To the outside observer, the recent debate on the importance of the private sector in creating employment must have come across as almost surreal, given South Africa’s economic predicament and the poor state of the public sector.
For one, it is painfully obvious that South Africa is still struggling with unhealed scars from almost a decade of State capture.
During that period, public resources were not only misappropriated in favour of a predatory elite, but those departments and State-owned companies (SoCs) that, in theory, should be the drivers of the State’s developmental agenda, including job creation, were hollowed out.
Secondly, the financial capacity of government and its companies to lead the infrastructure revival has dissipated.
Eskom is only a going concern because of sizeable taxpayer injections, which will continue in perpetuity until a debt solution is found and its tariff is cost-reflective.
Transnet, which has been seen traditionally as financially sound despite widespread internal corruption, has lost massive amounts of market share to road, allowed port performance to decline to the point where South Africa’s gateway status is questionable and is in no position, on its own, to make the investments required to bolster the competitiveness of South Africa’s freight logistics.
And the less said about Denel, the better.
Thirdly, the governance rot at some departments and SoCs has made them no-go zones for those who are, rightly, concerned about their professional integrity and reputation.
The knock-on effects are serious, as governance problems impact the morale of line managers and executives and make it difficult for departments and SoCs to attract the best talent.
In a context of such serious financial, skills and ethical backlogs, it is simply impossible for the public sector to lead the economic recovery, let alone the much-needed job-creation effort.
While these deficits persist, the risk of directing more financial resources and mandates the way of departments and SoCs would be imprudent, to say the least.
Hence, the importance of the debate around the respective roles of the public and private sectors in creating jobs.
Yes, South Africa has a mixed economy, and government does have an important role to play in both facilitating job creation and employing people directly in the security, health and education sectors, and preferably not merely to boost the ranks of middle management.
It would be antidevelopment, however, to rely primarily on the public sector to reignite growth and job creation – it is simply too weak and inefficient currently to do so.
Politically, too, it is important to emphasise the centrality of the private sector during this phase of South Africa’s economic development. The reason is that it is going to be impossible to address the current public infrastructure backlogs, from energy and logistics to water, without private finance, skills and implementation ability.
The focus of the public sector during this phase should be on ensuring that the guardrails are in place to prevent profiteering and exploitation and to direct delivery towards underserved areas.