Money Down the Drain

We could not help but notice this rather useful summary of completely wasted expenditure on state-owned companies put out by Free SA. The figures are eye-watering: a total of R520 billion in taxpayer-funded bailouts to state-owned companies over the last decade. Most (R241 billion) went to Eskom, R61 billion to Transnet, and R48 billion to SAA.

When was the last time you saw an SAA plane in the sky? The airline became a tragic motif for corruption and mismanagement under former chair Dudu Myeni, now declared a delinquent director. She was all about “transformation” and that meant rewarding her buddies with contracts even if it meant sinking a once proud airline. The airline ended up in business rescue (until 2021) but is a skeleton of what it once was. It was not a commercial enterprise. We flew to destinations in Africa that made no commercial sense, but we did it to “fly the South African flag.”

Then there’s the R8 billion to the Post Office, now in business rescue (since 2023). Many Post Office buildings in small towns across the country have been abandoned and looted.

The R520 billion spent on SOE bailouts could have been spent on building 8,600 new schools, or 2.6 million homes and a police force three times larger than it is, says Free SA.

The state pays 10-25% premiums on tenders based on the race of the suppliers. The Institute of Race Relations reckons this has cost the country R150 billion a year, with just a fraction of this money trickling down to the poor – the intended beneficiaries of black empowerment.

Public servants – who are 50% better paid than those in the private sector – now consume about 13% of GDP, well above the OECD average of 9.2%.

“Since 1996, tax extraction has risen from 19.8% to more than 25% of GDP, even as government effectiveness has plummeted by more than 50%, placing SA at the very bottom of the global ‘value-for-tax’ rankings. We are paying Scandinavian-level tax rates for Cuban-level governance and infrastructure development. We have passed from inefficiency to immorality,” says Paul Maritz of Free SA.

What’s the Solution?

Get rid of race-based privileges on tenders, break up Eskom, Transnet, and other state monopolies, and throw open these services to the private sector. Accelerate regulatory approvals for energy, water, and logistics, including Special Economic Zones.

“Let Cape Town run like Singapore. Let Gqeberha invite Singaporean port operators. Let Mpumalanga auction independent rail concessions. Let Johannesburg fix its water or let the private sector do it, and bill the city later,” says Maritz.

“Infrastructure is not charity. It is a multiplier. And if we want jobs, growth, and dignity, we must treat it as an investment, not a jobs programme.”

What is needed now is what India had in 1991, what Argentina is attempting under Javier Milei: a clear-eyed acceptance that the state has reached its limits, and that the future must be built not through slogans, but through discipline and courage.

Let’s cut BEE premiums. Cut VAT. Cut bureaucratic fat. Let the poor keep more of their money. Let capital do what it does best: let it build.

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