RUFARO MAFINYANI | SA lacks infrastructure co-ordination, not capital

Picture a village the morning after a fire in which nothing that matters has burnt: no barn, no plough, no seed and no skill. The cattle stand in the field; the mill still turns — only the ledger, the paper record of who owes what to whom, has been reduced to ash. And so a people who yesterday could bake bread and forge tools are told they must now go without, because the accounting of their wealth, not the wealth itself, has changed.

It is the global financial crashes of 1929 and 2008: episodes in which the world’s capacity to produce did not shrink by a single bolt, yet abundance was rationed as scarcity because credit refused to circulate. South Africa is a quieter, chronic version: not short of capital but short of the plumbing that turns it into factories, wages and exports.

The Reserve Bank reports that nonfinancial companies held a record R1.8-trillion in bank deposits by mid-2025 — a figure one can read as prudence or paralysis, depending on temperament. The Public Investment Corporation manages more than R3.5-trillion. These are not coins behind a national sofa; they are risk-weighted decisions, most rational at the level of the individual firm. That is precisely the difficulty: caution that is sensible for each company can be ruinous for all of them together — a collective action problem in the respectable suit of good governance. When savings circulate among themselves rather than into productive assets, an economy resembles an engine revving with great enthusiasm in neutral.

The reflexive objection is that capital sits idle for good reason and for a decade it did: unreliable power, choked ports and policy in mismatched shoes. Much of that was fair; less of it survives the present. Operation Vulindlela’s first phase helped unlock about R500bn in private investment, opened a 22,500MW generation pipeline, ended the worst of the blackouts and brought 11 private operators onto the freight rail network. Yet it has also exposed the true bottleneck. About 220GW of solar, wind and storage sit in development, stranded behind a grid built to carry coal south that barely reaches the sun-drenched Cape provinces where they want to sit. Expanding it demands about R390bn. Here is the paradox distilled: a wall of private capital that wants to build power, and a wall of power that cannot find a wire. The government waits for investment to prove the reforms are real; capital waits for the reforms to prove investment is safe. It is the chicken-and-egg problem, now with a risk committee and quarterly minutes.

The way out is neither prescribed assets by a gentler name nor a romantic suspicion of profit; South Africa need not frighten capital into patriotism but make productive investment the more intelligent expression of self-interest. An inconvenient truth deserves plain statement: every serious economy co-ordinates. The only question is whether the intersection of state and market is crude or sophisticated. The US has for 80 years blended defence budgets, procurement and venture capital while insisting, with charming innocence, that this is merely the invisible hand ― which happens to be wearing a Pentagon glove. South Africa built its own industrial spine the same way. The warning history offers is not against coordination but against co-ordination without discipline, competition and consequences.

That brings us to the question of manufactured confidence. What might its engineering look like without a single price being dictated? The state’s sharpest tool is not its chequebook but its credibility as a buyer. By anchoring a floor of genuine off-take in a sector it already intends to support — transmission, or local component manufacture — it turns a vague ambition into a bankable cash flow. Around that cash flow one builds a special purpose vehicle: a ring-fenced entity slicing the project’s risk into layers different investors will price. A state-linked arm supplies partial credit enhancement — a first-loss guarantee, in effect — and offsets its own exposure by issuing bonds preferentially to the firms that already live off public work. The insurer, the fund manager, and the contractor bidding for state tenders each buy in because their fortunes are already tied to the state’s. Risk is not abolished but moved to whoever bears it most cheaply — the entire point of finance and the first thing panic forgets.

A second frontier is liquidity: tokenisation and fractional ownership, on regulated registries, could make slices of infrastructure tradable, letting a pension fund, a stokvel or a congregation hold a fraction of a solar farm rather than the whole illiquid beast. Such tools can become casino chips in well-cut suits, but to dismiss them is to keep funding tomorrow’s economy through yesterday’s pipes.

History also offers an inconvenient consistency. Every sustained industrial success story — whether the postwar US, Germany’s Mittelstand, Japan, South Korea, Singapore, modern China, or the Nordic economies — combined markets with deliberate co-ordination between public institutions and private capital. The ideologies differed; the mechanics did not.

The US gave the world much of its modern technology stack through defence-linked research and procurement, from the US’s Defense Advanced Research Projects Agency to semiconductors and the early internet. China used special economic zones not as slogans but as fenced laboratories of infrastructure, incentives, export discipline and controlled openness. Singapore built a high-income economy by aligning land use, skills, housing, ports, finance and industrial policy with almost bureaucratic elegance.

South Africa, too, has done this before: Iscor, Eskom, Sasol, transport infrastructure and development finance were all products of deliberate co-ordination between national need, industrial capability and capital formation. Co-ordination, then, is not an ideological exception to the market; it is one of the recurring ways successful markets have been made to function.

• Mafinyani is senior partner in financial engineering & AI at specialised finance, risk and applied technology firm Intellica Analytics.