Thursday, February 25, 2010

THE STATE CAN EFFICIENTLY RUN STATE OWNED MINES

THE STATE CAN EFFICIENTLY RUN STATE OWNED MINES

Floyd Shivambu

Since the release of the discussion document on Nationalisation of Mines at the end of January 2010, the ANC Youth League has received satisfactory levels of constructive engagement with the entire perspective. The inputs, particularly from renowned academics and public intellectuals are particularly appreciated as most did not only identify the minor problems and weaknesses in the perspective, but provided concrete solutions on how a better and more effective method of Mines’ Nationalisation should be ushered by the democratic State. This does not however mean that there weren’t detractors, who sought to divert our attention from the strategic questions raised in the perspective.

It is our considered view that an absolute majority of South Africans agree with the Nationalisation of Mines, which should be directed towards the betterment of people’s lives and creation of decent employment for all. What seems to worry many commentators is the question of State capacity to manage and administer Mines as State Owned Enterprises. Recurrently, a concern is raised around the perceived and real administrative challenges and glitches in ESKOM, SAA, and SABC. Worrying though is that a rather lame conclusion is made that because these institutions had problems and glitches; the State is generally incapable of managing Corporations. This observation is sad and ignores the substantial factors relating to the management of State Owned Enterprises and their relationship with the State.

What is relieving amidst these observations is the fact that that the discussion document on nationalisation of Mines foresaw the potential opposition to nationalisation on the basis of a supposition that the State is inherently incapable of managing Corporations. In the document, the ANC Youth League said, “The State capacity to manage enterprises is doubted, often in comparison to the State’s oversight or lack thereof of key State owned enterprises such as the South African Airways (SAA), ESKOM, SABC and Denel. The comparison is not fair because in most instances, these have failed due to sheer criminality, mismanagement and patronage which characterised the most of these entities and very weak accountability systems. The capacity of the State to decisively intervene in SAA and ESKOM for instance was inhibited by lack of proper systems and legislative framework concerning the extent of interventions the State can make alongside Boards of Directors”.

Further than that, all the State Owned Enterprises that are said to have failed were purely run on private sector principles, wherein progress and success is measured as per the profit margins, instead of concrete developmental outcomes such as employment creation and infrastructure investments. Concerning this aspect, the discussion document on nationalisation says, “the State Owned Mining Company’s progress should be measured as per its ability, capacity and coherent determination to create jobs, maximisation of the country’s gain from mineral resources, contribution to socio-economic development and assistance of communities where mining happens”. This is one principle that should guide all State Owned Enterprises and it finds adequate resonance in the ANC’s 52nd National Conference resolutions on the developmental state.

In the process of questioning the State’s capacity to manage and oversee Corporations, there is also some level of neo-liberal hypocrisy that is defined a deliberate oblivion to the successes recorded in the SOE established by the post 1994 democratic government . The Petroleum, Oil and Gas Corporation of South Africa (Pty) Limited (PetroSA) owns, operates and manages South Africa's commercial assets in the petroleum industry. Whilst legislated in the 1940s, PetroSA was officially established and given strategic leadership by the democratic government, run at Board and Management level by Historically Disadvantaged Individuals, and is currently the country’s most successful petroleum corporation, even in comparison to privately owned petroleum corporations.

If there is ever any balanced comparison on how successful a State Owned Mining Company should be run, that comparison should be with PetroSA, because PetroSA trades with commodities in a highly competitive environment. The SOEs that are said to have failed are often said to have failed because of their internal management squabbles. But also the failed SOEs operate on private sector principles of narrow profit maximisation at the expense of everything else. Then the detractors of Nationalisation of Mines will raise false alarms and forever make lame attempts to link State Ownership with inherent inefficiency and corruption. The collapse of the economy globally happened as a result of narrow capital accumulation models pursued by privately owned corporations, and they all relied on public finance for revival and sustainability.

The ANC Youth League accepts that in the management of vital resources such as minerals and Mines, a need will certainly arise for strong accountability systems and legislative guidelines of how Mines are operated, buttressed by strong public accountability mechanisms. With the lessons derived from SAA, ESKOM, DENEL, and countries that are in Minerals extraction partnerships, South Africa is suitably located to institutionalise a more effective, efficient and durable mechanism, systems and legislative framework to manage Mines more efficiently. So the failed cases of SAA and ESKOM should not serve as a discouragement to the State’s control and ownership of Mines, but as a lesson of what should be done moving forward.

Floyd Shivambu-ANC Youth League Spokesperson and Head of Political Education, Policy and Research

FLOYD'S PERSPECTIVES

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