South Africa’s government needs to change – former World Bank head

Former World Bank president David Malpass said South Africa is a country with giant potential but needs fundamental changes at the government level to reach that potential. 

Malpass told Bloomberg TV that South Africa is having “severe difficulties” regarding growth, inflation, a weakening currency, and providing essential services like electricity and clean water.

He also said the country is experiencing a breakdown of its infrastructure, and there is a “huge amount of work to be done”.

While the private sector has been stepping in to fill some of the gaps left by the government, Malpass said they cannot make up the difference.

“Governments are needed in some of the basic infrastructure, like the maintenance of transmission lines,” he said.

For example, Malpass pointed to Eskom, which has been having difficulties for the past 10 to 20 years.

“It’s heavily unionized, very hard to get the maintenance done, and the actual production of electricity is insufficient to keep the grid going,” he said.

“And that means that private companies then turn to diesel generators. So you lose your best customers, and you’re increasing the carbon intensity at the same time.”

When asked what went wrong in South Africa to reach this stage, Malpass said that after the country became independent and gained its freedom, it inherited good infrastructure.

This infrastructure needed to be maintained and increased, which is where the problems arose. 

“That’s the hard part for governments to find a political system that really makes decisions. Decisions on spending, for example, where they often were spending too much on things that weren’t working,” he said.

In addition, South Africa needed a flexible labour force, which is critical for growth.

“South Africa really needed to focus on how to have skills for the labour force and then allow the labour force to move around within the private sector. And that got lost over the decades.” 

Malpass acknowledged that the government is taking steps to adopt reforms and better South Africa.

“They’re constantly working on it. President Ramaphosa has been in lots of international meetings, looking for ways to pull the country forward.”

He said a lot of what is needed to help the country is getting the details right regarding electricity production, distribution and transmission.

It is also important to allow the private sector to create jobs and grow the tax system, which is still “problematic”.

“You’ve got these core problems that need to be addressed from the top down from the government side,” he said.

“It’s a country with giant potential but really needs fundamental changes at the government level. I don’t think the private sector by itself can make up for it.”