This editorial by Peter Bruce, Editor of Business Day – the South African equivalent of the Financial Times – is well worth reading. It focuses on the current energy crisis, but has much wider implications.

It reflects one simple fact: after 20 years the ANC is a government at the end of its intellectual and moral life. It has no new ideas and is rotten with corruption. The ANC will, of course, win the May election, but even tolerant South Africans are beginning to run out of patience. The ANC needs that great cure for exhausted political parties – a period in opposition. Then, renewed and refreshed, it can once more take its proper place as a major party. But any party that believes it should rule ‘until the second coming of Christ’ is delusional, dictatorial and plain dangerous.


THICK END OF THE WEDGE: ANC has had long enough to experiment

by Peter Bruce, 10 March 2014, 06:38
Source: Business Day

THERE was some minor skirmishing on Twitter on Sunday, about load shedding. United by the dark in our hatred of Eskom and all who sail in her, we became our usual argumentative selves in daytime. Load shedding happens because we export all our good coal, said someone. No, said another, it happens because we export all our dry coal. Export prices are better, said another. But thermal coal prices are at a five-year low.

The always excellent Jan de Lange reported in Rapport that it started when BHP Billiton’s Khutala colliery delivered a huge load of wet coal — basically a sludge — to Eskom’s Kendal power station about 100km east of Johannesburg. It shut down six generating units in six hours. Quite a feat. What is interesting is that Khutala is one of the largest underground coal mines in the world, but what Kendal got was clearly from an open pit. What was BHP Billiton thinking?

The current mess is not of Eskom’s making. It was screaming long ago to be allowed to build more capacity, but the government wouldn’t let it until it was too late. What we are paying for now is pure ideology.

The Mandela and Mbeki administrations both set themselves to privatise as many assets as they could. Airports Company South Africa (Acsa) was sold off. SwissAir bought a big stake in South African Airways (SAA).

There were talks about privatising the ports and Spoornet and of opening up electricity generation to private competition. And a big slice of Telkom was bought by a Malaysian and US consortium.

This was tried-and-tested stuff. Margaret Thatcher had saved the UK economy doing the same thing. But inside the African National Congress (ANC) burned an idea that it knew better. It was Alec Erwin who first lit the fuse that plunged South Africa into darkness again last week. We were not going to privatise anymore because we were now a developmental state. Everything changed. The electricity firms from the US, Europe and the East went home, disillusioned. And, anyway, electricity prices in South Africa were way too low.

By now though, about five years had been wasted by an ANC government unable to make up its mind. As the foreigners went, Eskom was told to get back to the drawing board and get going on two new coal-fired stations — Medupi and Kusile. Neither has yet generated a single watt and, judging by the recent rush of promises to the contrary, power generation of any consequence whatsoever this year seems out of the question.

Meanwhile, we all know what has happened to the “developmental state” — it hasn’t developed very much. We are on the very edge of what is fiscally responsible in terms of government debt, and the government’s growth targets, modest though they are, seem wildly optimistic.

Even Iraj Abedian, an economist frequently pleased in the past to associate himself with the government, told the Financial Mail’s Claire Bisseker the other day that, “Within the ideological paradigm (I’m not really sure I understand what that means) of a developmental state, public spending has soared while public sector productivity and probity has plummeted.”

It sure has. In the term of Jacob Zuma’s first administration some quarter of a million new public servants have been employed. The public sector wage bill has doubled in this same period, to R314bn a year. We now borrow money from overseas to pay their wages.

The only way out of this mess is to reconsider the very existence of the developmental state.

What is it there for?

It should be there to create opportunities for private sector businesses to flourish in number and grow in size. Instead, it has turned the state into a recruitment agency, determined to press its face into the high winds of history and show that while successful states have retreated from running enterprises, this country can succeed where everyone else has failed.

The ANC has had long enough to experiment with South Africa.

Fortunately, there is now no more money. Still, who will account to the generation lost to outcomes-based education? For the money poured into SAA to show the state can run an airline? Who will explain to most of the 250,000 new public servants that their jobs are not real?

The fact is, it is time to put privatisation, or a version of it, back on the table. We have an opportunity now to privatise in a uniquely South African way to solve South African problems, bringing unions, the poor and investors into an inclusive pot that could change our future.

Privatisation is not neoliberal, as its detractors like to smear it.

As the state pours more and more money down the bottomless pits of its own enterprises, surely someone near the president can tell him it isn’t working. It has to stop.

If you want Kendal to work properly, sell it (or give it) to businessmen whose lives will depend on its working. President Zuma goes on and on about creating a class of black industrialists. Well, the state owns the assets a really powerful new black industrial class needs to make its presence felt. He should give them all away.

This note from the Acsa website should inspire him: “Our success as a commercial, world-class, globally competitive company is a model for successful privatisation,” it says.

“Acsa is a prime example of how an innovative, private-enterprise undertaking can emerge from a loss-making, state-run institution.” Enough said.