NICHOLAS WOODE-SMITH: Privatisation reveals the solution to infrastructure collapse

Every year we see more essential infrastructure collapsing across the board. Eskom continues to fail to keep the lights on, roads come to resemble the front line in a war zone, railway lines that haven’t been stolen rust away, and containers pile up at ports. As a result, SA faces a logistical nightmare that freezes the wheels of commerce, leading to supply shortages and backlogs, loss of income and a loss of jobs.

Then there is the country’s deteriorating water infrastructure. The department of water & sanitation recently reported on the worrying state of SA’s drinking water. Only 49% of the water supplied to homes and businesses is of a satisfactory microbiological quality. That means more than half of South Africans only have access to unsafe drinking water. 

President Cyril Ramaphosa has lamented the dire state of our infrastructure, blaming local governments for not spending their allotted budgets to maintain or expand infrastructure. He cited a lack of implementation capacity as the reason for these local governments failing to do their jobs.

But if capacity is lacking or has been destroyed it can be built. Budgeted funds can be used to hire skilled contractors or purchase necessary equipment. But most local governments in SA are incompetent and corrupt. They don’t see the point in doing their jobs because they expect to be appointed or elected again anyway. So they just rake in their salaries and let their constituencies collapse. 

Transnet adds fuel to the fire by incompetently running our supply lines and crucial commercial infrastructure. The terrible performance of the parastatal has resulted in immeasurable damage to the economy in the form of delays, backlogs and the destruction of the road network. 

All the while Transnet looks on as our railways and ports deteriorate. And while people beg them to sort themselves out, government can only admit that it doesn’t have the skills to solve the crisis. 

Attempts to partially privatise Transnet’s Durban Container Terminal (DCT 2) have been met with opposition from unions, who say as many as 55, 000 jobs will be lost if the partial privatisation goes through. 

I find this hard to believe. Why would privatisation shed 55, 000 jobs if those jobs were at all useful? And if those jobs were unnecessary, then why should they be protected? 

So even when Transnet tries to sort out its dire state it is met with petulant opposition from trade unions and ideologues. Similarly to how unions prevented Eskom from being privatised in the 1990s, they are now preventing Transnet from desperately important attempts to save SA’s infrastructure from itself, all for petty ideology and greed. 

While Transnet flip-flops between privatisation and retaining relevance it is attempting to borrow R18bn from the Brics Bank to be used to upgrade locomotives that will inevitably be torched by saboteurs or collapse on rusted railways. 

On every front SA’s essential economic infrastructure is collapsing and causing no end of strife for South Africans. Local government, Transnet, Eskom and every other public sector entity that is meant to keep roads paved, water clean, electricity on and trains chugging along, have failed to fulfil the very basics of their job. 

The solution to all their failures is the same: remove these responsibilities from their domains and place it in the hands of profit-motivated, pragmatic, non-political actors. Put simply, infrastructural maintenance, expansion and construction must be privatised as much as possible. Trade unions and their petty whining must not be allowed to get in the way. 

Profit and reputation

Companies are motivated by profit and reputation to do their job. If they are unable to service railways and allow trains to deliver freight, they don’t make money. If they can’t produce electricity and sell it to consumers, they don’t profit. If roads are unusable the companies that built them won't be paid.

Some infrastructure can be privatised more simply than others. Electricity could and should be de-monopolised and left to a flourishing free market immediately, for instance. But even for harder-to-privatise infrastructure such as roads there is a free market solution.

Rather than putting the responsibility of road maintenance under local government, assign an area to a company that has won a fair and transparent tender. Pay it directly from the national budget, or even from local taxpayers. Eliminate as many middlemen as possible. 

Perhaps in other countries infrastructure can be publicly owned and run efficiently. But not in SA. The ANC government has proven repeatedly that it is incompetent and unwilling to do its job properly. The solution is to take the job away and give it to those who have proved they get things done. 

• Woode-Smith, an author, economic historian and political analyst, is a contributing author for the Free Market Foundation. He writes in his personal capacity.