No easy path to wealth South Africa: ANC's privatization plan puts it in conflict with organized labor allies.

January 08, 1996

WHEN NELSON MANDELA's African National Congress came to power, it inherited an economy where state-run corporations dominated much of South Africa's economy. It did not take long for the Mandela government to realize its public sector, an apartheid-era creation, was a millstone around its neck.

One of the ANC's early promises was to provide jobs. Unemployment among blacks and other non-white minorities runs high. The best solution government decided, would be to dismantle most of the unwieldy state-run corporations and let the private sector run them more efficiently.

This view that privatization would save money and create more jobs has put the ANC on a collision course with black labor unions, which are still wedded to the principles of a state-run economy. Those unions, many of which are controlled by the Communist Party, a long-time ANC ally, have recently organized a series of wildcat strikes in protest.

Privatization of state-run corporations may not be the total answer, but it is essential, if South Africa hopes to provide long-denied basic services to its black majority.

Quick electrification of African townships would be one example. The same goes for telephones, railroads, defense industries and other parts of the bloated public sector.

Ineffective state corporations have been the bane of Africa from Tanzania to Zambia. South Africa is on the right track, but the Mandela government may have a hard time converting its long-time allies to the idea of privatization.

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