South Africa

South Africa is falling apart

South Africa is falling apart, with unreliable electricity, poor railways, ports which do not function properly, a dilapidated road network, and deteriorating state finances.

Late last month, Transnet CEO Portia Derby and CFO Nonkululeko Dlamini resigned, with Transnet Rail CEO Siza Mzimela following suit a week later.

More recently, Eskom chairman Mpho Makwana resigned following a public spat with Public Enterprises Minister Pravin Gordhan.

These resignations expose the turmoil and instability at state-owned enterprises (SOEs) that struggle to provide basic services to South Africans.

Speaking to eNCA, economist Dawie Roodt said most of South Africa’s SOEs, including Transnet and Eskom, have been run into the ground.

He said the SOEs make billions in losses at a time when the state is also battling a fiscal deficit.

Apart from the concerning financial situation, Eskom and Transnet fail to support business activities like mining in South Africa.

“We don’t have electricity to take materials out of the ground, and we don’t have trains to get it to the harbours,” he said.

Even if you can get it to the harbours using expensive trucking services, the ports don’t function efficiently.

“The impact on the mining industry is huge. The minister of finance is feeling this impact because his revenue is under pressure,” Roodt explained.

Apart from the impact on the mining and agriculture industries, which struggle to export their products, the effects of Transnet’s collapse go much further.

“Because the trains don’t work properly, businesses start using trucks to transport products. However, the trucks are destroying the roads,” he said.

“The roads are now falling apart, and the country needs to re-invest to fix the crumbling road infrastructure.”

To make matters worse, the South African Police Service is not capable of protecting vital infrastructure from vandalism and theft.

Cable theft, for example, is a tremendous problem for Eskom and Transnet and causes billions in damage and losses annually.

Roodt added that the state has proven incapable of running important SOEs like Eskom and Transnet.

“What we are witnessing here is a lack of competent leadership. That is what causes problems in most cases,” he said.

“If we don’t get somebody to do a proper job running state-owned enterprises, the economy will suffer tremendously – like we are seeing already.”

He highlighted that many of these problems start at a political level. “We need to fix our political problems first before we can fix our economic and financial issues.”


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