*Registered professional engineer, Director General of the Department of Water Affairs and Forestry between 1997 and 2005. Currently visiting research fellow at the Wits University Graduate School of Public and Development Management. This article is based on a series of three published in Business Day earlier this year
The recent Cabinet reshuffle and Cape Town’s electricity cuts briefly drew attention to the challenge of managing South Africa’s public infrastructure. A Public Service Commission report hinted at some of the more substantive issues that afflict infrastructure governance. “Rather than doing the fashionable, the Public Service needs dedicated consistency in working with what already exists and building on it” warned PSC head Professor Stan Sangweni.
Have we lost an important focus because we are focusing only on the black and white issues?
It is not simply that, as Business Day’s leader of 25 May put it, “a poor minister can do the kind of policy damage that we have to live with long after her or his tenure ends”. The trouble is that infrastructure is a long term business whose management cycle is out of sync with the political cycle, like the construction industry that supports it.
Politicians concerned about their showing at the next party congress often gain little by addressing the important issues since their impact, for good or ill, will usually only be seen long after the principal has departed. So the Deputy President was safely out of Minerals and Energy before Cape Town’s blackouts although the policy mistakes that caused them were clearly made on her shift – with much help from a large supporting cast.
Similar stories can be told in transport and water while the telecommunications story is too doleful even to consider here although; now that the private sector genie is out of the bottle, the challenge is to regulate the regulators.
Since infrastructure ministries are kind to incompetence and frustrating to ambition, they may indeed be used as dumping grounds. But can we afford this given that infrastructure is the very foundation of a modern economy, of society as a whole? If there is only limited political benefit to be gained from the long cycle of infrastructure, at least let management do its job. Then political change will matter less - a good management can carry a bad Minister.
To ensure good management, we must acknowledge the absolute need for high quality technical leadership and continuity of vision across the political cycles.
Certainly we need to ensure that there are mechanisms of political accountability, to keep that vision aligned with broader national goals. But most difficult, we must ensure that the voice of management is heard in the right places at the right times. There is no point in paying ESKOM managers huge salaries and then ignoring their warnings. And all levels need to listen to their users.
To date, this only happens too late, when the crisis is upon us – witness Transnet and the electricity investment programme. And the condition of our roads tells the story, liberally punctuated by potholes. Local roads have deteriorated markedly in many places, reflecting the poor state of local government’s technical management. On the other hand, the SA National Roads Agency has maintained national roads reasonably well under a competent Board and management which has been in place since its establishment.
Separate agencies are not needed to achieve continuity if this is prioritized; nor will they protect an institution if Boards are changed at a Minister’s whim. What is more important is to infuse the culture of the long term into political behaviour.
In this sense, the job of national infrastructure ministers is not to deliver services but to promote and protect the first class institutions that will do the job.
And we need to worry about this. If the new mantra of “ASGISA” works and the economy takes off, we will need the infrastructure to support us. But critically, ASGISA also depends on infrastructure investment to give it a kickstart.
IMPACT ON FUTURE GROWTH
Older readers may remember that in the 1930s, British economist John Maynard Keynes, in his search for policy to address high unemployment, remarked that borrowing money to dig holes in the ground and fill them up again was an effective way to create wealth and jobs. (In fairness, he added that “it would … be more sensible to build houses and the like but if there are political and practical difficulties in the way of this, the above would be better than nothing”.)
As we rediscovered his prescriptions, most South Africans thought we had hit the economic “sweet spot”, even if it felt a bit like an economists’ version of a perpetual motion machine. The way it works is simple. Government spends money freely on worthy public works. For the black and white elite, (although not the ordinary middle class teachers and nurses), it is party time, with money spent exuberantly on things like electronics and malt whisky (imported), clothes and cars (increasingly, imported) and foreign holidays (for which funds are exported). They don’t save much.
Unlike the bad old days, inflation and balance of payments crises have not yet forced financial managers to apply emergency brakes although the warning signs are there. That is because generous foreigners still lend us money which helps to prevent the Dutch disease — the malady that infects countries whose wealth comes mostly from selling stuff dug up from holes in the ground. As long as we keep spending freely on imports, it seems we can maintain the difficult balance, keeping the value of the currency down and our manufacturers happy.
But will the party last ? It comes back to our ability to deliver the infrastructure. More than a decade ago, as the first cracks began to open in the monolith of the so-called Washington consensus, three renowned economists — Amartya Sen, Nick Stern and Joseph Stiglitz — took part in a round table at the World Bank’s annual Development Economics Conference to discuss the role of the state in successful national development strategies. After decades prescribing one strategy or another, the wise men concluded “there is no single route to rapid growth”.
But Stern ended the discussion by noting that studies of many countries over more than 100 years had demonstrated that “the one single most explanatory variable … was the administrative competence of government”.
What this highlights is the seriousness of the performance problems in those areas of the public sector that require long-term focus and competence. These include the reliability of our power supplies, the safety of our water, transport planning, and the cost and efficiency of telecoms services to enable us to keep up and in touch with India, China and Brazil as well as Europe and North America.
