Doubts cast on BTC privatisation

MBONGENI MGUNI
Staff Writer | Friday September 23, 2011 00:00

 

Privatisation of the Botswana Telecommunications Corporation (BTC) has been complicated by the existence of both economic and political objectives in the model currently taking shape, analysts have said.

Under the model, which is driven by PEEPA and a consortium of transaction advisers, government is hiving off 49 percent of BTC to Batswana via an Initial Public Offer and subsequent listing on the Botswana Stock Exchange. A portion of the 49 percent is expected to be reserved for BTC workers.

Although some economists criticised the model from its unveiling last year, concern reached a crescendo this week when several analysts at the launch of PEEPA's second Privatisation Master Plan expressed doubt that the current exercise would succeed.

The criticisms voiced on Monday were in line with previous observations that the current privatisation model was incongruent with stated goals of the privatisation. This, critics say, include enhancing efficiency in the delivery of public services and relieving government of both the financial and administrative burden in the provision of goods and services.

Of the concerns raised by several speakers, none was more revealing than that of BTC chairman, Len Makwinja, who gave his opinion during a plenary session at the event.

'One of the problems I see now, having been involved in this process, is that we are mixing many issues,' Makwinja said.

'One is privatisation and others are the politically driven issues around citizen economic empowerment.

'These two can be addressed differently. If you try to address them at the same time, satisfying both needs, you are going to make mistakes and the process will be more difficult.

'We must be very cautious about mixing issues of citizen empowerment and privatisation. They are both important but they can happen at different times.'

Makwinja's comments came after prominent economist, Keith Jefferis, stressed the need for what he termed 'depoliticisation' of BTC's privatisation. 'Although privatisation is ultimately political, we have to depoliticise it,' Jefferis said. 'One of the issues this has led to is a lack of clarity of objectives. We have not been very good at clarifying the different objectives and prioritising them.

'I would like to see the economic objectives, and these would help depoliticise the process and also help government structure privatisation in a way that will help it succeed.

'Right now it is not structured to help it succeed from an economic point of view. The BTC privatisation could be a complete disaster and even fail in a way that will impact on other privatisations.'

He continued: 'We seem to be following privatisation in a way that is not learning from other countries. We need to get the politicians to understand what's at stake and endorse decisions that can drive privatisation.'

At the heart of the debate is the change from a previous model where BTC would rope in a strategic equity partner, with government eventually selling its stake fully to citizens. Under the current model, however, government will also be the sole buyer of shares from citizens who take up equity in BTC, raising the prospect of the state's stake swelling beyond the initial 51 percent.

For his part, local businessman, Emang Maphanyane said, the privatisation model of BTC was 'a political decision that does not make economic sense', adding, 'this is the fundamental problem.'

Air Botswana chairman, Nigel Dixon-Warren, who also chaired the plenary, said the private sector's capacity needed to be built up for privatisation to be successful. 'The private sector's view is that government has no business being in business,' he said. Rather, government's job is to create a conducive environment for the private sector.'

However, other commentators alluded to the need for government to protect workers in the aftermath of privatisation. Some cited the example of Zambia where thousands of workers were retrenched, often without compensation, under that country's privatisation policy.

In the past 18 years, Zambia has sold more than 262 state-owned enterprises for about P3 billion, but only this year was a retrenchment package worked into the purchase agreement.

'We believe very little is being done to listen to the voice of the poorest,' said BFTU publicity secretary, Edward Tswaipe.

'The experience or the worst disaster for the labour movement was in Zambia. We are concerned that in addressing efficiency, the social aspect is always ignored.

'We are very concerned about the issue of job losses. Also, what happens to the quality of jobs when people leave the public service and move into the private sector? Does the private sector promote freedom of association and quality of life?

'We have a very fragmented state-led and controlled social security system. Can we privatise in that environment? If you privatise without this, you will move many people into poverty.'