Thursday, April 9, 2020

Privatisation deserves a chance

A sector which I served and which is still very close to my heart is reported by BOPA as having dismissed privatization outright in Ghanzi recently during a youth political empowerment workshop. But in my view, privatization deserves to be given a chance and in this article I wish to discuss the privatization policy and the process which I understand. I must confess that privatisation is not a subject of my specialty and, therefore, please forgive me if and when I fault. I must also confess I was equally not happy with the process of Air Botswana privatization, and I was one of the people who congratulated Hon Maoto after he successfully presented a motion in Parliament blocking the going ahead with SAA Link.

That said, though, I wish to argue that one of the core responsibilities of any government is to ensure profitability of its resources, investments and its people. Government and its people should continuously ask what the stake of people in our resources is. This involves a systematic policy analysis to determine such basic matters as how to organize the economy, the Government and other social institutions. These initiatives have already been undertaken by our Government in various forms, the most recent development being privatisation of which I am going to discuss.

The painful reality is that Privatization is coming and we need to prepare for it? There is no turning back; and what I strongly recommend is that we need to be asking ourselves what our stake in the process is going to be, and what our stake will be during the implementation phase.

The Privatisation Policy (PP) for Botswana is documented as government paper number 1 of 2000, and it was widely debated by Parliament and at some point, it was rejected by the house since members justifiably wanted certain safety nets included. The first clear cut commitment was that government will create the Public Enterprises Evaluation and Privatisation Agency (PEEPA), with a mandate of effective evaluation of performance of parastatals and advise on the commercialization and privatization process. PEEPA was indeed set up, and went all out to consult different stakeholders (including unions, political parties and civil society organizations). PEEPA has held many consultative workshops and processes and reports of some former activities are available at their offices. Following a commitment made in the 2005/06 Budget Speech, by Honourable Gaolathe that Government will, during the first half of that financial year, approve the Privatisation National Master Plan, it was indeed released.

Granted, privatization has its advantages and disadvantages and one of the major potential disadvantages are the possible loss of employment, although this issue is debatable, especially when it is viewed hand in hand with healthy competition. For example, when the telecommunications sector was liberalized in Botswana, some jobs were lost at BTC coupled with their strategy of restructuring and down sizing. However, on the positive side, MASCOM and Orange came to the table, ensuring that more jobs were created, including those created for airtime agents and dealers. Another positive development was access to telecommunication by many Batswana and residents of this country, especially at areas where BTC could not reach out to.
In Botswana, it has been argued that privatisation has come up as a desire to improve efficiency in the delivery of services, raise the country’s growth potential by securing stronger flows of foreign direct investment (FDI’s) and technology transfer, and to create further opportunities for the development and growth of the citizen business sector. The PP further calls for privatization to be rolled out as a citizen empowerment strategy; as pronounced by Vision 2016, and thus calls for special attention in: the promotion and share-holding by citizens in share offerings of public enterprises; use of pension and other funds (e.g. unit trusts) to buy shares for the benefit of members; special access to shares by management and employees of privatized entities; special advice and assistance in organizing employees and management buy-outs.

I think the fact that it has been pronounced that it be rolled out as a citizen empowerment strategy presents an opportunity for all of us to ensure that indeed that is done especially that a citizen empowerment policy is currently being developed. The following are potential benefits: increased efficiency of all workers and organizations in the wider community; increased competition ÔÇô A competition policy is to come into effect soon; development of skilled manpower and better still development of the existing skills; reduced tariffs for businesses (for example in telecommunications an opportunity for In and Offshore Call Centre jobs); increased innovation resulting in customers and citizens enjoying value for their hard earned money; Reinforcement of a sense of ownership in people; job creation; investment opportunities; and economic empowerment of Batswana.

