If the government were a company, it would be liquidated

NEASA CEO Gerhard Papenfus said that if the government were a private company, it would have been liquidated.

This is because the state is “clueless” about what is required to establish a business and make it successful, he said.

Papenfus shared these views in an interview with Newsday on Tuesday, 22 September, wherein he discussed the state of South Africa’s government.

Papenfus heads up the National Employers’ Association of South Africa (NEASA), which provides labour law, industrial relations, and legal representation services to local employers.

In this position, Papenfus frequently needs to deal with the government, which he said can be an uphill battle.

He recounted a recent experience where NEASA had to deliver an important document to the Department of Employment and Labour.

“By 9:00 that morning, we couldn’t deliver the report. The front doors were open, but the people who had to receive that document by 9:00 were still not there,” he said.

“We couldn’t deliver the document that day, and we had to go back on another day and hope we find somebody.”

Papenfus emphasised that this is not an isolated incident for companies that have to do business with the government, adding that this is no way to run a successful organisation.

“If the state were a private business, they would have been liquidated by now, long ago,” he said.

He explained that this is the result of the state having forfeited the “merit principle”, which he believes every business should prioritise.

The merit principle refers to the standard of appointing, promoting, and evaluating people based purely on their performance, competence, and suitability for a job.

According to Papenfus, forfeiting this principle degrades a business’s quality, destroys its competitiveness, and ultimately causes an organisation to fail.

The government is a stranded ship

Papenfus believes that every organisation should follow the merit principle, or risk their business failing.

“I will never, I repeat, never forfeit the merit principle, because the moment that you do, you will not have a business,” he said.

He said that this is exactly what has happened to South Africa’s government, rendering it into a “stranded vessel”.

“It’s like a ship that’s on the rocks. There is movement as the tide goes in and out, but it’s going nowhere,” he said.

This will become a problem for the government going forward, as it is now increasingly looking to partner with the private sector to accelerate South Africa’s structural reforms.

Through organisations such as Business for South Africa, the state has partnered with private companies and business leaders to address issues including electricity, water, crime, and infrastructure.

In addition, the state has started to incrementally privatise some of its functions by, for example, issuing private rail and port concessions through Transnet.

The government is also planning to open up South Africa’s electricity sector by breaking Eskom’s monopoly over the country’s electricity supply.

While big businesses have bought into government partnerships and stand to benefit, Papenfus said that Small, Medium, and Micro Enterprises (SMMEs) do not have the same opportunities.

“An SMME doesn’t get money from anywhere else other than the people to whom they sell and who buy from them,” he said.

“If you sacrifice the quality of your job, you lose your business. Period.”

In contrast, the government does not need to ensure quality in its operations, because it will be funded by taxpayer money regardless.

“The state competes with nobody. They’ve got a monopoly on the nonsense that they do, and they get our tax money for that,” Papenfus said.

“But this rubbish is thought out by people who have never established anything – and I do mean ‘never’ and ‘anything’.”

“They are clueless about what is required to establish a business and make it successful because they’ve never done it.”