Analysts split on DA’s private sector-assisted municipal recovery plan

The DA’s idea of privatising government services will never save South Africa from poor service delivery, according to experts.

The DA announced in its manifesto on Saturday that it had plans to allow private-sector firms to provide municipal services.

Even though the DA was not immediately available to give more details about the plan, many experts have criticised it.

Perpetuating ‘culture of tenderpreneurship’

Trade union federation Cosatu has rejected the DA’s call to privatise municipal services, claiming that it would be a recipe for disaster.

“It will fuel the already devastating culture of tenderpreneurship that has gutted municipal services and bled municipalities dry and collapsed basic services,” said Cosatu parliamentary coordinator Matthew Parks.

“We need to end this culture of feasting off of municipal services at the expense of communities, workers and businesses.

“We need to recapacitate municipalities to provide basic services. Eskom, Sanral, water boards and Treasury should be mobilised to do so.”

Parks said the country could not abandon its responsibility to the private sector and the tender system as it would be unconstitutional, illegal and making matters worse.

“We need to deal with the hard issues of corruption and capacity and infrastructure maintenance. Not run away from them,” he said.

“This proposal is not a solution. It’s the abandonment of local government and would have devastating consequences for workers, communities and businesses.”

Political analyst André Duvenhage has supported the DA plans to allow private-sector firms to provide municipal services.

Duvenhage said the plan was currently in use under the broad-based black economic empowerment banner, but said it would work better in a competitive environment and improve service delivery.

“To show that it can work, we are already outsourcing; for example, in my town we are using water, power and other things from the private sector and the service is good,” he said.

“This system can benefit everyone. When it comes to corruption, I can’t comment because you will never know.”

A ‘discredited idea’

Another political analyst Sandile Swana said the plan would not work, stating the UK and France as examples.

Swana said there were two concepts that need to be dealt with, which are privatisation where the functions of the state are handed over to the private sector, and a situation where the private sector only takes over those functions that are profitable.

“Those functions that are broken or not profitable, the private sector will not take over,” he said.

“What the experience has been in France and in the UK, the government has been privatising followed by re-municipalisation.

“So, once the private sector takes over the state functions, let’s say water or electricity, they maximise profit and do not reinvest to either expand the service or to refurbish the infrastructure.

“Remember that in South African municipalities the infrastructure backlog is massive so that there is a need to probably replace about 60% of the pipes for water in our municipalities because they are old and leaking. This means there must be an investment package to refurbish that infrastructure to replace these pipes.

“All that then means is that all the money must be accommodated in the price per kilolitre of water so that the interest payments on that money that would have been used to refurbish the infrastructure is recovered from the users of the service.

“So, the prices will go up before any possible expansion of the services.”

Swana said what happened in countries that did what the DA is proposing is that, “as the private sector did not invest in the services in the infrastructure, over time the infrastructure was so broken down that the state had to take over and reinvest to rebuild the infrastructure and run the service by the state, which is re-municipalisation and re-ownership by the municipality”.

He said anybody who’s proposing privatisation must go and study the cases in the UK and France about every aspect, every sector, railways, everything that was privatised and what happened, “so you had re-municipalisation, renationalisation, all that sort of thing, so that idea is not foolproof. It is a discredited idea”.