LUNGILE MASHELE: Lack of state capacity? It’s complicated

There is oft touted rhetoric that the public sector lacks capacity. When probed about this lack of capacity, some refer to a lack of skilled and qualified people. Little consideration goes into the systemic rerouting of certain skills from the state to other countries or the private sector due to a lack of policy direction, jobs and red tape.

In the late 1990s, SA was intent on becoming Africa’s nuclear powerhouse. To this end the government channelled school pupils towards maths and science. Those who excelled were placed in nuclear programmes in various universities, offering them overseas exchange opportunities.

However, by the time these students had completed their BSc degrees the government had changed tack and nuclear was falling out of favour. This coincided with the closure of the pebble bed modular reactor programme, forcing many of its employees into Eskom.

The state power utility was touted to build another nuclear plant, but this did not happen. Instead, the young nuclear graduates are now adults in their 40s who have never worked a day in a nuclear plant and instead went into finance and business.

Over the past decade SA has also lost senior nuclear engineers to retirement, mismanagement and more lucrative opportunities overseas. The lack of investment in SA refineries has also resulted in numerous skilled workers heading to the wealthy Middle East, their decision to move solidified by the closure of half of SA’s refineries in 2022.

When conversations were initiated regarding the energy transition and how people in the coal, oil and gas sectors would have to be reskilled or become redundant, many highly skilled individuals in those sectors took up opportunities in Organisation for Economic Co-operation and Development (OECD) countries that have been pursuing oil and gas projects vigorously.

Those who stayed in SA moved to the private sector with promises of being able to work on future-fit projects. So, when we decry the lack of skills and expertise in SA, are we aware that policy inconsistency, coupled with austerity measures, led to the systemic breaking down of state capacity?

The government’s Reconstruction & Recovery Plan has identified infrastructure as a crucial driver for poverty alleviation, job creation and economic growth. However, investments in infrastructure are on the decline, leading to a widening investment gap, currently estimated at R2.8-trillion.

In 2022 total infrastructure investment in SA reached R258bn. The public sector played a significant role, contributing R158bn. The breakdown of public infrastructure spend was transport 42%, water 29%, energy 16% and social infrastructure 13%. This alone tells us where we need to concentrate the skills and capacity discussion.

The widening investment gap has led to the collapse of infrastructure in SA and resulted in a “messiah complex” due to what is expected of the private sector. So what is to be done to reverse this trend and attract skilled South Africans?

Clear and concise energy policy is sacrosanct — the flip-flopping on energy policy worldwide has been detrimental to the sector. It has resulted in sunk costs for developers and wasteful expeditions for governments, and has eroded trust in a sector that has been decimated by volatile price movements and geopolitics.

The austerity needs to end. In any healthy economy government is the main spender on infrastructure projects. An economy cannot be buoyed by private sector spending alone, especially if it is concentrated in one or two sectors, such as finance.

Timely execution is vital. Projects are taking four to six years from announcement to completion. Long and uncertain time frames make it hard to attract talent. A lot of the work in the energy sector globally is through an auction process, which further frustrates the attempt to retain skills in SA.

Outsourcing to the private sector only works if the state truly lacks capacity. However, a hollowing out of state capacity to benefit other countries and the private sector is foolish and detrimental to long-term growth, transformation and ownership prospects.

• Mashele, an energy economist, is a member of the board of the National Transmission Company of SA.