Mpiyakhe Dhlamini | Private, community-driven initiatives are best route to combat government’s failures

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Anton Ossip, from Discovery Insure, and Hadley Shapiro of Advanced EMS, in front of the new Discovery Insure fire trucks Photo: Supplied
Anton Ossip, from Discovery Insure, and Hadley Shapiro of Advanced EMS, in front of the new Discovery Insure fire trucks Photo: Supplied


As South Africans continue to suffer from many government failures, there is a small ray of hope emerging: The private sector is stepping up to do the job, where it is allowed to do so.

This is demonstrated in three stories that came out in the first two weeks of June.

First, financial services company Discovery is launching a private firefighting service in Johannesburg. This service will be available to Discovery Insure clients across most of Johannesburg, and will initially be launched with existing resources from partner companies Advanced EMS and Fire Operations SA. Additionally, two new fire engines will be added. This service has the potential to be a game changer, not only for Johannesburg but other municipalities too, especially metropolitan municipalities, which have significant concentrations of productive individuals who can pay for such services.

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Second, the department of transport is developing policy proposals to allow more private companies to fix potholes; this was announced by Minister of Transport Fikile Mbalula in Parliament. The department is taking these steps after seeing the success of the pothole patrol service in Johannesburg between the municipality, Discovery and Dialdirect. This presumably makes sense for the private companies, both of which are insurers, because they have determined that the cost of fixing the potholes themselves is less than the cost of paying out the claims due to accidents caused by the existence of the potholes.

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Finally, the National Energy Regulator of South Africa (NERSA) announced that it has registered 16 new private power generation projects under the licensing exemption provided for projects under 100MW. This is in addition to two earlier projects announced by NERSA. Most impressively, the exemption has allowed these power projects to be approved within 19 days, something that is unheard of in South Africa.

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Of course, the 100MW cap should be eliminated completely and these projects should not just be limited to renewable energy projects. The scale of South Africa’s power crisis means that we need energy, whatever the fuel source and as much capacity as the private sector is willing to invest in and provide. Energy is fundamental to any economy; no industry can survive without reliable and relatively cheap power.

Private sector willing to do the job

All of this amounts to one thing: the private sector is willing to do the job that the government has taken upon itself to do and failed. What we need now is to extend this principle to as many areas as possible. This includes areas such as policing and private prosecutions, where many criminals get off scot-free because the South African Police Service fails to handle evidence properly or the National Prosecuting Authority botches the prosecution due to a lack of skills and corruption.

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The government only needs to make it legal for the private sector to step in. It would also help to lower the tax burden for South Africans so that more of their income can either go towards savings, which will become the capital necessary for the private sector to invest in these areas. Also, income can go towards paying for these private services since it makes no sense to pay the government for a service that it is not providing. Sensible people can see the failure of the state all around them and they want more private sector involvement.

The government can also take credit for the successes of the private sector when it leads to an improved economy and enable more of our 11 422 000 unemployed people (according to Stats SA’s expanded definition of unemployment) to get jobs. The government will also benefit from a growing economy because tax revenue always increases with a growing economy. This is because company profits increase (more corporate tax revenue as exemplified by what happened when commodity prices increased in the past two years), more people are hired and become taxpayers and more spending takes place, which leads to higher value-added tax revenue.

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Voters will experience a broad-based improvement in standards of living since a growing economy is a tide that lifts all boats after all. Everyone will be better off and so will take care of their own needs, further reducing the burden on the government to provide social welfare in the various forms in which it is currently provided.

The solution to our social problems should not entail the basic income grant, which only creates more dependents if the economy is not growing, but rather allow the private sector the freedom to make profits. This also includes providing the infrastructure that other companies need to operate successfully and which government is failing to provide.

Dhlamini is a libertarian, writer, programmer and a former analyst at the Free Market Foundation


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