Privatisation

The IFP policy on privatisation is based on the following principles:

  • Belief in the free market system;
  • Support for the efficient allocation of resources; and
  • Encouragement of free and open competition in the economy, both domestically and in relation to foreign markets.

The IFP believes that it is incumbent on the state to accelerate the process of privatisation in order to achieve the following goals:

  • To remedy the failure of the state to make the parastatals more efficient;
  • To improve the delivery of services and products to the public, some of which are essential to the economy and others which are vital to the well-being of the people;
  • To attract foreign investment;
  • To promote technological transfers to South Africa;
  • To relieve the national debt;
  • To make more capital available for economic development, internal investment, job promotion and infrastructural improvements;
  • To put capital invested in parastatals to more efficient use through engagement with the free market.

In implementing a programme of privatisation, the IFP believes that the following criteria should be adhered to.

Balanced development: The state should seek to balance its priorities regionally.

Development of self-reliance: Emphasis should be placed on the need to encourage individual self-reliance in disposing of new resources.

Social justice: The state should strive to ensure that the fruits of growth of the economy are shared by all on the basis of enterprise and hard work.

Encouragement of initiative: The state should endeavour to encourage the development of initiative.

South Africanisation of management: The state should exert its influence to secure managerial positions in public and private sectors for South African citizens.

National Investment Companies

To assist in the management of the privatisation process, the IFP favours the creation of regional investment companies, along the lines of the KwaZulu Finance and Investment Corporation. Such companies, which would be directed towards the achievement of essential developmental goals, would be open to private share-holding. Through these companies the following goals could be achieved:

The financing of studies to promote private sector development;
The creation of wholly owned subsidiaries to assist industrialisation and to attract investment;
The promotion of small medium and micro enterprises through a catalytic effect.

Privatisation of government owned corporations

Government should provide a legislative framework to regulate privatisation, and should develop clear principles and guidelines to streamline procedures. The executive should exercise a regulatory role by constraining monopolies which inhibit competition.

The aim of government should be to establish a social market system which aims at the achievement of the following specific goals:

  • Generation of wealth;
  • Promotion small business;
  • Reduction of the effects of poverty;
  • Economic empowerment of the majority of the people;
  • Equal access to all spheres of economic activity; and
  • Bringing the previously excluded masses into the economic processes of the country.

Property rights

The state should protect property rights, including the right to own, freely choose and organise the means of production. Expropriation should be promptly compensated at market rates unless conclusive evidence shows that the property right was unfairly acquired. Public property should be limited to that strictly necessary for the exercise of public functions. Communal property should be recognised.

Global Economic Linkages

The regulation of South Africa’s economic system should be brought into line with international best practises. Government spending should be curtailed, budgets balanced and interference eliminated. Economic ties with the African continent should be developed.

Limited government intervention

The role and scope of government should be limited in the field of economics. Private corporations should be employed to perform as many state functions as can be performed by non-state agencies. This would apply particularly in the fields of education, health, prisons and construction. The role of government should be limited to that recognised by the institutions of civil society.

Privatisation Strategies

Every citizen should be given the opportunity to share in the fruits of privatisation. The following privatisation methods are supported by the IFP:

  • The sale of shares in parastatals;
  • The warehousing of shares for disadvantaged groups by community trusts or community directed corporations;
  • Private placement;
  • Trade sales via tender or private treaty;
  • The voucher/coupon system;
  • Debt-to-equity conversions; and
  • Preferential allotment schemes to advantage the previously disadvantaged.

Before a course of action is embarked upon, a public awareness programme should be instituted to improve the bargaining position of government. The marketing of parastatals should be effected with the assistance of well established and reputable professional organisations or individuals. The privatisation process should be transparent, and opposition parties should be represented on the privatisation agency.

Institutional investors should be encouraged, and the proceeds from the privatisation sales should revert to the state and be utilised to reduce the outstanding level of state debt.

Where parastatals remain under the control of the state, democratic processes must be seen to be in place.