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The problem with pushing for everything to be privatised is that the capacity of the state needs to be stronger, writes Oscar van Heerden as he reflects back on some of the challenges from 2022.
"Fellow South Africans"
These words from our president over a two-year period either sent chills or delight down our spines.
What stage will it be in this Covid pandemic period? What was the death toll thus far, and will I be next? Hospitals buckling under pressure and the economy taking a pounding every week. Job losses, frustrations and anger all round. Why can't it just stop already!
It was a time of profound crisis in the world, and we were no exception here down south. A virtual state of disaster, with movements of people curtailed, sanitisation and masks the order of the day, and just simple daily liberties hanging in the balance.
And yet, the president did steer us through these stormy waters, giving us comfort in the family meetings that we will prevail and that we are resilient people. Leadership and the qualities thereof are demonstrated not when all is well but in times of profound crisis.
A turmultous period
Facts and, in this case, medical science were our guiding lights that informed our actions and programmes. Interventions required cool heads, even amid so many deaths. We needed a coordinated approach to this pandemic and that is exactly what we got.
We did better than most countries though, at the expense of some civil liberties.
I talk about this period because we are finding ourselves at the end of a very tumultuous year and a year that saw us coming out of this isolation period. Many families lost loved ones, many businesses went bust and, all around, depression levels are at an all-time peak, I'm sure.
The crime stats recently released do not inspire any confidence, in fact, it is just damn right worrying and disappointing at the same time. Organised crime has been allowed to overrun the system and makes a mockery of our safety and security services, and our Constitution.
Extortion from criminal syndicates abounds in all sectors of the economy, the construction mafia, taxi owners intimidating long-haul bus services and actively playing a destructive part in dismantling our rail infrastructure throughout the country, especially the central line in Cape Town.
Derailing cargo trains that now have a direct negative impact on the economy, and Prasa seemingly incapable of curbing this trend.
Perhaps the use of satellite imaging and drone technology needs to be put to good use. Also, our defence force could play a more active role in securing our critical infrastructure throughout the country.
The very same can be said about Eskom and how criminals and politicians are failing us at every turn.
Government announced that the utility would be broken up into three distinct entities, and yet as always, there is very slow progress in this regard. Just do it already.
READ | Urgent steps were taken in 'a tumultuous' 2022 to address SA's electricity crisis - Ramaphosa
I need not lament the absolute damage load shedding is causing to our economy and the general morale of our people.
Mineral Resources and Energy Minister Gwede Mantashe is correct that these failures are tantamount to ensuring that the people turn against the ANC, but not because the management have ulterior motives, but because the political leadership have wholly failed to provide leadership and decisive action.
A recent decision to absorb half of the Eskom debt was a brilliant and commendable move on the part of Treasury, and hopefully, we will now be able to weather the storm a little bit better going forward.
Break up the utility as soon as possible and allow more independent providers some skin in the game. I concur with those that insist on our mixed energy plan and that the "just transition" must be carefully introduced and not at the complete expense of coal. I fear we will still rely on this commodity for many years.
Local governance
The third issue is the issue of governance, especially at a local level.
Previously, the social contract was simple; the municipality would provide a satisfactory service, and we, the clients (community), would pay for that service through rates and taxes. Non-delivery results in us exercising our rights at the ballot box and we vote you out of power and replace you.
Nowadays, we see municipalities expanding (over the last 20 years), in particular towards the historically marginalised black communities (townships), and that requires infrastructure of electricity provision, storm water drainage, piped water, refuse collection, and so much more. But most of them cannot pay for these services, they are dirt poor, and those "nouveau riche" black middle class simply refuse to pay (Soweto, a case in point), demonstrating unbelievable tendencies of entitlement.
READ | Developers say municipal infrastructure has worsened - except in Cape Town
At last check, about R300 billion is owed to municipalities by this stratum in our society. It does not help that our politicians make promises to scrap such debts, because this simply reinforces such nonpayment tendencies.
Also in this category falls free higher education, and the talk now of free health care in the form of the National Health Insurance.
You don't pay electricity, you don't pay for water provision, you don't pay for e-tolls, you just don't pay, and government will not take appropriate remedial action. In fact, they are very likely to endorse this behaviour. This is surely unsustainable as a strategy to address our triple challenges of poverty, inequality and unemployment. This is part of our fiscal crisis currently in South Africa.
So, how do we remodel local government, and let’s not talk of the current district model because we tried it before it did not work. Then you hear "privatise it". The problem with this approach is that the more you privatise, the more the capacity of the state needs to be stronger. Why? Because government has to balance profit motives with social priorities of the country.
In other words, privatising without sufficient state capacity is a big problem. One of the big drivers of this upward trend of compensation budgets is insourcing, wanting to employ everyone as a government employee.
Recently, we heard that government intends to "regulate" the price of electricity. That’s great, but the key concern must be that government then must have the power to make people pay that price (Soweto is again a case in point), and two, you must have the capacity to contain cost. That’s the discipline the market imposes on a private company.
Financial hole
If you don't contain costs, then there is competition and its this competition that will contain costs and make it cheaper, and hence you will go bankrupt. In the public sector, this mechanism is inherently absent.
So, in the case of Eskom, its all good and well to state that we want low electricity tariffs. Eskom says but this is the cost of production. We want cost-reflective tariffs. Now, if you can't contain costs because you are unable to hold down this cost of salaries and prevent insourcing, you don't do all the things that a private company does to contain costs. Instead, you can't do any of that. Then if you say we are going to contain the price, but the costs are now rising, all you do is create a financial hole on Eskom's balance sheet, which is exactly what's been happening this last decade or so.
So again, what's the model we must adopt? The current strategy of war rooms, and crisis centres is simply not working, especially not wanting to now put the blame squarely at the feet of the managers of Eskom. Really now.
When will the "sovereign" be more important than industry? Meaning why have the government decided that it's more important to honour their contracts with, for example, aluminum smelters, as opposed to plunging the country into darkness.
We, the citizens, must rather suffer higher electricity bills. We, who can afford it, must invest in solar and battery technologies and inverters. The poor cannot.
We don’t have a plan!
As I said, 2022 was a tumultuous year indeed. We need decisive leadership, not only from government but also from the private sector and civil society. Only together can we make our country work for all of us. Shouting from the rooftops and not getting one's hands dirty, and blaming others for our lot, won't be helpful.
Fellow South Africans, let's be all we can be and fix our native land. Whether through the ballot or by lending a hand.
- Dr Oscar van Heerden is a scholar of International Relations (IR), where he focuses on International Political Economy, with an emphasis on Africa, and SADC in particular.*Want to respond to the columnist? Send your letter or article to opinions@news24.com with your name and town or province. You are welcome to also send a profile picture. We encourage a diversity of voices and views in our readers' submissions and reserve the right not to publish any and all submissions received.
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