Fun and Games for 2024

Fun and Games for 2024

As South Africa says goodbye to another year, we are forced to concede that, unlike the Springboks, our transport and logistics industry did not pull off any last gasp saves. As NICK PORÉE details, the sector most certainly did not emerge as champions in 2023.

Transnet showed a loss of R5.7 billion, while the National Treasury estimates that rail inefficiencies cost the economy R411 billion in 2022, and possibly even more in 2023. The state-owned enterprise (SOE) has debts of R135 billion and – because “nothing is for mahala” it allegedly pays R1  billion per month in interest alone.

Transnet has asked for a R100 billion bailout which will somehow apparently make it “cost-effective”, but would this bailout see even more interest lumped upon the corporation? To Transnet’s struggles we can add a loss of R23.9 billion by Eskom and hundreds of billions of rands in additional losses to industry from 6,000 hours of loadshedding (a massive 59% increase on the 3,773 hours lost in 2022).

Despite higher tax recovery by SARS, the net effect has been a R44-billion drop in fiscal revenue, with implications of budget cuts and a reduction in government services. This comes at a time when the majority of our provinces, municipalities, and SOEs lack the technical and managerial competence to fix what is broken or recover their productive capacity. Many are on or over the verge of bankruptcy. Added to this, there is ongoing waste of about R15 billion per year on transport delays at our borders… and even more on the inefficiencies of our import-export logistics systems.

The medium-term budget policy statement showed that the government employee wage bill increased from R408 billion/year in 2013/2014 to R724 billion in 2023/2024 (a 77% rise over 10 years). The number of government employees earning over R1 million per year has increased by 450% from a decade ago, with 55,000 public workers now considered millionaires. Discussions on the current social and possible basic income grants all seem to start with South Africa’s “extreme inequality and increasing poverty”. No mention is ever made of the fact that the current economic mess is the direct result of policy decisions by government and the continual erosion of private sector productivity by government failures. Mismanagement of finances and lack of government competence and productivity are wasting what the private sector produces and exacerbating poverty. Private sector South Africa Ltd. is rapidly getting poorer.

We are told that South Africa is one of the most unequal countries in the world, with a Gini coefficient of 67. Yet we waste funds on inefficiency, ideology, and political ambitions as though we have the money to spend. The latest suggestion is that we dig into the Gold and Foreign Exchange Contingency Reserve (GFECR), which holds about R497 billion. This is reportedly essential to address “the moral and legal imperative to utilise available resources for development, rights, and reducing suffering”. This is not regarded as “borrowing” from the savings of the taxpayer; it is, in this case, for mahala.

The questions are, what “development”, whose “rights”, and how will this “reduce suffering”?

We hear of billions of dollars of foreign aid received for a range of objectives such as climate change, “just transition”, and Eskom bailouts. If more funding is made available, the objectives will presumably widen to include Transnet support and Mosgas contracts, as well as the National Industrial Participation Programme (NIP), Vulindlela, the Transkei bridges, Boegoe Bay, and a range of other schemes which do not appear to yield anything useful in terms of increased economic output.

As in soccer, once we feel like we are in the ascendancy and that there is money left to play with, it will get dribbled around until it gets finished as usual, instead of being directed incisively towards scoring goals. Government does not assume that it is necessary to make profits from investments, and there is minimal assurance of anyone with competence using the funds to achieve economic objectives. With all the money being poured into the trough, there is no mention of returns on investment, increased production, economic growth, or sustainable development of productive business.

Can any of the SOEs expect to produce anything at an affordable price – whether electricity or railway services – after soaking up hundreds of billions of rands in loans and borrowings? When all borrowings have been exhausted, the only final source of revenue will be to go back to the taxpayer, in the form of income tax, wealth tax, VAT, and/or other levies and grants to SOEs to repay interest and borrowings.

When compared to the dynamic changes in the rest of Africa, South Africa is becoming moribund, locked in an imploding state of disaster. Other countries are profiting from private investment in new rail, road, and port developments and increasing economic activity. Companies with South African origins and connections are putting their money elsewhere and scaling back activities due to a lack of skills and excessive regulatory obstacles to business.

With our current levels of unemployment and recent history, it is obvious that we are better at playing games than we are at creating profitable work. Maybe we need to blow the whistle now to start the elections…

Published by

Nick Porée

Nick Porée is a transport economist and freight transport consultant; he has more than 40 years of experience as a consultant in freight operations management, systems development, training, and transport research. His company, NP&A, has for the past 10 years been a consultant to the South African Department of Transport (National Transport Masterplan), National Freight Logistics Strategy and Road Freight Strategy. It has performed cross-border and corridor studies in Sub-Saharan Africa for World Bank, United Nations Economic Commission for Africa Trademark East Africa and other agencies. He was the freight transport consultant for the Southern African Development Community Tripartite project on liberalisation and harmonisation of road transport regulatory systems in the Tripartite region (now designated Tripartite Transport and Transit Facilitation Programme). He is contactable at or www.
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