Over the past few weeks print and electronic media has been awash with news of eminent privatisation of state-owned enterprises (parastatals). Among the proposed entities earmarked for privatisation have been Air Botswana (AB), Botswana Meat Commission (BMC) and Bamangwato Concessions Ltd (BCL). Obviously, there has been growing interest amongst Batswana who want to know the motive behind the proposed sale, the modalities of sale and related questions. Effectively, people are wondering why government would now prioritise privatisation as a developmental strategy when the same leadership in charge of the republic resisted calls for the same in the 1990s. But importantly, the question in everybody’s mind is; who are the real beneficiaries of the eminent sale of these companies? In this instalment I intend to reflect on the latest appetite on the part of our government to sell these asserts. Where possible I will also try to second guess the motivation for privatisation in Botswana.
Privatisation is effectively the sale of state-owned companies to private individuals. In this way, it is meant to transfer ownership of control from government to private hands. But before we dwell on the sale of state-owned companies, one needs to understand their origins and intended benefits, if any, to the nation’s economic and social development. State-owned companies have a long history and are found in almost all countries across the globe. They are effectively a feature of both developed and developing economies meant to help with provision of goods and services by government where private sector is not well developed to undertake such activities. Not only that, where there is less incentive for private sector to participate in the provision of services and goods largely because profit prospects are low or none existent, governments will create parastatals to fill that void. Specifically in Africa, creation of parastatals was also driven by political ends ÔÇô as an opportunity to create jobs to attract votes despite less need for such entities. In turn there was proliferation of parastatals in many African economies with, for example, the numbers going beyond hundreds of such entities in some countries. But common to those enterprises inefficiency and, hence, lack of realisation of objectives became the norm. They effectively became a drain on state coffers. Consequently, reform efforts, especially privatisation was touted as a solution to many ailing state-owned enterprises.
When many African countries were coerced to privatise in the 1990s by World Bank and IMF, Botswana was an exception. Things were economically going well for us meaning that the proposed measures to rescue other economies, including privatisation was not deemed necessary in our case. We then watched as parastatals were sold elsewhere in Africa. Obviously, locals were broke to have any stake when those entities were sold. Public asserts were therefore bought by foreigners with locals having little or no shares in new entities. A film entitled Bamako directed by Abderrahmane Sissako best captures the devastating consequences of rushed and coerced sale of parastatals in other parts of the continent. And generally the assessment of privatisation over the past two or three decades points to a failed exercise that has only accelerated looting, corruption and related ills in these economies. Therefore, the emerging picture of privatisation as a strategy to boost economic growth is not supported by evidence in Africa. Rather, the reform effort has often achieved unintended consequences that suggest the strategy was bad for Africa. Even the World Bank and sister Bretton Woods institutions concedes that privatisation has been a disaster for Africa and beyond.
One is the left wondering why suddenly we are pursuing a failed strategy as a way of resuscitating our ailing economy. Yes we were able to resist the same in the 1990s because our political leadership on both sides of the isle knew it was a wrong prescription to deal with economic challenges faced by some state-owned enterprises. We certainly knew such entities were unable to become profitable for a variety of reasons, including the legislation which did not require them in the first place to prioritise profit (see, for example, BMC Act). But chiefly, poor performance of such entities was best explained by political interference. Too much control by ministers in charge rendered management useless in terms of effectively managing those entities.
Now government would want to convince us that through privatisation ailing state-owned enterprises could be resuscitated. In fact, the rhetoric has now translated into concrete action with, for example, AB, Morupule B, and BCL up for sale. This is pure madness. Particularly the BCL case, where an abrupt closer of the mine towards the end of last year left almost 6000 people jobless, with government failing to inject almost P3 billion to safe the mine and, in turn, protect Batswana’s assert. Couple of months down the line it is reported that the same government has decided to sell the mine to Arabs from Dubai for P3 Billion. Common, this is the same mine that could not be saved because it had reached its use by date. There was no way it could run profitable. All that was left was to close and move on. I am afraid, someone knew he was being economic with the truth, the intention being to strip Batswana’s asserts and render us poor in the process. But why would someone do that? Personal interest best capture the behaviour of players involved in this privatisation effort. People are literally looting our economy. And sadly, these are the same people Batswana entrusted with those asserts to protect for future sustainability of our economy. Too bad for posterity, they will find literally nothing! And I mean nothing given the sudden appetite for privatisation on the part of our political leaders.
To be honest, the current drive for privatisation does not make sense at all. The proponents of such policies have unequivocally concluded that the strategy has largely been a failure globally. And we resisted temptation to embrace it when it was considered uniformed not to follow suit. Now the leadership here has decided to go against expert advice with the hope that they would achieve tangible results by privatisation. There can only be one motivation to embark on such a suicidal mission: personal enrichment by those in charge of our republic. How sad!
Dr Molefhe teaches Public Administration at the University of Botswana
