SA risks spiralling into a failed state, says MTN boss Ralph Mupita, becoming the latest high-profile business leader to express frustration about the stewardship of the economy, which is grappling with power outages, failing logistics infrastructure and corruption.
“I’m not saying we’re there [yet] but inaction could lead us there. Things we need to tackle: the energy crisis that we’re experiencing right now. Sustained stage 4 is going to inhibit growth in the country.
“There’s the logistics issue, which we feel less of, but we do feel some of it. And then there’s crime and corruption.” Mupita said. “Those are the things that we say could lead us to a failed state if we don’t act.”
Mupita’s comments reflect the wider sentiment among SA business leaders who have been tallying up billions of rand in additional costs to roll out the backup electricity to keep businesses running and ramp up security at their sites against rising crime and vandalism.
Others, such as FirstRand CEO Alan Pullinger, have taken a swipe at the government’s foreign policy, saying SA’s seemingly cosy relationship with Russia as it continues to wage war against Ukraine threatens to undermine the fragile economy.
The increasingly sour mood in corporate SA heaps pressure on President Cyril Ramaphosa, who wrote in his weekly letter that last week’s cabinet shake-up was meant to make the administration “active and capable” in its effort to build a developmental state.
“Countries with developed economies that do not face these problems may well not need such an active state. The size and design of their governments may be different to ours,” Ramaphosa wrote.
Mupita believes the state of disaster regulations give the country a “unique” opportunity to help with important national infrastructure, including telecommunications.
“Government and business must jointly seize this moment and act decisively to deal with the quadruple crises of energy; logistics; crime and corruption; and youth unemployment. Inaction risks SA being a failed nation state,” he said.
Absa CEO Arrie Rautenbach on Monday told investors that the time for decisive and cohesive action had come.
“To this end, we welcome President Ramaphosa’s call for decisive action and zero tolerance to corruption during his recent cabinet announcement. We view the reaffirmation of Operation Vulindlela as absolutely vital and urgent,” he said.
Increased load-shedding has resulted in the growing use of backup power such as generators and batteries, which have become targets of rampant theft and vandalism. This has driven up costs and threatens network availability.
Cost of power outages
Power outages cost MTN R695m, according to estimates from its 2022 annual results. This amounts to 3.4% of local core earnings of the R266bn company.
While mobile customers have in previous years grown used to increasingly worse cellphone reception during power outages, operators have been working to reduce such disruptions to improve connectivity.
Operators have realised the opportunity that comes from load-shedding, as it usually means those who have fibre or other fixed connectivity turn to mobile data services during power disruptions.
Through 2022, MTN deployed more than 2,000 additional generators to counter the effects of stage 4 and higher load-shedding. It now uses more than 400,000l of fuel a month to keep these generators operational.
Vodacom has spent close to R2bn on extra power for its towers in the past two years.
And this is all taking place in an environment of higher fuel and other price increases, driven by global supply chain challenges and the Russian invasion of Ukraine.
MTN — like its competitors — has had to increase spending on security as its network sites are targeted increasingly by criminals stealing and vandalising its generators, batteries, solar panels and network equipment.
With Nico Gous
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