Pensions for patronage

There has been widespread condemnation of a reported plot to hijack the Public Investment Corporation (PIC), with the apparent aim of bailing out ailing parastatals and the bloated parasites feeding off them.

It would be a mistake to believe that this is a “state capture” project that involves a small number of corrupt politicians and business people. The seizure of the PIC, and the tapping of the Government Employees’ Pension Fund (GEPF) that this would enable, is close to becoming official policy of the governing ANC.

The idea enjoys widespread support in the movement’s leadership, on the left of the tripartite alliance, in the ANC Youth League, and among black management professionals, especially in the financial services sector.

Many on the left of the alliance have long argued that pension funds — public and private — should be diverted to “developmental purposes”. Numerous black investment professionals believe that emerging asset managers should control a significant proportion of the funds currently invested by the PIC.

In August 2015, ANC Gauteng chairman Paul Mashatile told a Black Management Forum conference that the movement should instruct the PIC to invest in the local economy. “For too long our pensions have been used not to benefit us,” Mashatile claimed.

“We can’t be beggars in our own country, we have to participate, we must be beneficiaries.”

Instead of investing in the future, the PIC is now predictably being asked to rescue corrupt members of the political elite from their past indulgence.

In the energy sector, proponents of competition in a regulated wholesale electricity market have long argued for a separation between the grid and generating units. This could have allowed global power companies to invest in SA, and local private investors to buy power stations. After all, private pension funds are attracted by the long-term and reliable returns that power stations typically provide.

The break-up of Eskom was stalled and then reversed. The then public enterprises minister Malusi Gigaba began to turn the whole parastatal sector into a site of unprecedented patronage.

By the start of 2015, the weight of parastatal indebtedness, and the disastrous repercussions of vast Treasury loan guarantees, was becoming clear. At this point, ANC economic transformation committee head Enoch Godongwana proposed Eskom should not be broken up, but rather invite in “equity partners”.

The left would not allow “privatisation”, Godongwana feebly claimed, so the equity partners would have to be “public”. In other words, they would be the unwitting clients of the GEPF. Throwing pensioners’ money at unreformed parastatals might buy crooked politicians some time, but it is an appalling ethical breach.

We can guess where some members of the ANC’s committee stand on this issue: Pravin Gordhan, Tito Mboweni, Joel Netshitenzhe, and Max Sisulu might be expected to take a relatively principled approach. But few expect that Gigaba, Lynne Brown, or Tina Joemat-Pettersson will stand up for the interests of ordinary people against the claims of greedy patronage networks.

What we do not know is where the self-styled leftists of the economic transformation committee stand on the abuse of public sector pension funds to rescue patronage networks. What is the view of the SACP leaders on the committee, such as Thulas Nxesi, Rob Davies, and Senzeni Zokwana?

• Butler teaches public policy at the University of Cape Town.

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