Infrastructure: SA’s (lack of) progress in 30 years
On May 29, 2024, South Africa will have its sixth democratic election, commemorating 30 years since the end of apartheid. This article aims to quantify South Africa’s progress in infrastructure from 1994 to 2024. The period will be contrasted with the apartheid government’s tenure from 1961 to 1994.
The selection of 1961 is chosen, because it signifies South Africa’s transition to a Republic and the cessation of Queen Elizabeth’s role as the head of state. It was the peak of the apartheid government’s power.
1994 is the year Nelson Mandela became president and the beginning of the ANC government-led democracy.
The two periods are respectively, 34 and 30 years long.
The onset of democratic rule was not (as was predicted) a disaster, but the country certainly didn’t live up to its potential.
Urbanisation
Perhaps one of the most unmentioned trends is the coincidence of the collapse of the apartheid government with South Africa's transition to a majority urban population.
Unemployment
The rate of unemployment increased under ANC rule and the economy has been struggling to absorb the growing population. The unemployment rate is mostly from unofficial sources and must therefore be read in conjunction with the formal sector employment rate for which better numbers are available. The formal sector employment rate mirrors the “unofficial” unemployment rates and also indicates that the economy’s capacity to employ workers slowed since 1994 compared to the preceding period.
Economic growth trends
In his State of the Nation address on February 8, 2024, President Cyril Ramaphosa said the economy was three times larger than it was 30 years ago. However, based on data from Statistics SA, the real gross domestic product (GDP) amounted to R2.3 trillion in 2015 prices, and by 2023, it had reached R4.6 trillion. Simple division shows that the economy was only two times larger than it was 30 years ago.
There has been no significant reversal trend in GDP growth during the apartheid sanctions era. In fact, the average annual economic growth rate worsened compared to the previous 34 years’ average rate.
Only in the four years from 2004 to 2008 did the economy manage to grow in excess of 5%, surpassing its potential growth rate. Economic theory and prudent policy suggest that during such periods, investment in infrastructure, among other measures, can foster sustainable economic growth without triggering inflation. Unfortunately, this didn’t materialise.
Moreover, the South African economy has seen a decline in international competitiveness, particularly following Jacob Zuma’s rise to power. This has led to a reduction in the number of companies listed on the JSE by more than half and a decrease in gold production.
Additionally, the value of the rand has deteriorated. In the 1960s, it was notably stronger than the dollar due to South Africa's leading position in gold production. However, our gold reserves have been declining, regardless of the governing administration and throughout the new dispensation, the rate of decline has accelerated. In 2018, South African gold became the most expensive to extract compared to other top tier producers.
Electricity
The ideal time for investing in electricity generation would have been in the early 2000s, but the lack of planning combined with strayed policy options to a large degree contributed to the weaker economic and employment performance.
Infrastructure in general
When taking a broader view of infrastructure, it’s clear that the decline that took place at Eskom was not unique to electricity supply. It has been a systemic failure.
South Africa faces the challenge of water scarcity, ranking as the 25th driest country globally. This was evident during the 2018 water crisis. Water restrictions are widespread in many urban centres, with residents in certain municipalities enduring prolonged periods without water. The lack of effective planning regarding dams and the overexploitation of catchment areas contribute to the problem.
Between 1964 and 1994, the government constructed 18 new dams that could store more than 200 million cubic meters of water. Between 1994 and 2023, it built only two such dams. Since 2014, South Africa has not built any large dams.
Furthermore, there has been no significant investments in new road infrastructure, and even then the desired outcomes have not materialised, leading to rocketing costs that were often related to tender bias.
SAA, among the world’s oldest airlines, took to the skies for its inaugural flight on February 1, 1934, predating many Western carriers. However, upon reaching its centenary milestone, it found itself in a state of collapse, attributed to mismanagement and burdens imposed by tenderpreneurs. Only through government bailouts has the effectively bankrupt airline managed to remain operational. This stands in stark contrast to Ethiopian Airlines, where the Ethiopian government acknowledges its direct competition with commercially agile and well-resourced companies in the global aviation markets.
Furthermore, the major seaports have been auctioned due to the government’s inability to manage them, to the extent that Mozambique is outperforming us.
Skills flight
One would expect that the decaying infrastructure would bring an opportunity for engineers in particular. Unfortunately, South Africa has fewer qualified engineers permanently employed in local government today, than in 2005.
The root cause?
One might enquire about the root cause of all the issues, especially considering that the government is better financed with more staff and pay than ever before. But more staff, and more pay, does not necessarily mean more efficiency, as we have seen in the preceding analysis.
To add some context. More than 55 000 employees earned more than R1 million a year in 2023 – meaning a cost of at least R55 billion – while the number of ministers and deputy-ministers increased by 50% and the budget of the president rocketed.
Whatever conclusion is to be drawn from the above, it is evident that the ANC government, in terms of infrastructure, underperformed compared to the apartheid government.
It has been 30 years of missed opportunities.
Hügo Krüger, MSc in Civil Nuclear Engineering and Sdumo Hlope, BSc (Physics and Chemistry), MSc in Engineering Management, with input provided by Tisaenergy.
* The views in this column are independent of Business Report and Independent Media.
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