South Africa

South Africans dumping government services

South Africans’ use of government services has declined across the board from 2019 to 2023, with the state unable to deliver the quantity and quality of services it once could. 

This, in turn, has led to many South Africans using private companies that provide services similar to those expected of state institutions, such as private security, healthcare, and education. 

PwC revealed this in its South African Economic Outlook 2024, which outlined the major challenges facing businesses in the country. 

One of these issues is the deterioration of public services as the state’s capacity has withered away due to corruption and incompetence. 

PwC said that the country’s public sector is overwhelmed and unable to deliver the quantity and quality of services it previously could. 

The degradation or failure of key state institutions, from hospitals to the police and education, has severe implications for the economy and well-being of South Africans. 

In response, South Africans are turning away from government-run institutions and are simply not engaging with the public sector. 

The latest Governance, Public Safety and Justice Survey published by Stats SA found that the share of adults using public hospitals in the 12 months declined 6.3% from 19.9% in 2019/2020 to 13.6% in 2022/2023. 

This decline can be seen across all public sector services, including relatively well-run public institutions such as SARS. 

South African businesses have engaged the government to help it capacitate key state institutions, particularly state-owned enterprises. 

Business Unity South Africa (BUSA) has been engaging with the government to help address the challenges faced in delivering energy, logistics and crime services. 

Their collective efforts are, for example, paving the way for third-party train operators to enter the rail logistics market in 2024.

Standard Bank Group CEO Sim Tshabalala pleaded with the government to capacitate the state and make it easier to do business in South Africa on the sidelines of the World Economic Forum.

He said Standard Bank is urging African countries to reduce the risk premium associated with investing on the continent. 

To do this, he advised political leaders to liberalise their economies, make it easier for goods, people, and ideas to flow across the continent, implement fiscal discipline, and make it easier to do business. 

Reducing red tape, in particular, is vital. “Make it only take a day to set up a company, not six months,” Tshabalala said. 

This will make it easier for small businesses to transition from the informal economy to the formal economy while widening the tax base and creating a more resilient state. 

Concerning South Africa specifically, Tshabala said the country has incredible competitive advantages but has failed to capitalise on them. He called for the state to improve its efficiency to capitalise on them. 

“Please improve the quality of our institutions. In the case of South Africa, we use the lovely phrase ‘Please capacitate the public sector’.”

“Some parts of the public sector are excellent, such as the National Treasury and the Reserve Bank. Replicate what is happening in those across the board,” Tshabalala said. 

“Please capacitate the state,” he repeated. “Please professionalise it. Please continue to make doing business easier.”


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