It's like a game of dominoes. Festive cargo, stuck at sea as port congestion became unmanageable, spilling over into the snaking queue of trucks headed to the same ports.
In the same weekend, of Black Friday and a heatwave, more than 15,000MW of unplanned breakdowns meant the air-fryers and dishwashers South Africans fought to buy may only be put to use once there is power.
More of us were using air-conditioning to cope with the heat, Eskom said, leading to a demand spike the generation fleet couldn’t handle. The cooling systems the power stations rely on were also under pressure as temperatures reached 40°C plus in places such as Lephalale.
And like dominoes, anything that could go wrong seemingly did. In such a complex context it is often easier to find scapegoats than to confront complexity and the questions posed of any reform programme. One such scapegoat, commonly blamed for the underperformance, is preferential procurement.
Reports and a visit by two eminent groups of economists over the past few weeks show how for narrow interpretive reasons procurement becomes the cause of the polycrisis. The first group led by Ricardo Hausmann of the Harvard Growth Lab, the second from the University of London’s School of Oriental & African Studies (SOAS) led by Ha-Joon Chang, at the invitation of the National School of Government.
They both considered procurement, but in fundamentally different ways. Both joined many South Africans in lamenting the declining operational performance of state firms, and the binding constraint resulting from the lack of productivity of the stock of capital assets installed to deliver public and economic goods.
But their assessment of the proximate causes of this, and the solutions proposed, differed. Regular readers of this column would know that I have my reservations about our procurement system, in design rather than in its functional pursuit of redress for categories of people and places disadvantaged by unfair discrimination.
Much like Transnet’s board, the Harvard group thinks “unburdening” state-owned entities (SOEs) from preferential procurement and industrial participation requirements might be the answer. The SOAS group, on the other hand, highlighted the need to use active procurement policy and the “regulation of foreign direct investment for local capacity building” as industrial policy tools to upgrade the productive structure and capabilities of our SOEs and the manufacturing sector.
While the Harvard report viewed procurement practices as an unnecessary cost constraining the operational performance of the SOEs, the SOAS perspective highlighted the need for further strengthening of the use of procurement to build “pacts” with lead firms in global production networks and build local capabilities.
Both perspectives carry valuable insights on the nature of our crisis. However, in attributing the broader challenges faced by Eskom to the procurement of “expensive, low-quality coal” from BEE suppliers and the inability to access “parts and technical capacity”, seemingly attributable to strictures imposed by the industrial participation programme, the Harvard group understates the broader political-economic problems we confront.
In suggesting that strategic procurement be targeted towards industries with the potential “to eventually compete in global markets”, it posits the problem of procurement in industrial policy terms, as does SOAS, but finds issue not with the design, scope and effect of procurement on the domestic real economy, but rather with its choice of product and demographic categories of preference.
The public procurement bill now before parliament conceptualises preference in far wider terms than the caricature presented, by extending it to innovation, industrialisation and other “place-based” considerations. The failure to recognise these shifts highlights the political infeasibility of reform and turnaround suggestions focused on scapegoating empowerment regulations for undoubtedly complex operational and technological reasons behind underperformance.
It seems that the echo chamber that followed like dominoes across many publications gave “comforting shapes”, as Nigerian-British author Ben Okri wrote, to many who place at the door of transformation policy all the problems we face. That the Harvard report and much of the commentary that followed uncritically reinforced this view is deeply unfortunate.
• Cawe is chief commissioner at the International Trade Administration Commission. He writes in his personal capacity.
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