Managerial Economics:

QUESTION ONE [25]

Read the article below and answer the questions that follow:

Editorial: ANC's neglect of the state is fuelling privatisation

Whoever is in the ruling faction of the ANC and whatever their ideological stance on the once much contested matter of privatisation, it is happening anyway. Through market forces and without a coherent policy environment, citizens are turning to the private sector to provide the most basic of services.

By Eskom's inability to meet demand, something forewarned 25 years ago, the provision of a stable electricity supply is gradually being privatised. What that will mean in the future is an energy grid held hostage to the profit motive pursuits of private sector players.

Collapsed governance systems, maladministration, and corruption through large swaths of state apparatus, in particular state-owned enterprises such as Eskom and Transnet, have pushed back the state's participation in the economy. By the time we were exhausted by the ruinous reign of Dudu Myeni and former president Jacob Zuma, as an electorate we demanded SAA be sold. Its absence in the market (or at least as it once was) has been clearly shown in the increased cost of flights.

Our privatisation drive is not one by design. It is feeding into the higher cost of living. While the private sector promises better delivery of services, it is dependent on a profit motive. It is apparent that only the haves will get the improved services, and the less fortunate will be left with the crumbs. What choice do we have but to choose this route?

It's already happening in the educational sector as we digest the latest set of matric results. Since its establishment in 1998, Curro Holdings has built up a portfolio of some 177 private schools. The group provides its student body access to better amenities and opportunities than that offered by most public schools.

But we are talking about only 70000 students, whereas KwaZulu-Natal alone has almost three million. It's apparent that what is being bred is even greater inequality. The only reason private school groups have succeeded is the inability of the state to adequately educate its people.

In some of Joburg's wealthier suburbs, roads are tattooed with the branding of leading insurers Discovery and Dial Direct, who have partnered with the city's road agency to fix potholes. Looking at it without a cynical lens, it is a matter of corporate responsibility that one can applaud, but it is further testament to a city, a province and a state that is increasingly losing the capacity to deliver the most basic of services.

The private sector is helping to fix potholes, ferry people to hospitals, educate the privileged few and, given the present trajectory of Eskom, provide the most secure and stable electricity to a select few as well.

What the country is seeing is the spread of privatisation, not through a stated policy of the governing ANC, but through market forces. It is taking place in most spheres of our daily life, and it won't be kind to our structural flaw inequality (Mail and Guardian, 20th January 2023).

Questions:

1.1. Reflect on the notion of a move towards privatisation of services within the public sector as mentioned in the article and provide a substantiated opinion of this intention of privatisation and its implications for South Africa,

Comments:

• Cite or include in-text referencing in your arguments
• your respond should include Introduction, Body and conclusion

1.2. Propose arguments both for, and against the energy sector on whether it should it be:

(a) privatised if it is state owned, or

(b) nationalised if it is private sector owned.

Comments:

• Cite or include in-text referencing in your arguments
• your respond should include Introduction, Body and conclusion