Government is to be commended - with reservations - for two recent decisions. The first, announced by President Thabo Mbeki, is to campaign more vigorously against corruption and, in pursuit of that aim, to tighten regulations dealing with the "probity of officials" involved in the negotiation of large contracts. The second, disclosed almost simultaneously, is the plan to license two fixed-line competitors to Telkom and to grant each a fixed-mobile licence to accelerate cheaper delivery of phone services to disadvantaged areas.

The first decision contains an implicit admission that the controversial R43,8m arms deal might have been contaminated by corruption, despite earlier official assurances by no fewer than four Cabinet Ministers that a "fail-safe" procurement process had been followed. In what has been interpreted as an indirect reference to former Defence Minister Joe Modise, Mbeki has spoken of the need for regulations to prevent Cabinet Ministers from becoming beneficiaries of decisions taken in their official capacity by taking up positions in the private sector related to their portfolios when they retire. Intentions must now be followed up with legislative action.

Mbeki, of course, has given his own interpretative spin to the envisaged regulations. One of their purposes is the "protection" of the officials and Ministers concerned. "There should be no uncertain areas that can be misused to question government's commitment to the fight against corruption," he stresses. The FM has no quarrel with that. If the anticorruption measures are so effective that there is no scope for allegations of government negligence or lack of diligence in fighting corruption, that is all to the good.

One more point on that issue. The choice of Willie Hofmeyr as the new head of the special investigating unit is an excellent one. Though an ANC man with struggle credentials, Hofmeyr - who will retain his position as asset forfeiture unit chief - is widely respected as a man of integrity. He will spare neither friend nor foe in the fight against corruption.

The accelerated plan unveiled by the Department of Communications to open up the telecoms sector is a brave bid to increase competition, reduce the price of telecoms, improve services and, in the longer term, expand employment in the industry.

A central determinant of whether government's move will succeed will be its ability to encourage private-sector investment from local and international companies. In the light of depressed international telecoms markets, there are huge macro-economic risks in opening up the market too quickly. Foreign carriers are facing difficulties in their own back yards and investing in SA is clearly not at the top of their agendas. These are decidedly not glad tidings for the new competitors. They will need all the financial muscle they can muster.

At the same time, the two established cell-phone firms are being hit by the realisation that the days of a cosy duopoly are gone. Talk among the existing telecoms operators is that Cabinet was steamrollered into publishing the revised policy because of the tight deadline for Telkom's IPO.

They claim Communications DG Andile Ngcaba wanted the new policy announcement to coincide with the 10th anniversary of the ANC's first announcing plans to liberalise the market. With the policy ready to be gazetted and the public invited to the announcement, Cabinet did not want to lose face, even though there was still heated debate on details at last week's Cabinet lekgotla.

The truth will emerge in the next few months when the detail is finalised in new legislation and invitations to apply for the new licences are made. Any more surprise changes or backtracking will send further confused messages to the market.

That key government departments involved in the process - Finance, Public Enterprises, Trade & Industry and Communications - do not agree on all details in the policy is understandable, given their different agendas. Insiders speak of "fascinating politics of accommodation" behind the scenes. Investors, however, will want assurances that government is firmly resolved on its policy before they pump billions into SA. Telecoms is a capital-intensive industry and the pay-back period can be decades.

The risks are high and overcoming them will require strong nerves. The value government will get from listing Telkom (which owns 50% of Vodacom) and the sale of Transnet's 24,5% stake in M-Cell will, judging from market reaction so far, be affected negatively. But government must persist. An immediate priority is greater clarity on the details. Without it, the policy will fail.  

With acknowledgment to the Financial Mail.