These sectors need sound management backed by long-term vision based on good technical understanding. It is in these sectors that those who can’t learn from history (because they have neither experienced nor studied it) are fated to repeat it. In these sectors we need to get back to merit and away from patronage.
National Treasury can lead the way through the conditional grants it hands out to local and provincial governments. Why does it not place formal conditions about the competencies that those who want the grants must have? Municipalities should employ managers who understand municipal legislation, municipal engineers and treasurers who are professionally qualified; similarly in provincial and national spheres. And qualified officials must be allowed to use the funds professionally, not disqualified and disempowered by political patronage.
If we do not do this, the danger is we will continue to dig holes and fill them up again in ways that obstruct other activity — delaying the delivery of cement, steel and bricks, sucking scarce skills into unproductive pursuits, and forcing private companies to duplicate public investment by buying backup generators and providing transport for their employees.
Keynes may have been right in saying digging holes and filling them up could make us all very wealthy (he was talking about gold mining, after all). But then he hadn’t recently experienced the consequences of doing it wrong
REGULATING THE REGULATORS
Part of the problem is that South Africans, like the new rich all over the world, are keen to be seen to be wearing the latest fashions – even if they clash horribly. So our peculiar political dynamics have seen conflict between “wannabes”, “wanna-haves” and “wanna-dos” leaving the Western Cape in the dark.
The commentaries about the electricity failures in Western Cape did not really look at the role that fashionable electricity regulation and policy have played. And this, together with the broader question of the role of technocrats in a developmental state, is key to understanding our present dilemmas.
Decisions on electricity should have been made years ago. Transmission capacity could have been increased or more generating capacity built. The operators would doubtless have liked to have done both. But the decisions were not in their hands.
It is easy to be cynical about regulation, one of the fashions of a 1990s world in which it was trumpeted that governments would retreat, operations would be privatised, and independent regulators would manage the market framework, a world for “wannabes” who after a few months’ training could now set the rules for large and complex sectors on which the economy depends.
Meanwhile, the poor people who simply “wanna do”, after five years becoming engineers and another 10 spent learning how systems really work, have to obey the all-knowing regulators.
In energy, the main achievement of independent regulation was to move from a situation in which one party (Eskom) could be held responsible for ensuring reliable bulk power supplies, to one where no one was responsible. But while it may be tempting to berate the regulators, they are also often the victims of policy because unless policy and powers are clear, regulators are toothless.
Engaging with this policy challenge this year, we face a particularly South African version of the 1990s. Here we are not trying to get business for our multinational companies offshore (the purpose of the economic policies pushed so strongly by the IMF, World Bank and their masters) but to create internal opportunities for our new economic elite. With their hands close to the levers of power and policy, the commercial interests of these “wanna-haves”, rather than operational requirements, are also, too often dictating important technical decisions.
TRYING TO BUILD A DEVELOPMENTAL STATE
This is part of a broader challenge South Africa faces as we try to mobilise a creaky developmental state to deliver Asgi-SA’s “accelerated and shared growth”. The developmental state is, by definition, one in which state apparatus intervenes directly in the operations of the economy and society and does not simply seek to create an environment within which other agents operate.
For the state to intervene successfully, we come back to the issue of technical competencies. The political leadership must either possess those competencies, or have the means to acquire and manage them. A crude measure is the number of scientists and engineers in leadership. In countries like China, Turkey, Korea, the political leadership in key technological sectors have come straight up the line, facilitated in places like China by the strong parallel oversight by the ruling party. In South Africa, there are hardly any.
Where the political leadership and the technocrats do not come from the same schools, universities, churches and clubs, the situation is more difficult. Somehow a common understanding of political objectives and a climate of trust must be built between the two. If the trust does not exist, it is unlikely that the political objectives will be effectively achieved. Instead:
‖Policies will not be adequately informed by technical realities
‖Investments will be directed in a suboptimal manner
‖Operations will be inefficient and not meet user needs effectively.
Some of the challenges faced by SA are shared with other emerging economies. There is a shortage of key skills in key sectors, a good reason not to proliferate the institutions that require them. But SA’s history makes it even worse because the technological skills required are so unevenly distributed. Using engineers as a proxy for technical competencies, only 4% of SA’s engineers are black, 91% are white. And production is critically low, with SA producing just hundreds annually, while a country such as China produces millions.
There are two implications. First, SA should be encouraging as many young people of all races as possible to move into this and similar fields — and showing them successful role models is good way to do this. Second, the levels of trust between the technicians and the political leadership will have to be actively nurtured.
The importance of the trust relationship must be formally recognised by the political leadership as a development constraint that must be addressed. This puts an obligation on the minority of technocrats from whichever community who are able to build those bridges of trust with the political leadership. They will only be successful, however, if the need is acknowledged and their contribution accepted.
Until that happens, we will continue to see power exercised without knowledge and knowledge untapped because it has no access to power — and lights will carry on going out. We can learn from other people’s mistakes or insist on making our own. But we cannot build a developmental state in the dark.
So we urgently need to get beyond looking at issues as simply black and white, to worry more about competences than colour and where they are going to be coming from if the great infrastructure drive of ASGISA is not to get bogged down in the mud before it even starts.