By Pinky Khoabane
“When the World Bank and the International Monetary Fund lend money to debtor countries, the money comes with strings attached. These strings come in the form of policy prescriptions called ‘structural adjustment policies.’ These policies require debtor governments to open their economies to penetration by foreign corporations, allowing access to the country’s workers and environment at bargain basement prices. Structural adjustment policies mean across-the-board privatization of public utilities and publicly owned industries. They mean the slashing of government budgets, leading to cutbacks in spending on health care and education. And, as their imposition in country after country in Latin America, Africa, and Asia has shown, they lead to deeper inequality and environmental destruction.” Global Exchange.
One of the institutions that arose out of the negotiated settlement was the Transitional Executive Committee (TEC) as an interim government comprised of members of the ANC and the Nationalist Party. The TEC had many sub councils one of which was the sub-council on finance. The terms of the $850 million IMF loan the ANC government took in 1993 included cuts in state spending, the privatisation of SOEs, large cuts in public sector wages, and commitment to abandoning nationalisation. The ANC took out this loan to service the apartheid debt which was used to buy arms in its battle against Black people and to prop-up a system that oppressed them. In 1951-67 for example, the World Bank lent the apartheid regime more than $200m, half of which went to support electricity generation when the sprawling townships were denied electricity. In effect, the ANC paid for apartheid loans which were meant to destroy the Black populace. The IMF and World continued to supply loans to apartheid South Africa despite calls for anti-apartheid financial sanctions.
Since the $850m loan there have been more millions poured into the country as loans from the World Bank and with it, the ditching of the more progressive aspects of the Reconstruction and Development Programme (RDP). The Bank has had many representatives advising post-apartheid SA on policy which has been more “market orientated” and anti-poor.
Who were among the members of the TEC sub-council on finance that agreed to this deal.
- Former President Thabo Mbeki headed the council
- Former Finance Minister Trevor Manuel who was Chairman of World Bank and IMF at one stage and is now head of Rothschild Africa
- Maria Ramos who was Director General of Treasury. She left for Transnet before ending at Barclays Africa as CEO
- Pravin Gordhan who was co-chair of TEC from 1991 – 1994, Sars Commissioner from 1999 – 2009, was appointed as finance minister in Zuma administration and returned for a second term after Nenegate. He was fired recently as part of Zuma’s latest cabinet reshuffle. It was Pravin who signed for the $850m IMF loan
- Tito Mboweni who became Minister of Labour and thereafter Governor of Reserve bank between 1999 – 2009, and is currently advisor of Goldman Sachs International
The privatisation of state-owned entities began earnestly as soon as the democratic dispensation was ushered-in, with the ministry of finance given to Gill Marcus as deputy minister in 1994. Her biggest task was privatising the South African Reserve Bank (SARB) effectively giving away the country’s monetary policy to white private hands. After privatising the Reserve Bank, she became its deputy governor in 1999 and its governor in 2009.
Between 1997 and 2004, eighteen state-owned-entities were privatised.
South African Airways (SAA)
South African Airways (SAA) was established in 1934 and was under the civil aviation department until it was incorporated into Transnet in 1990. Transnet included other government transport entities.
With the pressure for privatisation as stipulated in the World Bank and IMF loans, Transnet had to undergo a process of privatisation.
With the poor financial performance over the years, exacerbated by the arrival of Coleman Andrews as CEO in 1998 as the turn-around strategist who, among many questionable decisions, sold off SAA’s fleet only to lease it back, calls for SAA to be privatised have been growing louder. Some in the ruling ANC have resisted privatisation while others who are pushing the neo-liberal policies have supported privatisation.
Coleman, an American, was appointed by then-managing director of Transnet Saki Macozoma. A report in Business Day in 2001, said SAA had paid over a R1billion “without making a single cent in sustainable profits”. The profit of R350m that SAA posted in 2000 was through the once-off sale of the aircrafts instead of a sustainable improvement of the assets. His tenure was met with public outcry and accusations of discrepancies and wastage. In a motion in Parliament, the Democratic Alliance (DA) said Andrews’s tenure “smacked of nepotism, blatant waste of taxpayer’s money and terrible business decisions’.
Andrews resigned on 1 April 2001, twenty-months into the job. He had earned more than R220m. He got over R200m in a handshake.