PAUL MARITZ: Three quick cuts to jump-start the SA economy

There are few sounds more satisfying than the crack of sekelbos splitting clean under a sharp axe: the reward of precision, strength and purpose. SA’s economy needs just such a moment of precision, strength and purpose if we are to ever get our economic fire burning. The time for deep pruning, not tinkering, is here.

We are past the point where vague invocations of “inclusive growth” or “social compacting” can suffice. With a national debt nearing 80% of GDP, effective state collapse in many municipalities, and growth rates limping behind population growth, the case for immediate action is self-evident. Instead of our economy, our house is on fire. There is no time to redesign the kitchen.

Fortunately, no grand new design is needed — we know what works and we have the tools and most of the infrastructure in place. What SA lacks is not insight, or models, or data. We need willpower. In place of grand, five-year plans (or 30-year plans, for that matter) or new commissions with acronymic gravitas, we propose three concrete reforms that could deliver a real and visible economic bounce within 12 to 18 months. They require no miracles, just political backbone and a willingness to have some uncomfortable conversations and offend the right people to disrupt the patronage systems that keep the sluggishness in place.

Cut BEE procurement premiums, not opportunity

SA’s BEE regime, particularly in public procurement, was conceived as a mystic ladder, some stairway to economic heaven. It has, perhaps predictably, calcified into a trap. When the state pays 10%-25% premiums on tenders purely for race-based ownership credentials, not for actual capacity, delivery or innovation, it institutionalises waste and rewards the connected few over the competent many. The façade of racial upliftment is as see-through as the Karoo in wintertime, and it has become clear for all who care to take note that political connectedness is the real determining factor in too many of these tenders.

As the Institute of Race Relations recently demonstrated, SA spends upwards of R150bn a year on these premiums, with only a fraction of that reaching the poor or truly empowering small black-owned firms. Most of it lines the pockets of tenderpreneurs whose primary skill is their proximity to power. 

How about we better employ those funds? How about eliminating these premiums and cutting VAT down to 12% or even 11.5%? This move would immediately boost purchasing power across the economy, especially among the poor for whom VAT is most regressive. In other words, redistribute downward through time-tested market mechanisms, not through patronage. Give the grandmother more for her maize meal instead of giving the minister’s cousin another Mercedes and the nauseating social media posts that always accompany these purchases.

Of course, this will prompt fury from ideological quarters, but let them rage. The Zondo Commission itself warned that BEE had become a veil for corruption, and Harvard’s Growth Lab found it to be a “tax on growth”. Moreover, people are increasingly realising that BEE has in fact failed SA economically. According to an April 2025 Ipsos poll, only 44% of South Africans, less than half, still support keeping BEE in place. 

If we are serious about transformation, we have to stop confusing symbolism with outcomes.

Axe the deadweight public service

When we speak of the “public service”, we often picture nurses and police officers. Our problem is not the essential front line of nurses and police officers. Instead, it’s the sprawling bureaucracy behind them. Underperforming administrators, underworked and overpaid diplomats, and bloated ministries that seem to exist to produce PowerPoints and organise conferences close to airports.

Public service compensation consumes about 12%-13% of GDP, significantly higher than global norms. In contrast, the OECD average for public sector wage bills is about 9.2% of GDP. A Centre for Risk Analysis report showed that SA has the third-highest government wage bill as a share of GDP among 20 major economies.

Since 1996, tax extraction has risen from 19.8% to more than 25% of GDP, even as government effectiveness has plummeted by more than 50%, placing SA at the very bottom of the global “value-for-tax” rankings. We are paying Scandinavian-level tax rates for Cuban-level governance and infrastructure development. We have passed from inefficiency to immorality. How does one enjoy a life of luxury knowing full well that it came at the cost of a disappointed and struggling populace? 

The fix is straightforward, though not painless: 

• Reduce the executive from its current 77 members to just 26 executive (ministers and deputy ministers) positions, merging or abolishing vanity departments (do we really need a ministry of sports, arts and culture?). Twelve ministers, 12 deputy ministers, president, deputy president. Klaar.

• Close underperforming Setas, whose impact on skills development is, after three decades of trying, anywhere between negligible and negative.

• Downsize or repurpose the military and diplomatic corps, absorbing critical skills into civilian border security and public safety agencies. 

These are not draconian libertarian fever dreams. They are necessary steps to prevent fiscal implosion. SA spends more on servicing its debt than on higher education. A leaner state, focused on outcomes not employment quotas, would be a step towards restoring credibility and investor confidence. 

This is not about austerity for its own sake. It is about spending less to get more — the simplest definition of reform.

Open the infrastructure taps — without the red tape

You don’t need to read a World Bank report to know that our infrastructure is crumbling. You only need to ship avocados through Durban, drive a truck from Lephalale, or take a cold shower in Johannesburg (if there’s water to begin with). 

Our ports rank among the worst in the world. Eskom, though stabilising in 2024 and 2025, remains an albatross. Trains have vanished from half the map. Water systems leak billions of litres daily. Meanwhile, public capital formation has collapsed to 14% of GDP, among the lowest in the developing world. 

The funders are there; they can simply not pass through the bottleneck of bureaucracy. 

We must unleash private investment into infrastructure through three simple acts of policy heresy: 

• Remove race-based requirements for private sector infrastructure tenders — investors want reliable returns, not ideological mazes.

• Accelerate regulatory approvals for energy, water and logistics projects, including special economic zones with fast-track status. But not like the SEZs that have been promised for years — actual hubs of investment, with real permits, real construction, and real jobs, not just ribbon-cuttings and PowerPoint slides.

• Break up Eskom and Transnet’s monopolies, not just on paper but in operational control, with credible public-private partnerships under firm rules. 

Yes, the state must still play a role but it must be a referee, not the star striker. SA's comparative advantage is not scale, it is flexibility. Our future lies in a mixed economy with a liberated infrastructure grid, not a Soviet-style ministry dictating who may build what and where. 

Let Cape Town run like Singapore. Let Gqeberha invite Singaporean port operators. Let Mpumalanga auction independent rail concessions. Let Johannesburg fix its water or let the private sector do it, and bill the city later.

Infrastructure is not charity. It is a multiplier. And if we want jobs, growth, and dignity, we must treat it as an investment, not a jobs programme. 

In politics, as in gardening, trimming often seems brutal. But letting rot fester is much worse. The irony of SA’s predicament is that solutions exist that are simple, actionable and backed by data, experience and evidence. What’s missing is the will to offend the patronage networks that benefit from the status quo, the politically connected procurement mafia, the bloated civil service elite, the ideological holdouts for racialised redistribution. 

What is needed now is what India had in 1991, what Argentina is attempting under Javier Milei: a clear-eyed acceptance that the state has reached its limits, and that the future must be built not through slogans, but through discipline and courage. 

Let’s cut BEE premiums. Cut VAT. Cut bureaucratic fat. Let the poor keep more of their money. Let capital do what it does best: let it build.

• Maritz is campaigns director at Free SA.