EDITORIAL: Investment pledges? No, business needs electricity

If local and foreign companies are falling over themselves to pour money into SA, as President Cyril Ramaphosa told everyone at his investment conference last week, then why is growth stuttering along at less than 2%? And why has the unemployment rate set increasingly grim new records since he launched his annual shindig four years ago, even as Covid has waned?

If SA is really that receptive to private capital, why would communications minister Khumbudzo Ntshavheni, in the same week, lash out at former SA Post Office CEO Mark Barnes for suggesting a public-private partnership for the failing parastatal, accusing him of deliberately hobbling the entity so that he could buy it on the cheap?

When Barnes left the Post Office in 2019, it had no need of National Treasury guarantees and was in verifiably better shape than the entity that posted a R444m loss for the three months to March 2021.

And if SA’s investment climate is as ripe for the picking as Ramaphosa’s coterie of advisers suggest, why are two local businesses of long standing closing or relocating precisely because of a business environment they feel is wholly unsupportive?

Massyn Vervoer, a long-haul transport group that was established in 1984 — hardly a propitious time in SA’s history — said last week that it would close its entire SA logistics operation "due to the market conditions in the road freight industry, the vandalism and damages we experience and the overall challenging SA economy".

Bell Equipment, meanwhile, which first set up shop a few years after World War 2, said this week that it would shift its manufacturing of articulated dump trucks to the northern hemisphere to ensure it is "less exposed to the risks presented by the volatility of the SA landscape".

These realities suggest that the investment pledges Ramaphosa speaks of are largely political hot air — money that would have been spent on sustaining operations anyway, particularly in the case of the mining sector, where companies such as Impala, Anglo and Exxaro have long-term budgets for mines with a life of 20-plus years.

Renergen’s R14bn "pledge" is equally disingenuous — this is what its Virginia gas and helium project will cost to be brought to full production. That money would have been spent regardless.

That big business has endorsed Ramaphosa’s showmanship is galling, given the frustration it frequently expresses, both privately and to shareholders in annual reports, at the government’s stewardship and lack of economic reforms.

What Ramaphosa should be giving industry, rather than academic investment pledges, is simply more electricity.

The lack of available power is probably the single largest cap on SA’s growth, not to mention new investment. Yet, six years after Ramaphosa promised that load-shedding would be gone, SA is still gasping for power as Eskom lurches from outage to outage.

But most importantly, SA needs an honest state that is prepared to ditch its ideological baggage: its dislike of private capital and expertise, and suspicion of entrenched business. It needs the humility to acknowledge its part in the destruction of the utilities — from Eskom to the local municipal waste works — that provide the platform for an investment-friendly destination.

The irony, of course, is that SA has experienced a de facto wave of privatisation as operators other than the state have stepped in to fulfil its roles: schooling, health care, postal services and security. For this, citizens and companies are effectively paying twice, once in taxes and again to the private sector company doing the actual job.

Despite Ramaphosa’s pledges, the government has failed to cash in on any of the advantages that a truly open-minded state would have embraced.