This article was first published by BizNews on 23 August 2024
Panyaza Lesufi, Premier of Gauteng, has expressed his wishes for the state to establish a provincial bank, to be run by the government for the purpose of providing capital for projects which are deemed unprofitable, but socially important. While the published goals of this project may seem virtuous, South Africa’s state-owned enterprises have a dreadful track record. Unfortunately, if this bank is established, it will become just another vehicle for corruption.
State-owned enterprises like Eskom, Transnet, the SABC, and SAA all illustrate the inherent incompetence of state-owned projects and enterprises. The repeated looting of the Public Investment Corporation (PIC), in order to enrich corrupt politicians and their friends, just adds an additional example of how whenever this government gets its hands on a source of capital, they will drive it into the ground through voracious looting.
The repeated failures of state-owned enterprises in South Africa isn’t just a coincidence; public sector institutions are inherently incompetent as a rule. When an official is paid regardless of whether they did a good job or not, and when promotion is based on political connection rather than competence – when merit is abandoned – then an organisation will collapse into inadequacy.
This Gauteng state bank, if it ever does get off the ground, will become rife with corruption. Even if it functioned like a normal, profit-making bank, the fact that it is established by politicians will ensure that there is too much political meddling, demands for bribes, and looting of capital.
The fact that this bank is stated to exist to finance unprofitable sectors just adds additional problems. While there are plenty of things that are important but unprofitable, in general this is not the case. Banks need to be sustainable, meaning that they must carefully invest their money so as to ensure that they can safely store their customers money and deliver interest on their investments.
If the Gauteng bank builds its investment strategy around giving hand-outs to unprofitable projects, then it is risking the money of its customers and investors on what may very well be vanity projects.
The government should act like a government, and not play dress-up pretending to be a business. Rather than establishing a bank, the provincial government should be doing its actual job. Service delivery will not be improved by access to additional capital to loot, but by the government being held accountable on all levels to actually do the bare minimum of its job description.
Rather than effectively giving complicated handouts in the form of ill-thought out bank loans and investments, the Gauteng provincial government – and national government for that matter – should be reforming the institutions and regulatory frameworks that currently hold bank the disenfranchised portions of our society that the Gauteng state bank is purportedly being founded to benefit.
Instead of giving money to the “youth, women and people living with disabilities,” rather create an environment where these individuals can pursue their own life goals without the need for handouts.
It is already the domain of government to educate the youth; a task at which they are failing dismally failing. So, rather deregulate the private education sector to allow the youth to benefit from real education. And for those youth who have matriculated and need a job, cut labour regulations to make it easier for employers to take a chance on young workers, giving them a leg-up in the job market to gain experience.
The government’s most important, and arguably, sole function is to protect its citizens from threats foreign and domestic. Women in South Africa bear the brunt of criminal brutality, violence and fear. The government should be focusing on addressing violent crime, and a seedy underbelly of criminal culture that views women as property. Functions that can be performed by the private sector must be, so the government can master its key necessary functions.
People living with disabilities would benefit from a deregulated healthcare sector that can invest more of its money into attending to the diverse needs of many different disabilities, while labour deregulation will allow more people with disabilities to find gainful employment.
There are many things the government should do to improve the lives of all South Africans. Founding yet another inevitably corrupt and incompetent institution is not a solution; it just expands the problem.
I urge Gauteng Premier Lesufi to focus on getting service delivery right, rather than wasting even more exorbitant amounts of money on what is, at best, a vanity project, and at worst, another avenue of public theft.
