CAIPHUS KGOSANA | The roadmap for economic reform could be derailed by ideology and elections

There is some excellent work being undertaken in the Presidency, to add some steam to promised economic reforms business has been begging for, for years now. But it’s all at risk of being undone by politics and misguided ideology.

President Cyril Ramaphosa long realised that relying on the bloated and under-delivering public service to effect reforms in the network industries of energy, transportation and telecoms was a complete waste of time. The bureaucracy was simply incapable of rolling out reforms of this magnitude, and in some cases unwilling.

Outside help would be required, and that’s why he turned to the private sector for assistance. For this to succeed, his office had to take the lead. I also understand business insisted on the Presidency driving the joint initiative as a condition for its involvement.

Strategically managing this collaboration has been the project management office working with technocrats from the Treasury under the Project Vulindlela umbrella.

Once this was in place, it became easier to set up crisis committees on energy, logistics, crime and corruption with partners in business. CEOs of 115 companies later signed a pledge to help government fight crime, fix rail and ports, and end load-shedding. This pledge is not gathering dust in some office in the Union Buildings. Captains of industry have rolled up their sleeves; actual work is being done and the results are starting to show.

The national energy crisis committee (Necom) started work much earlier than the other two and has made considerable progress in implementing the energy action plan. The shift they have put in is the primary reason Eskom’s coal fleet is performing at such impressive levels and why load-shedding has been contained at stages 1 and 2 for the past several weeks. We’ve practically had zero blackouts since Friday.

The shift they have put in is the primary reason Eskom’s coal fleet is performing at such impressive levels and why load-shedding has been contained at stages 1 and 2 for the past several weeks.

The joint initiative against crime and corruption (JICC) is also doing splendid work behind the scenes. Business has already started the process of digitising the forensic analysis capabilities of the National Prosecuting Authority’s investigations arm — the Investigating Directorate (ID). This forensic technology solution will enable the ID to trawl through laptops, phones and other digital devices to quickly analyse data that would have taken months, if not years, to decipher in hard copy format. This will speed up financial crimes investigations and help bring more state capture crooks to book.

But perhaps the most important job is that of the national logistics crisis committee (NLCC), tasked with fixing a broken Transnet whose gross inefficiency is starving its own customers and the fiscus, and choking the economy.

The NLCC has drafted a 123-page roadmap for the freight logistics system that could become the paramount blueprint for rail and ports revival since 1990, when the apartheid government corporatised South African Railways & Harbour into Transnet — a nimble state-owned business enterprise unencumbered by bureaucratic lethargy and onerous regulations. This gave it the edge to run rail and ports on a commercial basis as a  monopoly.

Now the roadmap proposes the complete dismantling of this monopoly in favour of liberalisation of ports and rail. It sets expedited timelines for introduction of private players on the rail network, and private port terminal operations. An infrastructure manager — separate from Transnet Freight Rail (TFR) — will manage access to the network, set rules of play and levy fees on all operators, including TFR itself.

These tariffs will be decided by an independent transport economic regulator in the same manner that energy regulator Nersa sets electricity tariffs for Eskom.

Transnet is being encouraged to create its own rolling stock company to lease excess locomotives and wagons to the private sector and unlock a new revenue stream.

A similar opening up of the ports is envisaged in the roadmap. The separation  of Transnet National Ports Authority (TNPA) from Transnet core operations has started. The drafters of the document want to see it become a wholly independent owner of ports and landlord to numerous terminal operators, including Transnet Port Terminals (TPT). 

This is a radical shake-up of the logistics system, the economy’s oxygen. A full adoption of this roadmap by cabinet and total implementation of its bold proposals — alongside a reduction in load-shedding — will stimulate the economy faster than any other intervention. The implementation timelines set in the roadmap might be somewhat unrealistic given that you can’t completely bypass the inept public service. But because these will be driven by the Presidency, there’s likely to be a greater emphasis on urgency.

So far, Ramaphosa has managed to keep these opponents of progress at bay by managing these specific reforms directly from the West Wing.

Imagine a rail network where a plethora of private operators run hundreds of freight trains per day alongside TFR; carrying the bulk commodities, chemicals, agricultural produce, manufactured products and container cargo that the state-owned entity simply has no capacity to accommodate. Imagine efficient ports with state-of-the-art equipment able to turnaround cargo ships faster and handle a lot more containers per day. 

The roadmap makes this all possible. Except it could be scuppered every step of the way. There are powerful forces in the ANC opposed to economic reforms that limit state control over what are considered strategic assets. Some of these people are driven purely by the ideological blinkers they wear. They still believe, contrary to all evidence, in some fantasy capable state, ala China and Singapore, owning key economic assets and managing them efficiently on behalf of all of us. Then there are others, of course, who still see a window of opportunity for state capture 2.0, where they and connected cronies line their pockets while SOEs die.

So far, Ramaphosa has managed to keep these opponents of progress at bay by managing these specific reforms directly from the West Wing. He also has the support of majority ANC branches who comfortably carried him back to power at Nasrec last December, so he doesn’t need to please factions any more.

But what happens if, as widely predicted, the ANC scores under 50% in the 2024 general elections and has to beg the EFF to keep it in power through a coalition? Their first condition would be a reversal of these reforms and loss of all gains in favour of moribund state control once more.