Last week is one that will likely be remembered for three things. At an agricultural conference, Eskom Chief Operating Officer Jan Oberholzer warned his audience to brace for another 18 months of load-shedding. In Gauteng, Rand Water announced that it was reducing the flow of water to the country’s economic heartland to stave off a ‘complete system crash’. Transnet is suffering a debilitating strike. And a memo from Ivan Saltzman, CEO of JSE-listed pharmaceutical chain Dis-Chem, prohibits the further appointment and promotion of white people.
Each of these represents a pathology in our economy, or perhaps better stated, in our political economy.
The shortage of power has dogged South Africa’s prospects since 2007. Despite promises to the contrary, this grinds on and imposes a hard limit to any growth aspirations. Warnings about water supply have been sounded since the 1980s; more than a decade ago, respected experts such as Mike Muller and Anthony Turton warned that a crisis was coming unless serious action was taken.
A failure of our rail and ports to provide efficient logistic services to business has likewise been a drag on operations in the country. Recently, South Africa’s ports were ranked near the bottom of global rankings put out by the World Bank and S&P Global Market Intelligence. Prasheen Maharaj, who heads the Durban Chamber of Commerce and Industry, put it in these words: ‘We had the pandemic, looting, flooding, the cyber-security attack in the port and the truck strike. The economy is on its knees, hanging by a thread, and can ill afford this strike.’
Introducing exclusionary racial policies meanwhile, has been years in the making. Policies like the one enunciated by Dis-Chem are not unique, though there is something in the bald and uncompromising phrasing of the memo that draws attention.
Less widely noticed in that memo was its concluding admission: ‘With Dis-Chem being a JSE-listed company, these are harsh measures and necessary if we are to remain profitable and to avoid a potential fine of 10% of turnover which would cripple the business. This is a real threat at this stage.’
At issue here is that the amendments to the Employment Equity Act will empower the Minister of Employment and Labour, Thulas Nxesi, to set hard race quotas across the private sector, under the guise of ‘targets’ by region, sector, sub-sector and occupational level, backed by the threat of draconian penalties sufficient to force non-compliant companies into bankruptcy. Intended by the government as a means to force greater ‘representivity’ on the private sector, Minister Nxesi has been unapologetic that it is the intention to be ‘very harsh’ on employers. That Saltzman identifies this as a ‘real threat’ indicates that this is pretty much how it is being seen. Step back and recognise that it’s understood that these measures can destroy companies. It’s difficult to see this as anything other than a choice the government is willing to make.
All in all, this looks a lot like a perfect storm for an economy already running at an investment rate of a mere 13%, and an unemployment rate of a third of the workforce.
It’s also a storm that South Africa’s policymakers, politicians and bureaucrats have brought upon the country. We are where we are as the (predictable) result of poor policy choices, inept implementation and the politicisation of just about everything.
The limits of our electricity supply were identified in the 1990s – at which point Eskom was a well-run institution. No action was taken, in part because private sector provision was under consideration. Though with no finality there, the private sector was never brought on board. Eskom meanwhile deskilled itself, and the power supply system gradually became mired in a slough of mismanagement and corruption. The supply of actual power seemed less important (and in reality, probably was) than the distribution of spoils available to the connected.
Promises to deal with it came and went. Back when load-shedding became prevalent, the time horizon for dealing with it was given as around five years – so by 2012, the issue might be resolved. In 2015, President Ramaphosa memorably said that ‘in another 18 months to two years, you will forget the challenges that we had with relation to power and energy and Eskom ever happened’.
Getting private generation on board only really got moving this year (and that took place along with farcical ideas about establishing another Eskom).
On an optimistic reading – taking into account what Oberholzer had to say – we may get over load-shedding sometime in 2024. Though I wouldn’t bet on it, and it’s not clear if that means we’ll have sufficient power supply to actually underwrite significant economic growth.
But continuing down the current path hardly offers much hope for turning South Africa around; at best, it gives a change of scraping by, long-term.
South Africa can, however, succeed. To do this, we need to make different choices: pragmatic decisions about dealing with priority problems. Jobs and growth, for instance, need to enjoy precedence over racial engineering.
In 2024, the election will offer a chance to South Africa’s people to render a decision on all of this. WE could do worse than bear last week in mind.
