S. Africa to Sell Off Assets, Use Funds to Help Blacks

President Pieter W. Botha announced plans Friday to sell many of the South African government’s major assets to private investors and use the money for development of the country’s poorer areas.

The plans include either selling or converting into private companies the country’s postal and telecommunications system, electric power utility and railways, national airline and other transport services.

Other state corporations, among them the country’s largest steel manufacturer, its nuclear power company and a new offshore oil and gas field, will be reorganized so that they, too, can be sold under the privatization program.

Botha, in a speech opening this year’s session of Parliament, explained that the government does not have enough funds to finance all its capital needs, particularly those in developing areas where most of the country’s 26-million black majority lives.

Finance Minister Barend du Plessis told reporters that the government intends “to take state monopolies, privatize them and redeploy that capital” for construction of schools, roads and water and sewer systems to raise the living standard in black communities around the country and to speed the growth of job opportunities there.

The money will also be used to provide loans for small businesses, particularly those creating new jobs, and to repay government debts.

Although the government does not yet have a timetable for its privatization program, Du Plessis said, “I would like to see as much of that capital coming to us as soon as possible.”

Botha also called for a nationwide effort to reduce inflation, now running about 16% a year, and to increase real growth, which rose to about 2% last year from 1% in 1986.

Five-Year Plans

To encourage businesses to implement the new wage and price restraints that he wants, Botha said the government will impose strict spending priorities and freeze civil service pay for the next year. The government is also introducing a central planning system, complete with five-year national plans, that will attempt to keep state spending within guidelines.

He also announced plans to replace the present 12% sales tax with a value-added tax as the start of a broad restructuring of the tax system.

On political reform, however, Botha said little, pledging only to proceed “with measures that have already been announced.”

“The thrust of government policy is on economic and financial matters,” Stoffel van der Merwe, deputy minister for information and constitutional planning, told reporters, but he added that the reform process is going ahead.

“In order to reform the political system,” he said, “one needs a sound economy--reform costs money--and it has become imperative to restructure the economic system.”

Reform Outlook Uncertain

The outlook remains uncertain for the two principal items on the government’s reform agenda: establishment of a national council to discuss a new political system based on power-sharing among all racial groups and limited integration of residential neighborhoods. Botha gave no impetus to the measures in his address.

“What is important is the climate and the cooperation from other groups,” Van der Merwe said. “Timing is of the utmost importance, and I can give a time schedule for the national council, for example. The reform process is continuing.”

Andries Treurnicht, leader of the far-right opposition Conservative Party, said Botha’s failure to deal with most political issues shows that the government has “no clear plan, no clear policy.”

“The government is evading discussion of constitutional issues because its reform policy is finally bankrupt,” he said.

Du Plessis, however, described the privatization program as an important part of the government’s broader, long-term reform effort. He said it will contribute substantially to improvement of living conditions of the black majority while a political solution is being sought.

Impact of Sanctions

“We have a lot of capital requirements that cannot be met at present,” he said. He noted that economic sanctions have reduced the flow of foreign capital into South Africa, that the country is already overtaxed and that “low-return infrastructure” projects, such as roads, water systems and schools, do not attract private investment.

Neither Botha nor Du Plessis indicated how much money the government expects to raise. However, the inclusion of such major operations as the South African Transport Services, the postal and telecommunications system and Escom, the electrical utility, demonstrates the scope of the much-debated privatization program.

For Botha’s ruling National Party, the privatization program represents a major shift in politics and ideology as well as economics.

Designed to Spur Growth

The services and corporations that he proposes to sell were established to accelerate South Africa’s development, particularly its industrialization, and were responsible for much of its rapid growth--the envy of the rest of Africa--over the last five decades.

At the same time, they became, along with the civil service, the principal employer of Afrikaners, the descendants of Dutch, French and German settlers, who provide the Nationalists with most of their support. They now face an uncertain future.

At the same time, the redeployment of capital that Du Plessis seeks will mostly benefit blacks, and that will probably be resented by many of the country’s 5 million whites.

However, business leaders generally welcomed the privatization program--”a meaningful step toward a sound economy,” the Assn. of Chambers of Commerce said.