When Cyril Ramaphosa, President of the Republic, announced in his second State of the nation address that government was going to split ESKOM into three separate state-owned entities organised around generation, transmission and distribution, he unleashed some shockwaves among various stakeholders.
The announcement has largely been welcomed by big business and economists. Expectedly the announcement has raised the ire of the labour movement who are reading the split of ESKOM as nothing but privatisation of the energy producer. The metal workers union, NUMSA’s Irving Jim, is spitting fire with anger and COSATU, the largest worker federation, has vowed to fight the move and has already taken to the streets to protest privatisation and looming job losses.
Since his ascendency, to the ANC Presidency and the highest office in the state as President of the Republic, Cyril has turned the Ramaphoria charm offensive that has seen him crisscross many platforms hosted by business formations locally and abroad, notably the World Economic Forum at Davos, to win over the confidence of global capitalism that the ANC government was friendly to private capital and that South Africa was open for business.
He has gone to the world cap in hand to raise a 100 Billion dollars in foreign capital investments in five years. However, there are no freebees in global capitalism. South Africa will pay a heavy price for the trade-offs. Global merchants have been eyeing ESKOM for some time and the time has never been more opportune for them to claim their coveted prize, the goose that lays that golden eggs, ESKOM.
Depending on where one stands on the ideological divide, Ramaphosa’s announcement on the unbundling of ESKOM is the clearest indication yet to merchants of global capitalism that indeed South Africa is back on track. After “the nine wasted years” with Zuma at the helm, the Ramaphosa administration is picking up where Mbeki’s GEAR left off. We are back to the ‘96 class project. We are back to the Future. The future of a capitalist south African state driven by neoliberal economic policies of global capitalism. We can see where the country is headed but where did it all begin?
The roots of privatisation of state assets extend beyond the democratic ANC government and can be traced back to the Apartheid government.
The great industrialisation of the country that was buoyed by the mineral revolution was also to prove its undoing. According to the research report, “The State, Privatisation and the Public Sector in South Africa” by Stephen Greenberg (2006), with the dropping of gold and rapidly increasing world trade liberalisation and the diminished role of gold as a store of value, “the price of gold drifted downwards and with-it South Africa’s economic fortunes.” This according to the Research, coupled with the intensified black struggle against apartheid precipitated an organic crisis in the Apartheid economy and the fracturing of the white hegemonic block made up of Afrikaner business, the farmers and the white workers.
The Apartheid government was facing increasing pressure from Afrikaans Capital to reduce state ownership and control of key state assets, leading to the partial privatisation of SASOL in 1981. According to the research, “the 1987 White Paper on Privatisation and Deregulation set out the case for privatisation”. The Ministry of Public Enterprises was set up in the late 1980s to oversee the commercialisation program. In the footsteps of partial privatisation of SASOL, ISKOR was to follow. The report claims that the apartheid government had laid a plan to privatise ESKOM, the National Parks, State owned forests, the South African Transport Service, the Post Office and Telecommunications.
The Apartheid government’s motivations for privatisation were not purely economic. Facing increasing political upheavals from the black majority and a hostile international pressure for democratisation, the end of Apartheid rule was on the horizon. The Apartheid government’s move towards privatisation was also about stripping the incoming black majority government of strategic state assets and to keep economic power in the hands of the hegemonic white block.
With the advent of democracy and the coming into power by the ANC government, privatisation has been ruled out at least on paper. However, the reality remains that the ANC took over power in a climate of shifting sands in world geopolitics.
With the collapse of the Soviet Union, communism was on the backfoot and global capitalism on the rise. Just like their predecessors in the Nationalist Apartheid government, the incoming democratic ANC government was not immune to unfolding developments in global geopolitics. Greenberg claims that the IMF had been supporting the Apartheid government since the beginning of the economic crisis from as far back as the early seventies. In return the Nationalist government would ease the transition towards less state control and a more liberalisation of the economy.
