Synergistic Consortiums


Synergistic Consortiums by David Macfie

SA faces many problems including the widespread corruption that is eroding our economy, stifling much needed infrastructure and destroying our international reputation. It should be a national imperative to weed out all of those who are stealing the nation’s assets. In fact, I believe that misappropriating the country’s money should be classed as treason and penalized with life in prison. (Or even the death penalty) The damage that has been done cannot be exaggerated. However, even if that issue can be addressed and all the money that is gathered by government ends up financing priority projects to the betterment of the previously disadvantaged as well as everyone else, we will still have a major problem. The problem is that government cannot possibly complete the work that has to be done in any timescale, never mind quickly enough.

Why?

The first reason is that the government just doesn’t have enough money and with our economy in the state it is in, we cannot raise enough money through taxation, and borrowing it is unaffordable, even if we had the credibility to raise loans. Furthermore, it is unlikely that our economy could grow fast enough to be the ultimate source of the necessary funds anyway. This is true even if corruption is completely eradicated.

Second, we cannot expect other countries to bail us out. Certainly some will be prepared to invest, but the cost to us in terms of interest or dividends will be high and not enough money will be available that way either.

Third, government doesn’t have enough human resources to address all the critical priorities, even if they had the skills to manage these projects. (Which, from evidence before us, they clearly don’t.)

Fourth, government is not a suitable structure to get things done quickly and ours has a track record of non-achievement. It is bureaucratic, committee and commission, rather than action oriented, and overstaffed with people who are not suited or skilled for the positions they hold. In addition many additional positions have been created that are really not necessary, so even if the money was available, the outcomes would be suspect at best and non-existent at worst. And sub-contracting work to third parties under government control has also failed, because government personnel don’t have the requisite skills to make things happen.

Fifth, there is far too much to be done. If I list only the most urgent priorities, you will understand what I mean:

  1. Housing:

Too many people are either homeless or are living in shacks or sub-standard housing. This must be rectified as a matter of urgency so that all of our legitimate residents are housed. The dwellings must be green and energy efficient with full services like water, electricity, sewage and perhaps even gas. The roads must be properly surfaced and the towns must be sited in locations that are not subject to natural disasters like flooding. Part of the problem here is the migration of rural workers to the cities to find jobs. This migration should be reversed with a workable land strategy. We should also instigate proper control over immigration from surrounding nations. This should not be done for any xenophobic reasons and must be managed in a humane and reasonable manner, but it must be done simply because, as a nation, we must look after our own people first.

  1. Electricity:

Our electricity infrastructure is ageing and maintenance is done using a ‘fix it when it breaks’ methodology. It is barely generating enough for present requirements of those who have access to power. If we house all those who are not adequately housed there will not be enough power to satisfy the requirement. In addition we also supply power to neighboring states under various contractual agreements and arrangements. It is generally agreed that we have to increase our capacity to cater for foreseeable future needs. To make matters worse. Eskom is overstaffed, under-skilled in many areas, and badly managed. Much money is wasted that should be reinvested into infrastructure. Finally, distribution of power is divided with some places being served directly by Eskom and some being served via municipalities, who add a surcharge to finance their delivery structures. The end consumers are expected to quietly pay for all this mismanagement and confusion.

  1. Water:

Water is in a similar state of disarray as electricity. Ageing infrastructure with a similar approach to maintenance, combined with the same sort of staffing issues and aggravated by the unpredictable global warming weather patterns that make rainfall unreliable as the only source of water, all contribute to a serious future risk. (Not too far into the future in reality) It is not difficult to imagine the same crisis, as has just happened in Cape Town, happening in many other places in SA. The simple fact is that the weather must not be the only source of water for supplying the needs of the population in all of its activities. In addition many waterways, including rivers, dams and the seas are becoming increasingly polluted, which adds another complication to the water management equation as well as damaging the ecology and endangering many species of birds, animals and fish. (Which has a knock-on effect on food production.)

  1. Employment:

This is a double edged sword. The first edge is the supply of available jobs must meet the demand of job seekers. The second is that the job seekers must have skill sets that meet the needs of the available jobs. So the employment issue needs solutions to the education situation as well as the issue of growing the economy to allow the creation of new jobs. Of course, solving the issues covered above will require a significant labor force in each area, but those particular job seekers must be up-skilled to be able to meet the need. An additional issue in the employment area is that we can no longer depend on traditional employment opportunities like mining because it is a dying industry as the natural resources that sustain it become increasingly depleted. There is an urgent need to introduce alternative industries to pick up the slack. Worldwide there is an increasing swing towards what are known as ‘human capital’ industries. SA must follow this trend and bring such opportunities here. For more on the education aspect, see my Message to Government on that issue. (Published on my blog on 29th August 2018)

