Poisonous politics a risk to us all

South Africa is experiencing its most poisonous political times since the advent of democracy. This poison doesn’t end at politics. It seeps through to the economy. How else do we explain the clumsy intrusion of politics in the country’s state-owned enterprises (SOEs)?

Make no mistake, these are poisonous political times for SOEs. The state capture commission of inquiry has exposed the deeply damaging effect of politics on one specific government entity – Eskom.

Politicians are impervious to how their actions, and politics in general, have become such a preoccupation of SOEs, instead of doing what they were set up to do.

Most SOEs have simply become funnels that money from the state goes through without achieving the intended goals while enriching consulting firms, tenderpreneurs and a few politically connected elites.

Recently, when asking for more money to aid Eskom, specifically an additional R56 billion in the next financial year, Minister of Finance Tito Mboweni issued a chilling warning:

“I wish to repeat what I said in my budget vote speech: ‘We really and truly cannot go on like this’.”

It fell on deaf ears.

More concerning is that the poison of politics has made those leading the state indifferent to warnings from colleagues about the long-term risk posed by entities such as Eskom to the country’s ability to get out of the economic glut it is in. The International Monetary Fund and rating agencies have also repeatedly warned about the risks of drag down effects on potential growth.

It seems almost indisputable that this poison of politics has an even more sinister intention about it, paralysing the state’s ability to direct the way government can or is supposed to work, evolve and better its service to citizens.

Much of what we are witnessing now is politics being used to reduce a government bureaucracy to an inefficient, unworkable and chaotic one. Politics is reducing the state to a tool in the hands of ill-meaning individuals.

No one is immune

Not even the president is immune to the poison of politics, as we have seen with the recent email leaks and allegations of corrupt practices. The result is diverting attention from the deteriorating conditions of the economy and the overall wellbeing of the country.

Tellingly, the ‘new dawn’ that was supposed to unite different factions within the ANC has failed. The party’s national executive committee is now even more deeply divided.

This is why the political disposition is poisonous – it has muted those leading government.

The troubles this brings about manifest in SOEs that are used in the political games played by leaders within the governing party. The not-so-invisible hand of politics decides who is appointed to these entities, who is awarded tenders to service them, and why keeping them as they are matters to them.

SOEs in perspective

The working assumption of the ANC-led alliance that SOEs are a ‘must’ defies economic logic. The economy has the symptoms of a weakening fiscal position in that (i) it has retreated in the past 10 years, (ii) it has a widening budget deficit, and (iii) government debt is almost 60%.

The poison of politics is such that China’s approach to SOEs is often held up as a model to use by politicians to rationalise their logic for keeping SOEs. The rocketing debt of Eskom alone continues to pose a risk not only to the fiscus but to the economy’s ability to recover. How much more so when SAA, the SABC and now Denel are added to the crisis.

Considered together with the points made earlier, it should be clear – if it wasn’t then – that the state can neither sustain nor afford to cushion the recklessness of the catastrophic and rising debts of SOEs.

The poison of politics has bestowed South Africa with politicians who don’t grasp the consequences of placing political ideology and aspiration over real-life economic reality.

Blind to the truth

The crisis of the SOEs illustrates this and reveals the short-sightedness of politicians in pursuing what they deem as necessary while ignoring the bad effects – namely the billions of rands required to keep them afloat.

Blinded by the poison of politics, they have failed to foresee that keeping them afloat will not be a once-off. Even more money will be required, and will still not be enough. More, more, more they will demand.

The poisonous politics that runs through the veins of the political elite is preventing them from seeing how the risks created by the ailing SOEs will clog up the economy’s ability to recover.

Their alliance partners will not permit them to cull these entities, yet that is exactly what needs to happen. They must be restructured, sculpted and refined into lean, efficient, semi-privatised machines. Or sold.

Keeping them is not an option, for the sake of the people who are the lifeblood and therefore the economy of this country.

Brought to you by Moneyweb