SA’s political economy still comes unstuck in governance silos as talk is easier than action

The devil is, as always, in the details. Ministers and officials can talk about coordination – and even establish so-called bottleneck-breaking special units in the highest executive office – but still splutter on delivery, as has emerged in recent budget votes, or spending and policy plans. 

South Africa’s Economic Reconstruction and Recovery Plan for inclusive and transformative growth, announced by President Cyril Ramaphosa in Parliament on 15 October 2020, is built around job creation through aggressive infrastructure and mass employment programmes, regulatory reform, fighting corruption and creating a more capable state. 

The 2021 budget vote ministerial speeches did not reflect such a concerted, coordinated approach. Never mind all the talk about master plans from the departments of trade and industry, communications, transport, water and sanitation, and others. 

Take harbours, for instance. 

Much has been staked on expanding Durban Harbour through a public-private partnership, as emerged during the presidential visit there in April. The R100-billion needed must be nailed down before the Port of Durban Master Plan can realise its expansion.

As the government, from Transnet to Public Enterprises, Transport, and Operation Vulindlela – the joint Presidency/National Treasury governance bottleneck-breaking unit – focuses attention on Durban Harbour, Business Day reports that capacity constraints at Saldanha Harbour have limited exports by phosphate miner Kropz, where business tycoon Patrice Motsepe has a majority stake. 

“There is a need to align the TNPA [Transnet National Ports Authority] pricing methodologies to those of port regulation for competitiveness and efficiencies of the terminal operators,” said Public Enterprises Minister Pravin Gordhan in his 25 May budget vote speech.  

The harbours in Cape Town, Gqeberha and Coega also require investment to overcome delays and capacity constraints. But Public Works and Infrastructure will focus on the development of 12 small fishing harbours, according to Minister Patricia de Lille’s budget vote speech on 25 May. 

Exports, although not necessarily through harbours, were key to Trade, Industry and Competition Minister Ebrahim Patel’s 18 May budget vote. Alongside localisation and boosting investment, exports are part of his department’s “future strategic focus, based on deeper integration of our efforts to galvanise inclusive growth and build local industrial capacity”. 

The government set a 20% localisation target valued at R200-billion over the next five years in non-petroleum sectors. Research that Business Unity South Africa commissioned from the consultancy Intellidex showed that while import substitution was a positive policy direction, it needed flexibility and the right conditions, such as capacity, clear demand pipelines, and pricing. Not all sectors have this. 

For Patel, master plans are central to South Africa’s economic reconstruction and recovery. From three last year to six in 2021, these master plans led to, inter alia, an additional one million chickens produced and lower sugar imports. 

Much-promised – all the way back to Ramaphosa’s first February 2018 State of the Nation Address – but yet to be delivered is the spectrum auction. 

It’s crucial for the digital migration – South Africa missed the global mid-2015 deadline to move from analogue to digital broadcast technology  – and also to free up spectrum for greater broadband roll-out. 

Without the spectrum auction, Communications Minister Stella Ndabeni-Abrahams’ digital economy master plan remains elusive – even if the minister prioritised it in her 18 May budget vote for “tech-enabled opportunities that drive inclusiveness, employment and economic transformation”. 

But for a 17-word reference to litigation hampering “our determination to rebuild our economy”, no one would know the spectrum auction has stalled, again. 

In March, Telkom and e.tv obtained an interdict against the regulator, Icasa, after successfully arguing the process was flawed. 

That court interdict has become a convenient escape from responsibility for officialdom, but this overlooks that the reason for legal proceedings arises from how the spectrum auction was framed, from ministerial policy directive to officialdom’s implementation. 

Like land, spectrum was contested, said Ndabeni-Abrahams. 

Also contested is energy. 

That additional electricity into the strained grid prone to Eskom-triggered rolling power outages is needed is agreed, as is the just transition from coal. It’s just the when, how and other details that remain fudgy, and depend on who does the talking. 

Gordhan was clear that the just transition was happening. And his budget vote speech said Eskom was doing its bit here and for independent power producers, while getting itself into a better state of financial health. 

A week earlier Mineral Resources and Energy Minister Gwede Mantashe seemed somewhat less enthusiastic, perhaps in the wake of widespread criticism for having capped self-generation projects at 10MW. 

“In an alternative universe, one would immediately eliminate fossil fuel-generated energy such as coal and petroleum. However, this is not our reality, our reality is that we have vast reserves of coal and petroleum resources which we continue to exploit,” he said in his budget vote speech on 18 May.

Public Enterprises missed an opportunity to give clarity on a solution for Eskom’s long-term debt – this remains one of the biggest threats to South Africa’s economy – and the funding of an eventual just energy transition.

Perhaps this was not surprising, given the rumours that Eskom will move from Gordhan’s to Mantashe’s portfolio. 

Meanwhile, on the money front of electricity, debt owed to Eskom is R45.1-billion, 78% of it by municipalities, said Gordhan. 

Sometimes ministers held back on talking, for instance on the outcomes of state-owned entities (SOEs) reform, in deference to the president. After all, Ramaphosa chairs the SOE Council, among others, including the Presidential Infrastructure Coordination Council and the President’s Coordinating Council with mayors and MECs.