First published in the Daily Maverick 168 weekly newspaper.
Even if the workings of State Capture are not well understood, its impact has been felt by the SA taxpayer; public funds earmarked for crucial service delivery programmes have been diverted to support financially distressed SOEs.
In the State Capture story, there are villains and heroes. Public Enterprises Minister Pravin Gordhan still enjoys hero status and the history books will acknowledge his bravery for speaking out against a kleptocratic state under Jacob Zuma – even when it wasn’t popular to do so.
But the history books will also acknow
ledge Gordhan for being a key public servant since SA transitioned to democracy in 1994, because he was the SARS Commissioner, headed the Finance Ministry (twice) and Co-operative Governance and Traditional Affairs. In other words, he had a grip on the levers of power and state decision-making.
When reflecting on the sorry state of SOEs, Gordhan cites the State Capture project as the main reason for their crippling financial and governance woes: “In recent years, the SOEs have been honey pots of State Capture, largely because of their large procurement spend … Unfortunately, we are still recovering from the terrible damage caused by looting and State Capture,” he wrote in a DM168 opinion article.
This has also been Gordhan’s default position when briefing MPs in various committees about the financial affairs of Eskom, South African Airways (SAA), Denel, the Passenger Rail Agency of SA, and other SOEs.
But Gordhan has failed to reflect on his place in several government administrations and the role his ANC colleagues have played in the mismanagement of SOEs, using them to grease patronage networks. It’s as if the Cabinet and the governing ANC had no control of the shady goings-on at SOEs; that State Capture was an external force that single-handedly appointed ethically challenged directors to boards, and unlawfully channelled lucrative contracts to politically exposed individuals.
Since 2004, SA has adopted a developmental state model that involves using SOEs to invest in rail freight infrastructure, for instance, to grow the economy and create jobs. Yet the development state model has failed outright – SOEs have weighed negatively on economic growth and depend on government bailouts for survival. Just look at Eskom.
In his opinion article, Gordhan said the “government’s aim is to stop the reliance of SOEs on the fiscus”. His assurance has been undermined by SAA, which has asked the government in the 2021 Budget Review for an additional R3.5-billion for its never-ending business rescue process. This is over and above the R10.5-billion SAA received in October 2020.
Gordhan, working with Mineral Resources and Energy Minister Gwede Mantashe, is also targeting reforms at Eskom and SA’s energy generation capacity. So far, the report card isn’t glowing. The restructuring of Eskom’s R480-billion debt continues to be sidestepped by the government.
Despite administrative progress, such as the government amending laws for electricity self-generation by private firms, not a single additional megawatt has yet been procured or added to the national grid.
Instead of expending more oxygen and energy to explain the impact of State Capture, Gordhan needs to move with speed on reforms. They are simple: hold the line on further SOE bailouts, pare back the degree of state ownership of entities (there are about 700), and reduce Eskom’s monopoly on power by embracing self-generation and renewable energy. DM168
This story first appeared in our weekly Daily Maverick 168 newspaper which is available for free to Pick n Pay Smart Shoppers at these Pick n Pay stores.