E-toll refunds, state banks and NHI – South Africa wasting time on things ‘that will never happen’

Markets and investors are anxious about South Africa’s focus, with the national government leaning into an ever-increasing number of implausible and unworkable policies, while political and financial resources dwindle.

According to Intellidex director Peter Attard Montalto, these projects are causing a lot of “noise” for South Africa and detracting from better or more manageable solutions to the country’s various crises.

In a column this week, the analyst highlighted several policies and projects that he views as “never going to happen”.

This includes:

• National Health Insurance
• State banks in Gauteng
• New investment into coal energy and the Karpowership deal
• Gauteng road users getting refunds for their e-tolls
• Trying to convince anyone in the world that South Africa is non-aligned in the Russia-Ukraine war

In most of these cases, it’s not the policies themselves that are unworkable, but rather the reality of their place in the South African landscape, he said.

Speaking to The Money Show, Attard Montalto noted that “all manner of these policies are entirely possible if choices are made to cut inefficient programmes and choices are made to prioritise various things – like choosing investment over current expenditure, or NHI over education – (but) those choices are not made”.

“Cabinet could do NHI – could do it big – they could do all these things, but they would have to trade them off over something else,” he said.

Instead, the government is focused on a slew of unworkable projects and is not willing to make a trade-off anywhere.

Meanwhile, the state of South Africa’s economy means that there is simply no room for any of these projects to become a reality.

Attard Montalto said that South Africa’s economy has suffered a number of significant shocks – a lot of which relates to load shedding. These shocks, he said, haven’t been properly appreciated, and National Treasury will likely look very worried when the numbers come in.

This will highlight the need for more focused attention.

What makes them unworkable?

According to Attard Montalto, projects like the NHI and such get the limelight because they have mass appeal for South Africans but ignore reality.

For the NHI, the entire scheme is steamrolling ahead at the whim of the ANC government despite all the legal advice and warnings against it. This means the system will be bogged down in court battles for the foreseeable future.

That’s before even looking at how it will be funded and the far-reaching impact on the healthcare industry. Instead of finding a more workable solution to South Africa’s healthcare crisis, the government is at peace with wasting time and resources on a system that won’t work.

With state banks, again, the reality is ignored. Attard Montalto noted that it is unlikely that any state bank will meet the stringent requirements set by the Prudential Authority without the government pumping money it does not have into them. Again, the project is doomed to sit in regulatory limbo.

Coal procurement has already failed in recent bid windows, and private banks are closing the taps on financing. Karpowership, too, will be caught up in litigation over environmental requirements for some time.

And when it comes to giving Gauteng motorists refunds for their e-tolls – the reality is the system hasn’t even officially shut down yet, with the government still mulling over how the debt will be financed – with the promise of refunds being made without any input of approval from Treasury.

As these projects grab headlines, energy reforms, development in the logistics sector and forming plans over the growing skills crisis get diluted as limited resources are spread even more thin.

According to Attard Montalto, NGOs and industries need to step in to try and “turn the dial” and hone the government’s focus – but unfortunately, it is more likely that many of these projects will simply be left to run their course and dwindle over time as reality sets in.

“Issues that will never happen are not the same as most issues which are delayed and bogged down,” he said.

“The latter needs to be supported and reinforced with capacity, and so on. The former, however, need to be killed off swiftly and replaced by better alternatives.”

“Business and investors need to get better at identifying and calling out the things that will never happen.”

Read: South Africa’s biggest medical aids argue for their right to exist under the NHI