The other day finance minister Tito Mboweni tweeted: “I am pleased that we have now signed a Memorandum of Agreement on the Infrastructure Fund. A blended fund drawing in the public, private sector and international financial institutions. This is a critical step forward in the economic revival of SA. Lets get on with it!”
Not understanding the jargon, I asked what a blended fund was. Quick as a flash my old news editor at the Financial Times, Alain Catzeflis, replied, eyes rolling as always when I needed educating, that: “It’s where the public sector underwrites the private sector so when it goes bust the public sector can turn to international institutions to bail it out. Keep up.”
I checked. It would actually be hard to find a better description of what Mboweni has just trumpeted as the start of President Cyril Ramaphosa’s economic recovery strategy — an initial R360bn plan covering water, electricity, housing, roads and food infrastructure.
Last month, the government gazetted 55 projects to lead the charge. The man running them, former Tshwane mayor Kgosientso Ramokgopa, works from the Union Buildings, reporting directly to Ramaphosa. His office said yesterday the gazetted projects were “shovel ready”. I asked if that meant financing for them had been agreed but got no reply.
If Ramaphosa does get these projects going though, he starts a chain of economic activity that could jump-start the economy. After these projects, there are 250 more to come. Politically, it is his money shot. Will it work?
No. If supplying simple masks, garments and bags as protective gear for a killer disease could spark the tender frenzy in the ANC that it did four months ago, what does a trillion rand (total) of infrastructure projects do to the comrades? Dozens of people will have to go to jail quickly for the Covid corruption before any serious money is going to build a ring road around Musina.
And the ANC itself, like all left-wing parties, has no membership money, so it also has to get it “indirectly”, like Europe’s famously corrupt socialist parties. In Spain in 1992 the governing socialists funded themselves off tendering to build that country’s first high-speed train line.
And even if the few big SA engineering and construction groups still standing know the game, history is not on Ramaphosa’s side. “Investment in infrastructure has always been an integral part of the SA development strategy,” wrote the researcher and strategist Andrew Merrifield in a paper for the state on 2002.
But we approach infrastructure in fits and starts. In the 1970s, investment in power generation was so big there was no pressure for more until just before the lights went out in 2007, by which stage we had lost critical design and engineering capacity. Our investment cycle doesn’t work.
Who will build Ramaphosa’s roads and dams? “I think we’ve lost about 60% of the engineering and contracting capacity we had in 2000,” says Merrifield now. People have retired or emigrated, and while universities turn out engineering graduates there’s not been enough activity for them to have become sufficiently experienced to take on an entire economic recovery.
In this game, experience trumps qualifications. Anyone in government with a real eye on the prize would have seen the opportunity for maintenance on roads while the lockdowns thinned traffic. Maintaining roads is 16 times cheaper than building new ones, Merrifield calculated in 2002. But maintenance is dull and doesn’t dump large tender money into any pockets.
Ramaphosa anyway regards these infrastructure projects as merely the “flywheel” of economic growth. What surrounds it is a fantasy of indescribable complexity and control.
“The key missions would be very few, national and cross-cutting, with action plans developed by social partners,” presidential economic adviser Trudi Makhaya told Daily Maverick’s Ferial Haffajee this week. “But every sector in the economy needs to craft a multistakeholder plan that addresses its specific needs. The sectoral plan must be backed by government, labour, business and civil society.
“Sectoral initiatives are already well reflected in government’s five-year plan (the medium-term strategic framework) and many of them are driven through ‘master plans’ developed in partnership with the relevant industry’s stakeholders. Where plans exist, stakeholders will have to re-examine them in a Covid-19 context.”
That’s a sensational exposition of how the ANC menaces its own economy. It perfectly describes the ANC approach to almost everything. The plan is the project. I suspect we are quietly trying to build a siege economy here, a version of what the Afrikaners once did. Control is everything. Scrap metal exports have been banned for almost two months as the state tries to “create” stock for a viable local steel industry to supply its ... I give up. Saldhana Steel is closing down meanwhile, a triumph for central planning and other experiments.
Ramaphosa cannot bend this economy, broken or not, to his will. Not even for small black businesses. All those entrepreneurs want from government is that it produces stable policies, gets crime under control and cuts taxes. And then, please, to get out of their way.
I grew up in Mthatha, where my dad was a contractor. I remember talk back then about a dam on the Mzimvubu river that runs to Port St Johns. It’s still there, on the president’s newly gazetted infrastructure list, more than 50 years later.
• Bruce is a former editor of Business Day and the Financial Mail.
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