ECONOMY-SWAZILAND: Govt Jumps on the Privatisation Bandwagon

By James Hall Reprint | | Print |

James Hall

MBABANE, Oct 26 2001 (IPS) - Swaziland’s ministry of finance has hired a firm to create a policy paper for the privatisation of state- owned public enterprises, signalling government’s seriousness about jumping on the privatisation bandwagon that has rolled across all other nations in the subcontinent.

“We need to get moving on this process, with a targeted completion by December,” says Paul Lewis, the study manager for PriceWaterhouseCoopers, the consultancy firm.

The Swaziland Electricity Board, the Swaziland Water Services Board, and Swaziland Post and Telecommunications Corporation, are three of the largest government owned public enterprises up for privatisation, along with the state-owned radio and television services.

Labour unions oppose privatisation of public enterprises because of potential job losses created by downsizing such companies when they go private.

Jan Sithole, secretary general of the Swaziland Federation of Trade Unions, says, “We have indicated to government our opposition to privatisation. Whatever business interests may be served, the public does not benefit from higher unemployment.”

Quinton Dlamini, president of the Swaziland National Association of Civil Servants, agrees. “We oppose privatisation on principal. Government says its number one goal is job creation. Privatisation is the wrong way to go about it, because it will result in the opposite, job loss,” he says.

However, the unions do not have any hard projections indicating prospective job cuts.

An economist with the Central Bank of Swaziland counters, “The unions have to remember that job losses will be 100 percent if these government companies are not restructured through privatisation, because they cannot continue operating in a wasteful, inefficient manner given the competition out there.”

The plight of the government television service is a good illustration. The Swaziland Television Authority is almost wholly dependent on government subsidies because viewers are refusing to pay for television and VCR license fees, as required by law.

“All Swazi TV give us are old movies, censored news and amateurish programmes,” says Mbabane viewer Sandra Dube. Like many Swazis, she finds alternative news and entertainment from foreign stations beamed to her home satellite dish.

The finance ministry has given Swazi-TV its full budget request for the first time in years, according to the station’s acting head Celani Nsibandze.

The funds will be used to technically upgrade the station with digital equipment that is the international norm nowadays, but little will be left for original, professional shows that would draw back viewers.

The Swaziland Post and Telecommunications Corporation is also plagued by inefficiency and mismanagement, according to Wilton Mamba, former Times of Swaziland business editor.

Just as disgruntled viewers of Swazi TV can use their satellite dishes to find alternatives, customers of the postal service who are fed up with delayed and lost mail can now send e-mail, though this requires the use of the corporation’s often congested phone lines.

“The telecom corporation also faces competition from new technologies,” says Lachezar Karadjov, president of the Internet service provider Real Image. “Fax, improving Internet services, and overnight courier services, particularly to South Africa, are cutting into postal business.” With a wait of up to two years for a new telephone, Swazis now possess more mobile telephones, which they can purchase at hundreds of shops, than own fixed-line phones.

But when government granted the South African company MTN a license to set up a cellular phone network in Swaziland, competition with its own phone company was anticipated, and the telecom corporation was given a 40 percent share in the venture.

“Any purchaser of the post and telecom corporation will also be buying a major piece of the cellular phone franchise, which enjoys a monopoly in Swaziland until 2008,” says a Central Bank source.

The Swaziland Electricity Board is the monopoly that controls the kingdom’s electricity needs.

This week, an agreement was signed by the board with South Africa’s electricity giant, ESKOM, to provide power to the kingdom through February next year for 11 million U.S. dollars.

Usually, only 20 percent of the country’s power is generated locally, with the rest imported, to the detriment of the nation’s balance-of-payments.

Heavy rains this year led to more hydroelectric generation, and slightly less dependence on electricity imports, but it will not be until the new Maguga Dam’s electricity-generating unit goes on line next year that a greater measure of self-sufficiency will be realised by the electricity board.

“Maguga Dam has the potential to meet 50 percent of Swaziland’s electricity requirements,” says Prime Minister Sibusiso Dlamini in an interview.

The dam also will provide more resources to the Swaziland Water Board, a good buy for an investor once privatisation goes through, according to economists.

As long as these public corporations fall under state control, they are susceptible to manipulation by government officers working on behalf of royal interests.

The local media has been filled this month with stories, confirmed by the minister of natural resources and the minister of agriculture, that these cabinet officials intervened on behalf of a bankrupt businessman with strong palace ties to have the water and electricity turned on for his failed businesses.

Services had been disconnected after the businessman failed to pay accounts exceeding 10 million U.S. dollars.

“Ordinary Swazis, whose services are instantly disconnected for a delayed payment, are angry at this special treatment,” noted the Times of Swaziland in a front-page editorial comment.

The newspaper commended the electricity and water board executives for refusing to yield to political pressure, and not reconnecting the businessman’s utilities.

Victor Nxumalo, director of Public Enterprises at the Ministry of Finance, released a statement about government’s hopes for privatisation.

“Privatisation should allow Swazis an opportunity to benefit directly, whether through the distribution of proceeds or through broader equity ownership,” Nxumalo said.

He said public enterprises account for 7 percent of formal sector employment. He said a public information programme must accompany the privatisation process to achieve broad-based consensus and understanding.

Such public education may not quiet the unions, but it will make possible job loss seem less arbitrary to those affected.