SA is nearing the precipice of failed state status because of government’s inability to ensure access to critical services, said the boss of Royal Bafokeng Platinum (RBPlat), joining a growing number of business leaders publicly showing their frustration with President Cyril Ramaphosa’s government.
“We are destroying ourselves. Who would want to come and invest in SA if we don’t even want to invest in it ourselves?” Steve Phiri said at the PGMs Industry Day in Johannesburg on Tuesday, adding that the country’s potential to be among the world’s top economies was slipping further out of reach by the day.
His comments echo a similar sentiment by MTN CEO Ralph Mupita, who also warned that SA risks spiralling into a failed state, an outcome that has the potential to make the country a no-go zone for investors, lead to a punishing brain drain and send shockwaves across the world.
Phiri’s statement reflects the mood in most SA boardrooms as the executives tally up billions of rand in costs to roll out backup electricity to keep businesses running and to ramp up security at their sites amid rising crime and vandalism.
South Africans have grown sceptical of SA leaders’ ability to solve problems, Phiri said, referring specifically to the many years of empty promises about dealing with the electricity supply crisis.
“In 2008, we started having electricity problems; it is now 15 years later, and things have only got worse. We have not been short of promises [from the government], but nothing has come of this ... why would we not be sceptical?”
The deterioration of Eskom’s coal-powered fleet has seen the utility resort to the implementation of near-constant load-shedding since January. Last week, Eskom was able to suspend load-shedding for a full 24-hour period for the first time this year but has since reverted to daily power cuts as it struggles to balance power supply with demand.
Phiri also spoke about the deterioration in the country’s bulk water infrastructure.
“We have serious water supply problems, people are queuing for water, and yet we hear politicians saying on television that they are sorting out the problem.”
He dismissed the excuses often given by municipalities, which blame load-shedding for causing water-supply problems, saying that SA’s water problems were a symptom of the state’s inefficiency.
“The fact of the matter is SA has not invested sufficiently in water infrastructure for years.”
Apart from the deterioration in the supply of services such as electricity, water and rail transport, Phiri also took the government to task for failing to keep South Africans safe.
“Organised crime is a problem affecting just about every industry in this country in one form or another,” he said.
The failure of the state to adequately police crime and prosecute criminals has left businesses with no choice but to take measures to ensure the safety and security of their employees and operations.
“Companies are spending a lot of money in security, not just to employ security guards to guard their assets, but also to chase and apprehend criminals because the police are nowhere to be found.”
Phiri referred to a recent incident when 300m of cable was stolen from a company site. The cable was replaced the next day and that night the thieves returned to try to steal the new cable, but the mine’s private security personnel were able to chase them away.
In an interview with Business Day on Monday, the CEO of thermal coal miner Thungela, July Ndlovu, said its mines were being targeted by illegal miners and “highly sophisticated” criminals that form part of organised crime networks.
Ndlovu said that in 2022, the company had to spend R300m to rehabilitate areas that had already been completely rehabilitated before illegal miners moved in to operate the old mine shafts.
“We are seeing illegal miners becoming more brazen. In some instances, they are accessing our operating mines to steal copper cables. Some of them collude with our own security guards to steal diesel, cables and conveyor belts,” Ndlovu said.
Phiri said high crime rates and the targeting of industries such as mining and construction were impeding investment that could help the economy grow.
“The money we and other businesses have to spend on security erodes profits. To be investable as a country you need to be able to prove to investors that their investments will be safe. International investors will not want to invest in this country if they feel they will have to deal with crime all the time.”
He warned that time to stop SA’s decline was running out. “As people, government and industry, we can collaborate to arrest the decline, but we are almost on a precipice. We need to act swiftly and decisively.”
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