the recommendations there is not much that PEEPA can do about it.

Latest figures indicate that Air Botswana made a loss of P87 million during the 2008/09 financial year.
And, as was to be expected, Matambo revealed government has decided to shelve plans to privatise the airline to a later stage.

We have in the past underscored the fact that the best time to sell these entities is when they are most attractive in as far as their performances are concerned.

If all of sudden they become less attractive, Government has to be prepared to bail them all out until they get out of slumps.
An alternative would be to sell them for a song.

In short, our argument is that there will never be any privatisation unless there is overarching legislation in place to regulate the process.

Privatisation is too important and too complex a process to be left to the whims, vagaries and capricious emotional feelings of public servants.
As of now, it is sad to state that there is no clarity.

It is not clear whether Government is going ahead with the process or not.
That said we want to say if properly executed, government divestment can unlock a lot of value for government itself. It can also work wonders for the economy which seems to have reached its growth peak.

On the other hand, if not properly done, privatisation has the potential to get workers out of their employment, make them poor and enrich the few.

In fact, it can easily become a national security threat, especially for a country like Botswana where billions of public finances have for decades been planted into these entities that are today being lined up for privatisation.

Despite these setbacks, not to mention a shocking lack of progress, it is gratifying and encouraging to note that government has finally acted on the recommendations of PEEPA on the mergers of government entities that perform the same functions.

That will reduce duplication of roles and, along the way, save the public some money.


Read this week's paper

The Telegraph September 23

Digital edition of The Telegraph, September 23, 2020.