Business Leadership South Africa (BLSA) CEO Busi Mavuso has highlighted sources of optimism in the South African economy despite various challenges hampering its growth potential.
For example, she notes in her latest weekly newsletter, that the results of last year’s census show good progress having been made in extending basic services to citizens, with 89% of the population now living in formal housing, compared with 65% in 1996.
Additionally, access to electricity as the main source of energy for lighting has grown from 58% to 95% over the same period.
Another source of optimism is the roadmap for the freight logistics system, a draft of which was circulated to key role players last week for comment. Mavuso says this is a big step toward confronting the serious problems in South Africa’s rail and ports infrastructure that are constraining economic output across the economy.
The document has been drawn up by experts from industry and government and envisages a reformed logistics system that will serve South Africa much better, with both public and private operators functioning in a well-regulated market.
It sets out a promising set of actions to restore the logistics system.
“I am excited to work together with partners through the National Logistics Crisis Committee to turn around our logistics and the draft roadmap is a good step forward,” Mavuso states.
Despite the country’s many challenges, there are positives for the outlook. Mavuso says good things come from partnerships, particularly between government and business.
She adds that there has been major progress on resolving the electricity crisis, with the private sector now building almost 6 GW of new generation and more projects in development.
Together with important regulatory reforms that are in Parliament, Mavuso is optimistic about an end to the electricity crisis.
The logistics roadmap is an important guide that can enable similar progress in our electricity system.
Mavuso elaborates that fast-tracking the National Prosecuting Authority Amendment Bill is equally important. The fruits of this work will enable the economy to turn its trajectory, generating jobs and the financial resources for government to give people better lives.
That will enable progress, ensuring that the next census shows further improvements, rather than confirming an inflection point now.
ESKOM EFFORTS
“Last week, we saw news of a major blow to the organised crime syndicates that currently extract resources from Eskom after the South African Revenue Service (Sars) led raids of coal smugglers and related entities across five provinces,” Mavuso says.
Sars says these syndicates have robbed the State of more than R500-million in lost revenue, but Mavuso believes the cost to Eskom of the fraud and theft undertaken by these syndicates has been multiples more.
“Organised crime has been a disease at Eskom, driving sabotage, violence, and widespread theft of Eskom resources. Sars’s actions, while principally focused on recovering lost taxes, will have the effect of putting out of business the criminals who currently do so much harm to the utility,” she notes.
Indeed, BLSA’s concern over the effect of criminal activity at the utility is what led it to provide financial support for the intelligence-gathering efforts of the previous CEO.
It also shows how far the restoration of Sars has gone – such actions were unimaginable five years ago. It is good to see Sars taking action, though much more can be done by the police to directly tackle the criminals. Through Business Against Crime, BLSA is working with government to enable this, Mavuso explains.
One of Eskom’s intractable problems is the debt owed to it by municipalities. “It is fiendishly difficult to manage this – do you cut off the municipalities, with the obvious consequences for people’s lives and the political blowback? Do you hope that government will turn around the municipalities so they can meet their financial obligations?”
Mavuso says one of the interventions to find a way through the mess is the Eskom Municipal Debt Relief Support Programme. This scheme is operated by National Treasury and enables debt relief, provided municipalities meet 14 conditions including minimum collections and a ringfencing of the Eskom account which must be paid first.
However, as of the deadline last week, municipalities representing less than half of the outstanding R58.5-billion debt had applied. The deadline has since been extended to the end of October.
However, it is only then that the hard work must begin – the scheme must not result in more damage to Eskom’s balance sheet – the write-offs must be balanced with funding from government, Mavuso warns.
To be sustainable, the national culture of non-payment must be turned around. Municipalities must step up collections, ensuring that they collect the revenue and then pay Eskom, and their residents need to pay. This will require a national effort, she concludes.