Development Bank of Gelderen Southern Africa. This bank refused to lend money to the South African town, THERE HAS been little or no Nelspruit, to upgrade its mention in the British media water superstructure, but of the Global Privatisation then lent a British multinaSummit which started in tional R150 million to privaCape Town on December 1. tise the water.
The summit was hosted by This summit has aroused South Africa's Minister of the ire of the South African Finance, Trevor Manuel and trade unions, especially the Minister of Local South African Municipal Government, Sydney Workers Union (SAMWU) Mufamadi. who has expressed its disAlso attending were privatisation ministers from 14 gust that only international consultants which advise on countries, as well as interna- privatisation, such as Price tional financiers such as the Waterhouse Coopers, KPMG Bank of America, European Investment Bank and and Investec, have been invited to address the sumCommonwealth Bank of Emit. Australia. Milked These financial institutions have one thing in common - SAMWU points out that they will only loan money to consultants have already local governments if they milked South African municipromise to privatise. palities of well over R200 Also present was the million in the last two years - money which was desperately needed to maintain services.
The union believes that the Private Finance Initiative (PFI), which was introduced in Britain by the Conservative government in the early 1990s, and is now central to New Labour's public sector strategy, has no relevance at all to South Africa and the developing world. "The PFI mechanism seriously undermines delivery of free basic services", said SAMWU General Secretary, Roger Ronnie.
Pri in Britain nas already been rejected by public sector unions and the TUC. Under PFI, private companies take over services for as long as 60 years. Instead of the municipalities borrowing money to finance services they are forced, under PFI to pay a hefty annual fee to the private company.
Under PFI, the future provision of public services is determined by what the private consortium wants rather than what the public needs.
The lengthy contracts mean that councillors, the elected representatives of the people, lose control completely of any influence they have over service delivery. After elections, entire councils can be replaced, but service delivery remains tied into a contract.
International experience shows that PFI projects profit from paying lower wages than council employers, and by cutting back on health and safety standards.
There are many examples of PFI contracts failing to meet their obligations. Here in Britain there were huge delays in processing passports after Siemens failed to provide a functioning computer system, leading to huge queues - and more expensive passports. Buy now, pay later The cost of PFI arises from the "buy now pay later" financing of projects.
The long term costs of PFI are much higher than in public financed projects because of the high settingup costs, higher levels of interest that the company pays private banks on loans, lengthy negotiations involving solicitors and consultants and, of course, the profit margin which must be built into the cost of the service.
PFI consortia demand an excessive rate of over 20% on their investment.
SAMWU and other South African trade unions are particularly incensed because ANC ministers are hosting this summit during elections Mbeki's privatisation policy is angering ANC's union support when ordinary people are voting or councillors, who are supposed to be the ones deciding with the community on service delivery. The newly elected councillors, hemmed in by PFI contracts, will be as powerless as their predecessors to act in the best interest of the electors. SAMWU organised a protest march to coincide with the opening of the summit - marching against privatisation and job insecurity, enlisting in the world-wide struggle with the millions of workers who have lost their jobs through these plans.
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