South Africa: privatisation scramble begins.

Author:Samboma, Julian

Local and foreign investors are getting into the starting blocks for what is expected to be a headlong dash for lucrative state owned companies when South Africa's big privatisation programme is launched this summer. But, as Julian Samboma reports, not everybody is looking forward to the prospect.

Foreign investors and South Africa's business community are salivating at the prospect of the Mandela administration launching a massive privatisation programme in the summer, when a decision on the future of state enterprises is expected.

According to Government sources, the programme "will deliver concrete benefits to everybody", and is aimed, among other things, at increasing access to electricity and telephone services, providing more extensive and reliable public transport, improving postal services and bringing greater choice in television and radio.

Industrial giants such as De Beers, Liberty Life and AngloAmerican are gearing up to swoop down on the rich pickings they hope will be on offer, while international fund managers have indicated they "would be very receptive to investment opportunities in the sector".

Among these are Britain's Save & Prosper and the investment arm of Credit Suisse, both of which launched South African investment funds two years ago. These fund managers are keen to expand their portfolios in the country at a time when foreign institutional investment in South Africa is rising.

The impetus for privatisation has come in the main from the World Bank and its Bretton Woods stable-mate, the International Monetary Fund (IMF), Western Governments and sections of the local business community.

They say the parastatals are a drain on scarce Government resources and that the African National Congress led administration must shed them. Pressure has also come from Mr Chris Liebenberg, the Finance Minister, and the Central Bank Governor, Mr Chris Stals.

Both men see privatisation as one weapon in the Government's armoury with which to slash Government spending and reduce the budget deficit which, at just under 6% of gross domestic product (GDP), is perceived as being too high and unsustainable.

Although a task force charged with sounding out public opinion on restructuring state enterprises has yet to complete its brief, analysts say the question now is not whether privatisations will take place, but how radical the process will be.

The task force, headed by the Minister of Public Enterprises, Mrs Stella Sigcau, will present its...

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