  1. State Owned Enterprises.

There are 131 state owned enterprises, some of which are regulatory organizations, while others are tasked with strategic businesses like Eskom, Transnet, SAA and SABC. Many of these structures are dysfunctional or corrupt or failing for one reason or another. Some are all three of these. There are a few success stories but they are in a significant minority. Almost all are overstaffed and if Government is considered as a state owned enterprise the same comments apply. It also is overstaffed – there are too many of everything – members of parliament, ministers, deputy ministers, spokespeople, bodyguards, public servants and this goes on down into provincial government and municipalities. Government is also largely dysfunctional and state capture has exacerbated its difficulties. It is difficult to imagine how much money is wasted or stolen through the mismanagement of all of this chaos. And all of these people are earning salaries that are at least competitive against private enterprise. Another issue in these structures is that people are usually not held accountable for the delivery of the functions of the enterprise they work for. Criminality or ineptitude or unsuitability for the position rarely result in dismissal or legal consequences. Separation, where it occurs, is usually rewarded with a golden handshake that is neither deserved nor justified. Worst case is often a transfer to a similar position elsewhere. And when these organizations get into trouble they are regularly bailed out by government, which could be described as sending good money after bad. A truism in this whole area is that creating unnecessary jobs or filling jobs with crooked or unsuitable people is simply a waste of money. It solves nothing and it costs a lot. This is clearly unacceptable.

So what should be done about all of this in order to get South Africa out of the mess we are currently in?

Here are some of my major suggestions.

  • All government structures must be streamlined:
    • Politicians and public servants should speak for themselves – there should be no spokespeople.
    • Politicians should not need full time bodyguards. If they are in a situation of suspected danger then protection should be arranged, but full time protection is overkill.
    • There should only be necessary and sufficient organizational positions to run an efficient and effective government and public service. As an example, we have far more ministerial and deputy ministerial positions than most other states of comparable size and complexity. Any positions that are superfluous to requirements should be removed. This should apply all the way down from central government to municipalities. We must put an end to nepotism, cronyism and jobs for the boys. And we should reduce centralized structures for command and control of things that would be far better served by direct activity at the point of action. We should also avoid duplication of roles and responsibilities at different structural levels
    • There should be no bonus payments to anyone, who hasn’t over achieved on their goals and objectives and these goals and objectives must be real, necessary and measured in a tangible and unambiguous way. Furthermore, if any individual fails to achieve a defined minimum of their goals and objectives, that individual should be subject to the same performance management processes as private sector individuals. Finally, if at the end of such processes, an individual should be terminated from that position, without any compensation. If the individual is moved to a different position, it must be one that they can succeed in, not one of similar content as the failed position.
    • Packages for government officials and public servants, including the perks of the jobs they do, must be reasonable and appropriate. Super luxury vehicles and over the top housing do not fall into the reasonable and appropriate category. And the state should not be expected to pay legal fees for personal litigation or unreasonable family expenses, like bodyguards, vehicles, houses and allowances for multiple spouses.
  • Job creation must focus on activities that create wealth for the nation and the people in it. So these jobs must add value to the enterprises that create them. They should be results oriented not bureaucratic. To achieve this we must be innovative in the ventures we encourage and we should skill up our population to meet the challenges of demand driven activity as it happens. Entrepreneurs must be at the heart of the expansion of our economy – we cannot rely on traditional industries.
  • State owned enterprises must be fixed or discarded. If they are regulatory in nature they should be lean and mean and should deliver on their goals and objectives in an effective and efficient manner. If they have a business function they must at least break even financially. If they don’t and the business function is considered essential, they should be restructured and re-staffed to meet their purpose or they should be privatized. If they are non-essential or non-strategic they should be shut down or privatized. Examples of this type of enterprise are, in my opinion, SAA and SABC –if they cannot run at a profit they are simply a drain on the economy and their purposes could easily be taken over by commercial competitors.
  • Synergistic Consortiums:

Strategic enterprises like Eskom and the water supply infrastructures should be run as profitable, effective and efficient businesses and should be staffed with suitably qualified and experienced people. But they should not have a monopoly on the provision of these services, because they have all the issues that I started with. I believe that the answer here is what I term “Synergistic Consortiums”. In simple terms this means that, taking energy generation and distribution as an example, private enterprise should be encouraged to participate in the generation and distribution of power using all possible technologies that are suitable. Renewable energy sources should be prioritized and private households should rely on the grid as little as possible. Initiatives should be introduced to facilitate this. And we should cut out the ‘middle-men’. This means that distribution of power should be done by a single national grid that is run profitably by a consortium. At present some people get electricity directly from Eskom and are billed by them. Others are supplied via municipalities who obviously add their ‘management fee’ to the charges. I think this is not in the interests of the consumer and should be discontinued. In my idea there will be many generators of electricity but only one distributor. With the idea of synergistic consortiums, there are many sources of capital that are not available to, say, Eskom and many organizations will add labor forces and technologies to the mix. Many of these will generate more than enough for their own use and will sell the excess to the distributor’s grid. I believe the same principle can be applied to any issue that must be solved urgently, including the supply of water. These Synergistic Consortiums will enable faster action to be taken and will reduce the pressure on state budgets. They will also spread risk and gain access to more sources of capital.

In conclusion, I encourage South Africans to put their differences behind them and work together in Synergistic Consortiums aimed at solving the nation’s issues as quickly, effectively and efficiently as we can. If we do, all will benefit and the Rainbow Nation will become an example to all.