Conduct of private firms fuels nationalisation debate – minister

2011-09-07 11:11

The conduct of some private companies is fuelling the debate on nationalisation, said public enterprises minister Malusi Gigaba.

“There is a growing underlying legitimacy crisis regarding whether the private enterprise is a ‘socially responsible’ institution, capable of both developing the economy in a sustainable manner and equitably sharing the benefits of economic growth and development,” Gigaba told the Black Business Summit in Johannesburg today.

“I think it is this legitimacy crisis that underlies calls for nationalisation and such like,” he said in a speech prepared for delivery at the event.

“The behaviour of a range of private companies, including some privatised state-owned enterprises, is providing plenty of fuel for this debate.”

He was referring to the debate on whether to nationalise South Africa’s mines and banks, after calls by ANC Youth League leader Julius Malema.

In response, the ANC was conducting an independent study of whether nationalisation was viable and would discuss the findings of the study next year.

Gigaba said he was regularly asked whether state-owned enterprises (SOEs) should be privatised.

“Somehow, there is that old assumption, ideologically informed, that SOEs are inherently inefficient, incompetent and corrupt relative to the private sector and that therefore if they were privatised, they would discard all these bad habits.

“If we may be allowed to pose the question: is there anything intrinsic in the private sector that makes it more efficient and competent; or posed differently, is there anything in the public sector that makes it intrinsically antithetical to all of this.”

SOEs had an important role to play in developing vital economic infrastructure, managing state assets, and driving the transformation of customers and suppliers, he said.

Gigaba asked whether it made sense to privatise national assets, or to allow foreign multinationals to take control of strategic industrial capabilities.

“I think there is little doubt that we will be extremely cautious in the future around who do we trust with the ownership of strategic national assets.”

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