Budget airline Mango's business rescue plan is more about selling off a headache or finally burying the problem as the SAA dictated, revised plan was approved by creditors. Picture Supplied.
With state owned entities consistently mismanaged, pillaged, and run into the ground, economists say it should come as no surprise that the private sector was increasingly stepping in and taking over key functions of the state.
According to chief economist at Efficient Group Dawie Roodt, the debate on whether to privatise battling state entities such as The Passenger Rail Agency of South Africa (Prasa) and Transnet was immaterial, as the private sector was already taking over wherever it matters.
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He said the private sector has basically been flying passengers as the South African Airways has been crippled, financially and operationally, while the private security industry has grown three larger than the size of South Africa’s police service.
Roodt said though the South African Post Office has not been privatised, the private sector has already completely taken over the postal service function and the private sector has also moved in to supply power as Eskom battles to keep the lights on.
“What is real is that the state is collapsing and the private sector is simply taking over those functions, whether you agree with privatisation or not. It is basically happening… because the ANC government is so incompetent that they are simply making a mess of just everything.”
Dawie Roodt
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Roodt said this was the source of discontent for the taxpayer as this meant double taxation, since citizens have to pay for their own security as they don’t trust the police.
He said already there was a private run railroad company running from Ceres in the Cape Town to the rest of the country.
“They can jump up and down and do whatever they want to and they can call it privatisation or deregulation, it does not matter. The point is [government] cannot do it. They proved themselves not to be able to do it.
“So, we are privatising everything so much that we can even say that we have privatised the police. There are over three times as many private security guards as police. People do not trust the police. They see the police as incompetent and corrupt so they are paying for their own security,” Roodt added.
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The Freedom Front Plus has, however, argued that privatising Transnet and PRASA was the only solution to the decay of the railway network and train services in the country.
The party’s Fanie du Toit lamented that 28 years of ANC rule has brought about the destruction of a once effective train service and railway network.
“The number of functional train stations decreased from 590 to 129. A total of 461 train stations are no longer in use, and have been vandalised and carried off bit by bit,” he said.
He said between 2017 and 2019, nearly R1 billion in tax money was spent on seemingly fruitless attempts to repair railway infrastructure, though Prasa spent a further R1 billion per year on security.
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According to Statistics SA’s National Households Travel Survey 2020 (NHTS), in 2013, 700 000 South Africans (13% of the employed population) regularly used trains to get to and from work.
By 2020, this number had dropped by almost 80%, with just 150 000 workers still relying on trains, with less than 2.2% of all households surveyed reported using trains as their main mode of transport-from the 8.9% in 2013.
“Add to that the already known cases of corruption amounting to millions of rand with the procurement of locomotives, in which various PRASA managers were implicated, and the reasons for the decay of national assets become clear,” Du Toit said.
He said Transnet awarded contracts worth R25,5 million for the construction of 554 locomotives, but was struggling to meet its commercial service obligations since 2011, with the contract amount more than doubling to R54 million in the meantime.
“It is, therefore, urgent and vital to place Transnet and PRASA under professional private management for the benefit of all South Africans,” Du Toit added.
Neels Haasbroek, United National Transport Union deputy general secretary, said privatising Prasa would result in increased costs for commuters.
He said transport minister Fikile Mbalula was the problem at Prasa because of his empty promises.
“What did he ever fix? He is [full] of empty promises. He must go,” Haasbroek charged.
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Vandalism and theft of critical infrastructure has also exacerbated the challenges of the state entities, despite a collective (Eskom, Prasa, Telkom and Transnet) R10-billion spent on security per annum on security.
To this end, the quartet have come together under the Economic Sabotage of Critical Infrastructure Forum led by Eskom group CEO Andre de Ruyter, in an effort to bring solutions to increasing economic sabotage.
Portia Derby, Transnet CEO, said they were hit both in freight rail and pipeline, both of which have an impact on the economy.
She said theft of fuel from their pipeline was so bad that there was a week when they feared Gauteng, the life blood of SA’s economy, would dry up of fuel, particularly diesel.
With 118 incidents, last year was the worst for Transnet and this year alone there have been 61 incidents to date-at the cost of R400-million a year and R1-billion environment impact.
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