Sivi Gounden has launched a global charm offensive. South Africa’s director-general of public enterprises flew to London last month, hoping to persuade skeptical investors that his country’s privatization program is back on track after five years of delays.
Although no timetable has been set, the first state-owned industry on the block is likely to be Telkom, the national fixed-line telecommunications monopoly that owns half of South Africa’s biggest cellular network, Vodacom. “The fourth quarter of next year is a possible listing date,” says Gounden.
Other national industries slated for sale will require further restructuring to make them attractive to foreign investors. They include power utility Eskom and TransNet, which manages transportation infrastructure.
The South African government approved privatization in the mid-1990s but has encountered repeated obstacles from politicians and other parties concerned that jobs will be lost.
Now Gounden faces the tough job of selling the program to two very different audiences: He must persuade fund managers that South Africa is committed to creating profitable private companies, while convincing domestic trade unions that privatization won’t mean massive layoffs. “We spend a lot of time with the unions,” he says. “We have approved a social plan that ensures that those who lose their jobs will have the chance to retrain, and we will fund new business start-ups.”
