Disaster warning for South Africa

Former Statistician-General of South Africa, Pali Lehohla, warned that the country is heading for disaster and that there is no end in sight.

Lehohla made this comment during a discussion on SABC News about government bailouts to struggling state-owned enterprises (SOEs).

Transnet is the latest state-owned enterprise to ask the government for support to implement its turnaround plan.

Transnet said its board would discuss the plan to address its estimated R130 billion in debt with the Public Enterprises and Finance Ministries.

It followed the government’s decision to take over R254 billion of Eskom’s R423 billion debt, which include R168 billion in capital and R86 billion in interest.

Lehohla said providing SOEs with bailouts is not the solution to address the problems they experience.

“There is something far more fundamental that must happen at the SOEs than just throwing money at them,” he said.

“At the current rate and with the current architecture of conception of the state-owned enterprises, there is something fundamentally wrong.”

He said many politicians like the word ‘state-owned enterprises’, but what it takes to run these institutions is a far cry from what is happening.

Lehohla said that compared to countries that have properly run SOEs and national development programmes, South Africa’s “is a joke”.

He added that South Africa has very weak leaders. “We have people in positions of leadership, but it is a misnomer to call them leaders,” he said.

The government has leftist policies but often reverts to right-leaning economic decisions, which creates a mess.

“The leadership is bankrupt intellectually as it relates to how economic policies should work together to create a desired outcome,” he said.

He said the government’s master plans, recovery and reconstruction plans, and development models are not technically competent.

Renowned economist Dawie Roodt said the reason for right-leaning economic events is that the government fails to effectively implement its left-leaning plans.

“The ANC government is left-leaning. It is a socialist government where people call each other comrades and refer to the state as a ‘developmental state’,” Roodt said.

However, the government is too incompetent to implement its left-leaning policies or properly manage the institutions it controls.

The result is that the private sector steps in to resolve the problems created by the government, which is then seen as privatisation.

Roodt said Eskom is a good example, where the private sector started to create its own electricity because of Eskom’s failure to provide reliable power.

Another is the South African Post Office, where private courier companies took over the task of delivering parcels in a timely manner.

“It is not official government policy to privatise anything, but in reality, the private sector is taking over the tasks of state-owned enterprises,” he said.

He urged the government to accept that it is poor at running state-owned enterprises and enable a smooth transition to privatise these functions.

This article was first published by Daily Investor and reproduced with permission. Read the original here.

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