Save time by listening to our audio articles as you multitaskThe companies that run power stations, railways and ports can be every bit as systemically important as banks. Eskom, South Africa’s state-owned electricity firm, was once among the world’s largest utilities by installed capacity. In recent decades it has been hollowed out by graft, cronyism and mismanagement. Daily blackouts now close South African factories, offices and shops.
Another South African firm stumbling towards collapse may be even more systemically important, since it affects not just its home country but the wider region., which runs the railways, ports and pipelines that connect sub-Saharan Africa’s most industrial economy with the outside world, is in deep trouble.
Last year, even as coal prices were booming, South Africa’s coal exports slumped to their lowest level since 1993. This is because Transnet’s main coal line, which ought to carry 81m tonnes to ports, carried just 54m. This represented lost exports worth at least 80bn rand . Iron-ore exports, which also go by train, slumped to their lowest since 2012, while volumes of general freight sank to levels last seen during the second world war, reckons Jan Havenga of Stellenbosch University.
Yet often politicians want firms to be state-owned so they can give jobs to pals or enrich themselves. These firms tend to arrest development, not accelerate it. A recentstudy found that fully 40% of state-owned firms in sub-Saharan Africa were unprofitable and that their losses could destabilise local banking systems, hurting the flow of credit to the rest of the economy.
Investing in infrastructure, is one of the foundations for development. A railway line, could transport mineral coal to the ports, if you need it.
Is is much more than that. It is a death sentence for economic growth, and a death sentence for road accidents involving trucks transporting goods.
Privatize it all. Problem solved.
South Africa’s collapsing electricity provider is more of a cautionary tale considering the citizens are experiencing anywhere between 8-12 hours a day of blackouts. now that’s an article worth writing
It’s a tragedy what has been happening in South Africa and no one is paying any attention.
Soon the xenophobes will start running outside of South Africa.
Your clients never were reconciled to independence. And you have to tag along.
Or maybe the Afrikaans should return to power. SouthAfrica has become a joke under black rule.
They had trillions poured into South Africa and Africa over the years. Now ask yourself why their political elite and the family and friends have become rich. Whilst the people at the bottom lives are still the same as it was 50yrs ago.
I can't see how privatization will help. Probably needs more $ and attention thrown its way.
Everything ANC touches collapses 😬