A SMAC in the Face #40:  Bad Luck Comes in Threes

The old South Africa had a plethora of racial legislation but it could be distilled into the three basic pillars of Apartheid.  The first, The Population Registration Act, decided what racial boxes to put everyone into.  The next, The Group Areas Act, decided where those boxes could reside and the third, The Prohibition of Mixed Marriages Act, prevented those little boxes from playing housey, housey.  These three pillars along with their supporting Acts were swept away by 1994 and the unholy trinity of the Tripartite Alliance – ANC, SA Communist Party and Cosatu – created a new hegemony.  It seemed as if SA’s bad luck was going to continue in triples and it was only going to get worse.

After the euphoria of victory died down, the Tripartite Alliance got down to the serious business of transforming South Africa.  Unfortunately, the ANC were indulgent midwives.  Protest action, making the country ungovernable and labour unrest were the most potent tools that helped to overthrow Apartheid.  28 years later and this intransigence continues to roil the economy.  It seriously hamstrings growth and this is in the face of ever-increasing levels of unemployment.  A recent study reports that a third of South Africans are earning less now than before Covid yet government and SOE workers have managed to wring at least inflation related increases out of the fiscus on top of their above par salaries. 

From a policy perspective, AA (Affirmative Action) and BEE (Black Economic Empowerment) constitute the two other pillars that underpin the present foetid state of South Africa.  These two policy initiatives were so enthusiastically pursued without any thought to reality that AA destroyed all institutional knowledge and BEE forced the insertion of letterbox companies into all procurement processes.  They added no value whatsoever except for their BEE credentials.  In many cases, the markups due to these Johnny Walker Blue companies have been eye watering.  In addition, while these two policies might not have created corruption, they provided fertile ground for it to take root with a will.

I know of not one SOE (State Owned Enterprise) and Government Department with the exception of Finance and Justice that is not become a joke.  They are riven with incompetence, venality and laziness and are overstaffed to boot.  However, one must single out Eskom as the single SOE that has the potential of collapsing the economy overnight and is an exemplar of those three pillars at work.  AA ensured that Eskom did not have the skills to undertake the supply expansion needed and to maintain the existing network.  BEE in the flagship construction projects and coal supply contracts coupled with the lack of skills has ensured project timescales doubling and huge increases in coal costs that is now often trucked in instead of being brought in by rail.  The latest bout of loadshedding, one of the most severe in the history of loadshedding, was brought about through illegal striking by militant workers that caused 16,000MW to go off line which is about a third of the total capacity.  They eventually only returned to work after rejecting all wage offers until they exceeded inflation in addition to a variety of direct one-off inducements.

Instead of transforming SA into a more equitable country, these three pillars have transformed South Africa into a shadow of its former capable self and has deepened the inequality through the rising unemployment rate.  Not only have we achieved junk status, but dump status as well.

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