As the saying goes the future is held hostage by our past. The ANC government is paying the price for the trade-offs agreed as far back as the transition Government of National Unity (GNU) with the IMF. We are paying for the agreements of CODESA and the transition government. Despite its public posture, the ANC government has long nailed its colours to the mast on the issue of privatisation.
In 1995 Cabinet adopted a discussion document on the restructuring of state asset with possibilities of privatisation. In 1996 the three Labour Federations, COSATU, FEDUSA and NACTU together with government, signed the National Framework Agreement on the Restructuring of State Assets. The understanding was that State Owned Entities with a clear public policy to provide basic services such as ESKOM, SPOORNET, TELKOM, SABC, ACSA etc would not be privatised.
The framework made commitments not to reduce the involvement of the state in economic activity. However, the Mbeki Administration had other plans. Mbeki morphed the consolidation of the Restructuring and Privatisation strategy into the Growth, Employment and Redistribution Strategy (GEAR), much to the irritation of Labour. In the language of GEAR, restructuring would allow for the selling of non-strategic state assets. It is here that accusations of the ’96 Class project came to the fore.
Mbeki was to become sworn enemy number one of the labour movement. Six years later in 2002, Mbeki followed through with the Accelerated and Shared Growth Initiative (ASGI). Government was to increase Fixed Investment and utilise state owned enterprises to drive investment but also encouraging disposal of non-core state assets.
According to the 2006 research, a decade into power, the ANC government had sold close on to R 32 billion state assets. These included six SABC radio stations, the partial privatisation of Telkom, SAA, ACSA and the sale of government stake in MTN. The greatest irony with the privatisation drive – despite continued denials by the ANC – is the fact that the ANC government has presided over a privatisation program conceptualised by the Apartheid government to emasculate the post-Apartheid ANC government and deny it a base to bolster any economic development by the previously disadvantaged black majority.
Whereas the Whites in South Africa are tone deaf to any talk of Radical Economic Transformation, the Apartheid government leveraged the construction of state monopolies to bolster Afrikaner Economic Empowerment. In stark contrast, the new aristocrats in the ANC government have been selling off state assets to benefit politically connected individuals and not the black majority.
In 2007 Mbeki was ousted at the bruising Polokwane elective conference. Zuma was elected President of the ANC. The Zuma Presidency put breaks on the ’96 project. The Zuma years have interrupted a program hatched and commenced in the Apartheid era and whose implementation continued in the democratic epoch. Instead of continuing with the selling off program, under watch of the Zuma administration state capture took a different trajectory. Zuma repurposed the State-Owned Entities. The new capturers of the state were not interested in selling off the pieces. They set themselves up for lucrative state contracts from the State-Owned Entities.
It is in this context that we should understand the “nine wasted years”. Just as Polokwane had to see Mbeki off, big business could not afford another day with Zuma in office. He has proven a tough customer, a cat with nine lives. With Zuma out of the way, albeit “nine wasted years” later, the ’96 Class project is back on track. With Cyril, the alleged protégé of the Oppenheimers, in the highest office, the privatisation program has been reinstalled. As they say in broadband speak, we should see privatisation rolled out at LTE speeds.
The Vultures have been circling the carcass way too long. It is time to recover lost ground. The regulators are back in town. They mean business and there is no more time to waste. SAA is already in ICU and is likely to go first. Eskom is ripe for the taking. Cyril has long shown his hand. No sooner than he was installed than were the IPP agreements signed. According to Engineering news of 4th April 2008, IPP projects, with a combined investment value of R 56- billion and a combined capacity of 2 300 Megawatts were signed by 4th April, barely over a month with Cyril in Office.
With the political infighting that characterised his first twelve months as ANC President seemingly neutralised, it is now time for the bounty hunters to stake their claim. The unbundling of Eskom is the first step. In the meantime, brace yourself for more blackouts and enjoy the ride into the future. The template of a manufactured crisis in the game of capitalist state takeover is in full swing.