The Guardian December 6, 2000

SAMWU condemns global privatisation summit

The South African Municipal Workers' Union has condemned the Global 
Summit on Public-Private Partnerships and Private Finance Initiatives, due 
to commence on Monday this week in Cape Town.

The Summit is hosted by Minister of Finance Trevor Manuel and Minister of 
Local Government Sydney Mufamadi at the Cape Sun Hotel.

In attendance are privatisation ministers from 14 countries, as well as 
international financiers that only give money to local government when it 
promises to privatise, such as Bank of America, European Investment Bank 
and Commonwealth Bank of Australia.

The Development Bank of Southern Africa, a public finance institution which 
refused to lend Nelspruit TLC money to upgrade its water infrastructure but 
then lent a British multinational 150 million rand to privatise the water, 
is attending the conference, and has clearly taken on the role of a private 

SAMWU objects strongly to this.

SAMWU is disgusted that international consultants which only advise 
municipalities to privatise, such as Price Waterhouse Coopers, KPMG and 
Investec, are speakers.

"Consultants have already milked our municipalities of well over R200 
million in the last two years  money which is desperately needed for 
service delivery", SAMWU said in a statement issued last week.

"The union believes that the concept of Private Finance Initiative (PFI), 
which was introduced in Britain in the early '90s by the Conservative 
government, has no relevance at all to South Africa and the developing 

"It has already been rejected by one million public sector workers in 
England. Under PFI, private companies take over services for as long as 60 
years. Instead of the municipality borrowing money to finance services, 
they are forced under the PFI to pay a hefty annual fee to the private 

"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 elected councillors lose control completely of any 
influence they have over service delivery.

"Entire councils can be replaced yet service delivery remains tied into a 

"International experience shows that PFI projects profit from paying lower 
wages than municipal employers and by cutting back on health and safety 

SAMWU pointed out that there are many examples of PFI contracts failing, 
such as the British passport office where the private company failed to 
provide a computer system that worked, leading to huge delays in processing 
passports, huge queues at passport offices and more expensive passports.

"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 publicly financed 
projects because of the high setting up costs of a PFI contract.

"Costs escalate further with high interest that the company pays private 
banks on loans, lengthy negotiations involving solicitors and consultants, 
and the profit margin that must be built into the cost of the service  
PFI consortia demand an excessive rate of return of over 20 percent on 
their investment.

SAMWU sees it as a mark of disrespect that Ministers of Finance and Local 
Government are hosting a conference to effectively determine the future of 
services in South Africa during elections, when ordinary people are voting 
for councillors who are supposed to be the ones deciding with the community 
on service delivery.

"The PFI mechanism also seriously undermines delivery of free basic 
services", said SAMWU General Secretary Roger Ronnie.

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