The policy has made the following implementation pronouncements: that government will set up an Investment Trust Fund to purchase a certain percentage of shares of privatized enterprises on behalf of citizens ÔÇô these shares later to be sold to citizens in small tranches over a period at the current trading price in the stock market when the market conditions are right; Government will extend a credit scheme to small citizen investors to buy shares and that such a scheme will be amended appropriately for this purpose; citizen participation in the ownership of shares in any privatized entity should also involve the use of owners’ finances; Government will reserve a certain proportion of shares of the privatized enterprise for allocation to members of the existing work force, on deferred payment terms; Where possible, government will offer a group of former employees a guaranteed 3-year contract on the basis of which they could raise capital and acquire the necessary skills to operate as a business ÔÇô a clear opportunity for Worker Cooperatives; Where practicable, government will encourage and enable Botswana investors to acquire majority control ÔÇô where ownership of existing public assets has to be limited to citizens, foreign participation in privatized activities will be in the form of management contracts and franchising; out-right exclusion of foreign investors or across-the-board fixed restriction of foreign participation in privatized enterprises will be avoided and any restrictions will be considered on a case-by-case basis. Implying that they can still be considered.

Many people have presented arguments for and against privatization as indicated earlier on, but what is clear is that with the Privatization Master Plan now in place, privatization shall go ahead as planned and the 2007 State of the Nation has confirmed that. I am of the view that since public enterprises are major national assets and heritage, as citizens we should jealously ensure that we benefit from this transaction, and this will require a lot of effort from all stakeholders. Citizens here should not be only “a few citizens” but many citizens including the poor. The privatisation policy in my view is well packaged and with input made by various stakeholders during PEEPA consultation forums taken on board, the implementation should be water tight. However we should also appreciate that the PP has made a lot of non committal statements, for example the following words have been used: “where practicable”; “where possible”; “while government will endeavor” to mention but a few. These statements appreciated with our poor track record of policy implementation are a cause for concern, thus a justification for a jealous approach and cautious approach towards implementation of the plan.

These policy pronouncement should and must be backed up by appropriate legislation, since policies are said not to be enforceable in a court of law.

For example, the legislation must clearly stipulate government role in ensuring that essential social services under privatization benefit all ÔÇô they cannot just all be left to an investor. For example, these could be part of a licensing agreement or coming in the form of government subsidy. For example, there could be a law that even under privatization, telecoms companies cannot increase rates without BTA approval, and the same can apply for tariffs of other services. Therefore, our responsibility is to jealously ensure that all these safety nets are put into place and implemented.

Some ideas which I believe can further assist us have already been developed, especially during BOCCIM Business Conferences, and these include, that: Botswana should formulate and implement a comprehensive citizen economic empowerment (CEE) policy embracing recommendations of the 1999 citizen empowerment conference and harmonise foreign direct investment (FDI) and CEE; Botswana should formulate policies to facilitate linkages between big and small businesses for the promotion of small businesses through implementing trade remedies; legislation for privatization be formulated; a timetable for privatization be formulated (there was concern that the process was just too slow); out-sourcing of non-core government and parastatal activities be accelerated; we minimize the creation of parastatals in the privatization process; existing parastatals be reviewed with a view to identifying synergies.

Different stakeholders must remain key players in the implementation of The Master Plan and they must ensure that various policies and programmes be taken on board to benefit a broad section of Batswana. For example, the packages presented by the Poverty Reduction Strategy should be unpacked on how poor Batswana could benefit from privatization. Concepts such as cooperatives should be repackaged, especially for savings by the youth, both in and out of school for utilization in privatization.

Privatisation, in my view, is not after-all that bad because some safety nets have been provided which, as citizens, we must jealousy ensure for their implementation. My worry is that privatization will go ahead, but with too much negativity we may lose on obvious opportunities that could have benefited us as a nation. I was told last week that “you see obstacles when you lose focus”. I wish to, in conclusion, congratulate PEEPA for employing a full contingent of competent professionals as paraded in the media this week. I am convinced that they will add value and help Rre Galeforolwe push the implementation agenda.
*Dikgang Phillip Makgalemele is CEO of Botswana Agricultural Union. He writes in his personal capacity