South Africa’s state of disgrace

 ·14 Feb 2023

The Cape Chamber of Commerce and Industry, representing businesses and business leaders in the Western Cape, says president Cyril Ramaphosa’s attempts to gloss over South Africa’s problems and inspire hope have fallen flat.

Responding to the president’s State of the Nation Address last week (9 February), the chamber said that talk of “resilience” and “hope” was the antithesis of “success” and “development”, and downplayed the reality businesses and South Africans at large were experiencing on a daily basis.

The chamber also said that South Africa was now expected to entrust the resolution of the officially declared state of disaster to the very same government that orchestrated it.

“The fact is, our now officially declared State of Disaster is self-created. The president would have done better to declare a State of Disgrace, for, unlike a disaster which generally describes something beyond our control, our current predicament was avoidable,” it said.

Echoing the wide response of investors, analysts, economists and civil action groups, interventions raised by the president to address the immediate problems related to load shedding – such as a new ‘Minister of Electricity’, as well as a new state-owned entity to oversee other state-owned companies – were flatly rejected.

“As a chamber, we are convinced that the less the state has to do with energy provision, the better in terms of overcoming the current crisis; creating more government posts to resolve a crisis largely caused by a bloated bureaucracy is a recipe for even more disaster,” it said.

“Instead of public service jobs propped up by taxpayers’ money, we urgently need the private sector and market growth.”

The chamber also took exception to the president trying to paint a picture of the government doing well under trying circumstances, saying that businesses are not being fooled by this narrative spin.

Notably, it highlighted how dismally power utility Eskom is performing despite massive state intervention.

“To date, Eskom has been provided with over R136 billion to pay off its debt, with a further R88-billion to be supplied until 2025/26. The company continues to rely on government guarantees and equity injections to finance its operations.

“The company received R31.7 billion in equity support from the government during the 2022 period but its liquidity remains constrained because of unsustainably high debt servicing costs,” the chamber said.

“The debt assistance is supposed to help Eskom perform better and allow it to invest more in its ageing infrastructure. However, though the company has already received a part of its bailout from the government, the percentage availability of South Africa’s total installed capacity of 53.7GW at the end of 2021 fell to below 60% in October 2022 as its coal-fired power stations continued to break down, resulting in power cuts.”

Citing data from National Treasury, the chamber outlined further poor performances by the Department of Public Enterprises in addressing the failure of state companies.

“Allocations to the department of Public Enterprises have increased during the past decade from R236 million in 2013 to R23.93 billion in 2022. State-owned companies Governance Assurance and Performance budget Allocation also increased by 155% between 2013 and 2022, from R23.8 million in 2013 to R60.7 million in 2022,” it said.

It further flagged a decrease in conviction rates related to commercial crime, a lower number of cases finalised, and a sharp rise in the number of reported crimes in this segment in South African Police data.

“The president mentioned corruption cases going to court. That’s not the same as telling us about the conviction rate. Having a trial that goes nowhere because no-one ends up in jail is not helpful,” it said.

“For all these reasons – and many others too numerous to detail – we fear a descent into a deeper state of disaster’ if the government fails to involve the necessary social partners in resolving our most critical challenges,” the chamber said.

“The government has failed to control critical expenditure, has failed to make our business environment more globally competitive, and has contributed to the soaring cost of living by failing to effectively manage state-owned enterprises.

“As the president rightly pointed out, we deserve more from our government.”


Read: Ramaphosa is leaving out this key player in the energy crisis

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