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Whither the developmental state? As it withers, we are likely to see a drift to self-governed cities

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Saliem Fakir is Executive Director of the African Climate Change Foundation

Increasingly, the poor have to suffer the worst of state incapacity. Faith in local government is in tatters. Close to 18 million people rely on the state for social support amid a sprawling spread of a decline in local management and service delivery at municipal level.

“Melancholy: an appetite no misery satisfies.”
Emile M Cioran, All Gall is Divided.

The upcoming local government elections will require sober minds and confidence that voting for your local champion will not lead to melancholy and more misery.

Several years back, the notion of a developmental state became the vogue within the parlance of ANC conferences and documents, drawing inspiration from other developmental states, particularly in Asia: the state directs both public and private resources towards concrete developmental outcomes.

Irony would have it that as much as the developmental state’s aim was to avoid the privatisation of key state assets and services, corruption, incompetence and lack of accountability are driving more and more citizens — who can afford it — to seek refuge in the private market and non-profit service providers.

The state’s capacity to do things for the majority of its people wasn’t always a poor record.

If anything, consider how Eskom was repurposed from the old apartheid era to perform new duties and responsibilities and, given its then strong cash pile, it expanded electrification to the majority of South Africans. 

This developmental repurposing also covered other state enterprises and entities covering water, air travel, rail, road and other essential infrastructure, giving access to non-exclusive public goods to those who had been previously excluded.

Former president Thabo Mbeki also inserted into the public service the ethos of Batho Pele (citizen-friendly public service). Given the development backlogs the country faced, creative solutions were found for vexing problems and public servants had to be up for it. 

The post-1994 period — perhaps the first 10 years or so — was flushed with diverse thinking and approaches to dealing with service delivery and backlogs.

There were many challenges and the structure of the economy — which increasingly became finance, service and consumption orientated — did not create enough diversification of productive capacity to bend that curve of economic exclusion into different strata of the labour force. The effects can be seen in the growing dependency — close to 18 million or so people — on the state for social support amid a sprawling decline in local management and service delivery at municipal level.

The centrality of a state in both the developmental and entrepreneurial role, as a mechanism of accumulation and the power to redistribute, is crucial for both balanced and inclusive growth. This has to be matched against globalised, sophisticated and well-capacitated private firms and agencies. Economic power also translates into political power.

One does not need to read Machiavelli’s The Prince to understand that business elites need to cultivate political relations to advance the expansion of markets and enhance business interests — here too there is room for collusion and conflict of interests. 

Private entrepreneurs are not oblivious to the role of political power to serve their needs (especially in network infrastructure) and so do not shy from funding party politics to hedge their bets that the right man or woman gets into power and influences choices that may be provident for their businesses.

The paradox of a weak developmental state is twofold — it can substitute its own lack of capacity for the capacity of private capital only because it has no option, and in so doing entrenching indirect privatisation; and second, state mandarins can go rogue by being parasitic — they can use state access to pursue their own private interests, a form of illegitimate regressive privatisation.

In South Africa, there seems to be no end to this, despite the Zondo Commission’s revelations, given that nearly R15-billion seems to have been siphoned off through corrupt means during the Covid-19 crisis. 

Developmental states can be a camouflage for more predatory interests; or worse, nice people are hired, but do not realise their best because of poor management and leadership. All of the above determines the capacity and quality of a developmental state.

Parasitism produces little in the way of productive results suggesting that managed market solutions, with reasonable profit take, is still a better outcome for society in the context of a failed state apparatus and rampant rent-seeking with no social returns.

Lack of performance does lead to fewer developmental outcomes — not only because outsourcing entrenches asymmetry of experience between the state and private firms, but also because the state does not build the institutional memory and learning to become better at its job. It outsources both the services needed and long-run capability.

The central debate within the ANC — radical economic transformation versus white monopoly capital — captures the essence of two forms of capitalist interests, but perhaps having different social outcomes. We cannot say that all of capital is good, just as we cannot say that all of capital is parasitic. But we can say some of capital is entirely parasitic with no conscience, and others, without being entirely predatory, can be socially conscious.

In life, we are often gifted with the least of ideal partners or the best of deals, but we must choose the lesser of two evils to advance positive outcomes rather than tipping the scales and descending into the abyss from which we may see no return.

The state, it seems, is no longer seen as an independent arbiter over public affairs as politicians and officials juggle their developmental obligations with those of private interests (some of whom they may actually have relations with, whether for private gain or to fund political coffers). 

