President Cyril Ramaphosa will deliver his State of the Nation Address on Thursday 9 February 2023. He will most likely take several hours to complete his speech after the usual disruptions and descent into violent chaos to which we have become accustomed.
Dutifully, the Speaker of Parliament will, as is custom, have invited senior diplomats to watch South Africa embarrass itself by showing how fundamentally unserious its “elected” national leadership is in the face of a deep national crisis. They will shake their heads and file reports to their home countries expressing even deeper concern than the previous decade in which they have done precisely the same.
But Thursday’s State of the Nation Address should not be an ordinary one. While rolling blackouts are the most pressing national issue, the truth is that our crisis now runs far deeper than rolling blackouts. We are going backwards, erasing the progress we have made since 1994.
At just over 33%, our unemployment rate is the same as it was 20 years ago. When we include the millions who have given up looking for work, our unemployment rate is a staggering 44%! Youth unemployment is even higher at 60%.
Nearly half of all children who start school never reach matric. These children become adults who cannot find jobs to build a better life for themselves and their loved ones. As a result of the joblessness, poverty and inequality have worsened, while food insecurity and hunger have returned as people struggle to put food on the table.
The country has been suffering rolling blackouts to varying degrees for most of the past 16 years. Last year South Africa, and Eskom in particular was producing less electricity than it did in 2008. Keep in mind that Eskom owes lenders close to R400-billion and spends more on servicing that debt (R32-billion) than it does on maintenance (R19-billion in 2021). No economy can function, let alone grow, without electricity.
Although the government has indicated it will take over some of Eskom’s debt, the government’s own debt servicing costs this year will amount to R332-billion, or just over R6.4-billion per week. Debt service payments are now the biggest single expenditure item in our national budget.
Ordinarily, debt is not a problem if the economy and state revenues are growing, but ours aren’t. In January, the Monetary Policy Committee of the South African Reserve Bank estimated economic growth this year to be just 0.7%, partly due to rolling blackouts and logistical challenges, a euphemism for Transnet’s problems.
Therefore, to begin to solve this crisis, we must get to the nub of the issue — money. With the ruling class having destroyed the economy and stolen billions of rand over the last 15 years, what they are not saying is that there is simply not enough money to make the investments we so desperately need.
Let me make just two examples:
Eskom needs over R600-billion to reduce its debt, conduct maintenance properly and invest in grid and other capacity to connect us to new sources of electricity. Eskom doesn’t have that kind of money as it is looking at a R21-billion loss when it publishes its financials in March.
Transnet needs R110-billion over the next five years just for its rail infrastructure. Right now, Transnet only has R30-billion, with a request for an additional R40-billion from government having been rejected, because there is no money.
Both companies have a profound impact on the economy. Were South Africa a business, it would be close to shutting down.
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We need a crisis recovery plan, not business as usual.
President Ramaphosa’s address will be meaningless if he doesn’t specify what our financial priorities and arrangements are going to be, so we know if his plans can be implemented. Not only does he need to say how much we are going to invest in solving rolling blackouts, he also needs to say how much is needed in total, and where it is going to be found.
Since we have no more room to increase the personal income tax rates of ordinary people, South Africa’s main source of government revenue, he must say which of his party’s fantasy projects are going to be suspended or canned so we can focus on our biggest problem right now.
Second, we need a municipal recovery plan because dysfunctional municipalities are beginning to cause systemic ripple effects. The dysfunction and corruption in municipalities are depriving Eskom of R55-billion in unpaid electricity when it needs that money to conduct maintenance to end rolling blackouts and invest in new infrastructure.
It only makes sense that all the municipalities that cannot manage their affairs must be put under administration, otherwise, before long they will cause a R100-billion hole in Eskom’s income statement within a few years.
Third, we must unlock private investment in energy and logistics — the backbone of the South African economy for which we have no more money. By this, I mean extending the investment from generation to transmission because Eskom doesn’t have the R144-billion it needs to build new transmission infrastructure.
Unlike what the ANC thinks, the role of the state is not limited to borrowing and spending money, but also regulating private sector conduct to prevent price gouging and exploitation. That power should enable private investment in national infrastructure.
In a country swimming in ideological taboos, many people get upset by the idea of private investment in national infrastructure; but it is unsustainable that we sit with hundreds of billions of rand in private sector capital, generated from investments by worker pension funds — but we insist on borrowing money we cannot afford to repay. This has been the ANC’s formula for digging this country deeper and deeper into debt while the rest of us suffer.
Ironically, we can turn this crisis into opportunity, but that needs a new orientation that will give us a new language for prosperity, not deprivation or mere survival.
For example, we have an $8.5-billion commitment from Western countries to assist us in the work we need to do to generate cleaner energy for the future. That is over R140-billion in grants and concessional loans that are far cheaper than the open market borrowing we currently do.
We should use that money to build solar factories where solar panels and systems are installed in millions of South African homes, by hundreds of small and medium-sized black- and women-owned businesses. This will open whole new sectors of work, advance economic transformation, and save the environment.
We are in a crisis. A crisis demands vision, fortitude, and capability. South Africa has all three — just not where it matters, and that is in a declining ANC that no longer knows how to govern.
So, as our parliament descends into chaos on Thursday night, setting off a week of inconsequential political posturing, think of all these things we could do if we had politicians who took their duty to the South African people seriously and had the capability to develop the solutions we need in this moment.
This is not the time for grandstanding. It is a time to unite South Africans behind a clear set of objectives and plans to get us out of this crisis before it is too late. And since not much will change despite all the speeches and comments on Thursday and the days after, we must set our eyes on 2024 to finally give South Africa the chance to rise from the ashes.
We can do this by ensuring that we have a new, stable, and visionary government to take us out of this mess. DM