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how broke governments are. Perhaps this is the fear that people have, for if a government is really broke then what hope can an individual have of prosperity?
Governments are the focal owners of assets and commercial enterprises. State owned enterprises are one of the vehicles through which governments manage the resources of the nation. Thus state-owned enterprises often supply fundamental services such as water, electricity and transportation that private companies and all citizens depend upon for their competitiveness and welfare.

How well governments manage these assets and enterprises has a great impact on the real values these enterprises represent, and on a country’s public finances. Many are confounded by the contradictions in Africa’s vast natural resources and the fact that the continent hosts, some of the poorest countries in the world. Even more confusing is growing inequality of income among countries and within nations. One World Development Report indicated that the most important problem of development on the world agenda is to find jobs for millions of people in order to make them individuals who can contribute to production and to provide a better quality of life.

The objective of development should therefore be to create conducive environments for people to enjoy long, healthy and creative lives. This is what people expect and yet this has not been the case for a long time. This gap is what has created the ongoing global social discontentment, the latest of which is currently unfolding in the US. One of the foremost factors threatening world peace today is global poverty.
How can national governments harness wealth and convert it into real wealth for the people?

Worldwide, poor performances and inefficiencies have bedeviled state owned enterprises (SOEs) for a long time. In response, governments in both developed and developing nations have adopted privatisation, as a way to promote economic growth, achieve macroeconomic growth and reduce public expenditures.
In Africa, between 1991 and 2002, roughly 2 300 privatisation transactions were recorded through Bretton Woods Institutions, with total sales value estimated at around US$9 billion. Overall, privatisation activity concentrated on Eastern and Southern Africa (Mozambique, Zambia, Tanzania, Kenya, and Uganda) and Ghana, with these six countries accounting for 60 percent of the total number of transactions. In terms of sales value of transactions however, the picture is slightly different, as South Africa alone accounts for 35 percent of total sales revenue; the other key players include Ghana, Nigeria, Zambia and Cote d’Ivoire.

In Zimbabwe, perhaps the Bretton Woods did not capture the privatisation of the Harare commuter services, for instance. The privatisation of this sector was not as systematic. The Emergency Taxis managed to side sweep, Zupco, the successor of the United Bus Company.
Social benefits of this privatisation are fast services, which these days almost offer door to door service to some lucky commuters. Social costs include lack of reliable and consistent taxi timetables, volatile fares where sometimes change is withheld by the crew. Social etiquette is out of the question, one has to have appropriate attire. Dignity is not always available, although one occasionally comes across a polite and courteous crew. The costs list tends to outdo the benefits, particularly when one considers that the income is private. Tax implications are not clear.

Despite evidence that associate privatisation with improved performance, higher profitability, output and productivity growth, fiscal benefits, quality improvements and better access to services for the poor, many seem to now think that privatisation has generally been oversold as a panacea for economic ills.
Information on post privatisation is not always available in order to evaluate whether indeed privatisation offers the cure to economic ills in SOEs. Privatisation in Lesotho led to the country being virtually dependent on foreign companies for most of its amenities.

Namibia is on the other side of the spectrum and prefers not to privatise, but instead, subsidise and improve on governance. The rationale being that SOEs were created by governments to serve the people and therefore citizens would pay for any increases in costs, through subsidies. The Namibian government ensures that SOEs fulfil their mandate and remain accountable. Therefore SOEs are expected to provide accountability reports. In addition SOEs’ are required to sign governance and performance agreements.

What are the origins of privatisation?
Economists trace privatisation to the Nazi era, where the aim was to tilt the distribution of income towards the rich, with the objective of reducing consumption, on the basis that the rich consume less. Peter Drucker was to later during the late 1960s, describe government as a poor manager, which had no choice but to be bureaucratic. In the same book, “The Age of Discontinuity”, Drucker says that the government is not a doer and that non-governmental institutions would provide for better performance and operations.