In areas where private interests have to rely on state permission, a contest is brewing between perpetuating a systemic crisis versus good outcomes for all of society. The state is caught between handling things on its own or letting in the “devil’’: private firms with capacity and capital.

The recent emergency power producer’s procurement process being run by the department of energy illustrates the challenge between state centralism and getting a job done. Even though the state sought to outsource the solution of emergency power provision, it imperilled the outcome in what looks like an increasingly messy, if not dodgy, deal. 

Even if Karpowership is needed, it is sufficient to sign a short-term arrangement with it — why a 20-year deal when a lot of things can go wrong and change in 20 years?

An alternative trade-off holding little risk to the state is to allow private firms and households to generate their own power. And, for that matter, large metros that have the balance sheets to do so — but every crisis seems to only breed more procrastination and obfuscation: nothing makes sense.

Why not lift the cap on self-generation from 10MW to 50MW when domestic private firms can deliver projects at much cheaper cost, faster, and lift the burden on the grid? These anomalies and contradictions speak to contradictory state-run developmental objectives (with the creep of other interests) against common-sense solutions, even if it means signing a Faustian bargain with interests you do not like.

The developmental state should only outsource in areas where it has no clear strategic advantage as a cost driver, where it is concerned about social welfare outcomes in services and sectors that are a natural monopoly, and in areas where it is concerned about national sovereignty and security. 

Increasingly, the poor have to suffer the worst of state incapacity. Faith in local government is in tatters.

A precedent-setting case looks to go in the favour of several North West residents where they want direct oversight over rates and levies rather than hand these over to municipal officials in at least two councils in the province.

This case also brings to mind the economist Paul Romer’s idea of Charter Cities — self-governed models (which can also be outsourced to other capable nations or other cities) in which residents make rules that work for themselves and hold everybody else to them. 

One may take issue with Charter Cities because it is a controversial concept, but the idea of decentralised autonomy is likely to grow as models of self-governed cities, while the central government fails to rectify the growing wrongs and incompetence of local authorities across many parts of South Africa.

The idea of a developmental state is a healthy mess driving richer parts of society more and more into capable private service in which their money does count as a vote, versus the paradox in which public service and servants seem to outlast citizens’ votes, making a mockery of the ballot box. DM

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All Comments 6

  • “An alternative trade-off holding little risk to the state is to allow private firms and households to generate their own power. And, for that matter, large metros that have the balance sheets to do so — but every crisis seems to only breed more procrastination and obfuscation: nothing makes sense.

    Why not lift the cap on self-generation from 10MW to 50MW when domestic private firms can deliver projects at much cheaper cost, faster, and lift the burden on the grid? These anomalies and contradictions speak to contradictory state-run developmental objectives (with the creep of other interests) against common-sense solutions, even if it means signing a Faustian bargain with interests you do not like.”

    But you made crucial mistake here: if you assume that the ANC of today less about good governance and more about centralization of power (ala China) and ensuring the ANC and only those who are connected to them make up the elite, every decision starts to make sense.

    I think the ANC underestimated how much faith SA citizens have in each other and the courts.

  • At 68 I back human nature and self interest. The further those responsible for a decision are from the outcome of the decision the worse the decision making. It’s easy to turn off the water in a town you never visit let alone live in. So the premise should be local decision making wherever practical, unless economies of scale clearly dictate otherwise. Sweeping principles but easier to implement in many instances than one might think. For example. nuclear power, a touchy subject, and most think of as only being only available on big scale. Yet Bill Gates designed a nuclear plant that was about to be commercialised in a JV with a Chinese company when US/China got into a big spat, and the JV dissolved. Localised sewerage plant that returns water to drinking quality that are economic and can replace central treatment plants. We need local Government that is run primarily for delivering services like a utilities business, within a structure that recognises the need for charity towards the least fortunate. We confuse political direction and leadership with planning, organising , leading and controlling the delivery mechanisms. For example, the executive mayor function doesn’t work. A politico becomes the CEO of a big utilities company and also knows nothing about how to run a charity- yes it’s a business that needs professional management, not well intended amateur politicians. Result poor decision making, poor management, inefficiency and wastage. Time for a new approach!

  • I don’t think you need to cite Charter Cities to consider the question of greater devolution of power to cities. The establishment of metropolitan councils 20+ years ago signaled the way forward. Recent discussion of a District Development Model has revived it, or should have. What has stood in its way is politics and ideology. Why doesn’t the government take commuter rail out of the hands of government and give to to cities? All major global cities have single a metropolitan transport authority in each city, but not South Africa. Why not? Political parties need to get to grips with the political and ideological stumbling blocks that hold back sensible devolution of key powers to cities.