This is the thought that still holds the argument for privatisation of state owned enterprises. Economic or operational ills within this sector seem to have their solutions based in privatisation. It is believed that once privatised, the former state enterprises would become more efficient, competitive, profitable and sustainable.
It will also be remembered that the 1980s and 1990s, development models were affixed towards globalisation, including international trade through WTO and the EPA global systems. It can also be said that as governments focused on global trade, privatisation seemed to be twin to globalisation. The efficiency of private based business models, offered expectations, that nations would be competitive within global trading.

In retrospect privatisation was embraced without due consideration of the good and the bad as well as the social cost. Private means reserved or restricted, whose opposite is public. Simple logic would explain that a rich millionaire, investing in a national utility entity such as electricity or water, will seek maximum profits at minimum costs and the returns are private.
The African culture is predominantly communal. Although people try to be individualistic on the surface, prevalence of nepotism supports the communality within the socio-economic societies. Thus if society is collective, at what point do African governments, expect, private returns to meet communal needs?

One could also ask that, given the many global corporate failures, can the private based model still be the cure for ills in state owned enterprises?
The dilemma for many governments in the 21st century is that well after the privatisation hype of the 1980s and 1990s, citizens continuously expect governments to provide for the basic services, of health, water, electricity and transport. Privatisation skeptics argue that certain social services cannot be provided to citizens at competitive prices, the state simply must shoulder the costs.

In a largely private sector based economy such as the US, protests are against economic inequality, corporate greed, influence of corporate money on government decisions and for separation of money from politics.

The repositioning of countries in the 21st century, particularly in the wake of the arrival of the economic giant China, is skewed towards nationalism. China’s approach is not through trade blocks, but does business with individual nations.
Nationalism transcends barriers such as tribal, political, gender, or regional.

Economic and political sovereignty is what will save the day for governments in this globalisation. Assets and sustainable enterprises provide a base for this power. It is also how the governments will manage to keep their nationals happy, with jobs and essential amenities. This is where governance comes in.
One important characteristic inherent in good governance is efficiency. This is achieved through good organisation of state owned enterprises in terms of simple issues such as role clarity, between government as a shareholder and the executives. Role clarity of the state as a shareholder and regulator, the state as a business and state as a provider of social benefits, notwithstanding role clarity of politics and business in SOEs.
Governance is a major problem in many jurisdictions. Battles between the CEO, the board and the responsible minister have shaken South Africa’s. Eskom, SAA, Transnet, the SABC including the National Energy Regulator of South Africa (NERSA).

Zimbabwe’s governance problems within the electricity enterprise, Zesa and governance issues within the transport and mining sectors are also a good example.
Botswana for a long time served as a model for harnessing the diamond wealth for the good of the nation. The Botswana government has provided about 65 percent of the funding for HIV programmes, although the high HIV/Aids prevalence has resulted in the government overspending. The principle is economic sovereignty.

Weak governances within SOEs, weaken their ability to generate income for the government, weaken the asset base as well as institutional capacities of countries.
The result is that the government is broke, the people are broke, hence the question where is the wealth?
Governments are increasingly realising that there is no quick-fix, one-size-fits-all panacea for SOEs. While the whole region or even world is privatising, one does not have to follow. Policy and business must reflect the pulse of the socio-economic needs of its citizens.

This also impacts on solutions offered by development agencies. Sustainable socio-economic interventions can no longer be imported, but must be tailor made for each country and its people, not the leadership.
The awakenings in many jurisdictions are a signal that people need to be taken seriously and respected. Questions are being asked whether the mass protests, in the US, Greece, London, the Middle East and North Africa are the beginning of a global social avalanche.

In an evaluation report of the South African Privatisation and Regulation experiences (Jerome 2004), it is advised that despite the growing unease about privatisation, it should neither be abandoned nor reversed.
Rather, there should be a strengthening of efforts to privatise correctly: by better tailoring privatisation to local conditions, deepening efforts to promote competition and regulatory frameworks, enforcing transparency in sales processes, and introducing mechanisms to ensure that the poor have access to affordable essential services.
All this is achieved in an atmosphere of good governance, where national interests come first.

• Gertrude Takawira is a researcher and consultant in governance; [email protected]