By Omphile Maotwe
The Medium-Term Budget Policy Statement (MTBPS) presented by the Minister of Finance, Enoch Godongwana, on Wednesday in the National Assembly spells disaster for the future of South Africa. In his statement, Godongwana claims that the economic policy path aims to maintain macroeconomic stability, implement structural reforms, build state capacity, and support growth-enhancing public infrastructure. Yet, in the same breath, he outlines a fiscal policy that essentially hands over the responsibility for building public infrastructure and creating jobs to the private sector for profit maximisation.
Godongwana, in a desperate attempt to send correct signals to the markets, seems convinced that South Africa’s path to economic growth lies with the private sector. Yet, this is the same private sector that the former liberation movement, the African National Congress (ANC), previously criticised for hoarding cash rather than investing in productive sectors to create jobs. It is no secret that the private sector is reluctant to invest. Despite claims of lacking confidence in the economic environment, the reality is that the private sector is motivated purely by profit, regardless of the country’s poverty levels, deep racial inequality, and the millions of young people marginalized and driven to lives of crime and substance abuse. What they care about is quick profit, often derived from the financial sector, including taking money out of South Africa and investing it offshore for faster returns.
A recent example highlights the private sector’s lack of commitment to South Africa’s development. When the government introduced the COVID-19 loan guarantee scheme, meant to provide loans—substantially guaranteed by the government—to businesses to support operational expenses, it was a failure. According to the Parliamentary Budget Office report, the scheme saw minimal uptake, with only R18.2 billion of the targeted R200 billion utilised, despite efforts to make loans more attractive. This demonstrates that leaving critical matters in the hands of the private sector and expecting them to contribute out of generosity and understanding of the country’s challenges is simply foolish. It seems, however, that the ANC has not learned this lesson.
Godongwana not only talks about scaling up private sector participation in the delivery of public services but aims to dismantle the state, replacing it with profit-driven private companies for services that should be delivered to the public without a profit motive. His entire statement was filled with phrases such as “private sector investment”, “private operators”, “private sector participation”, and “private sector financing”. If anything, his address sounded more like a marketing brochure for the World Economic Forum (WEF) or for financial markets at institutions like BlackRock Asset Management, where Godongwana has been a regular guest since becoming Finance Minister.
Furthermore, South Africa continues to implement policies that have been ineffective for the past 30 years. These policies have failed to create jobs, deliver sustainable growth, or address poverty, producing underwhelming GDP figures, far below global average. Yet, we are continuing along the same path, prioritizing profitability over the well-being of the people, in the hope that private sector-led growth will somehow create jobs. This is not only naive but fundamentally dishonest on the part of the ANC.
This approach was unfortunately expected. The unholy alliance between the racist Democratic Alliance (DA) and the former liberation movement, under the guise of a Government of National Unity (GNU), is nothing more than a grand coalition led by the DA. It was no surprise that Godongwana received the loudest applause from the DA caucus, as the DA and ANC share the same neo-liberal policies that benefit a few at the expense of the majority. These policies keep black people in rural areas and informal settlements, trapped in poverty as cheap labour, while wealth accumulates in the hands of a few.
The medium-term budget policy statement is the first official joint neo-liberal economic policy statement of the ANC and DA, and it confirms that these two parties share the same destructive vision for South Africa. This policy, presented as centrist, mature, and prudent economic policy, is simply a repackaged version of International Monetary Fund (IMF) demands that will further impoverish the poor and working class.
The reality is that South Africa does not need an increase in private sector participation in public infrastructure delivery. The government should be directly responsible for providing essential services through strategic state-owned companies to its citizens without relying on profit-driven entities. Increasing private sector involvement only serves to sideline the public interest in favour of private profit.
South Africa does not need private sector investment, because it is generally focused on short-term, speculative markets that do not support the long-term economic transformation the country needs. Private sector investments are frequently directed towards projects with quick returns, often in financial markets or offshore investments, rather than in building sustainable industries or supporting economic equality. The country cannot rely on entities that prioritise dividends and shareholder returns over addressing deep-seated socio-economic issues.
South Africa does not need private sector financing to fulfil its obligations to its citizens. The state has a constitutional obligation to provide basic services, develop infrastructure, and support economic growth for all. When the state finances infrastructure, it ensures these projects serve the public good. However, involving the private sector leads to a focus on cost recovery, excessive tariffs, and profit maximisation, which place essential services out of reach for many. For example, electricity prices continue to rise as state-owned enterprises are pressured to operate like private companies. The state should focus on funding infrastructure directly to ensure affordability and accessibility.
Offering guarantees to the private sector under the vague concept of “de-risking” is simply misleading and it is daylight robbery of public money. The private sector claims it is taking risks to justify huge executive bonuses and shareholder dividends—yet the burden of these “risks” often falls on public funds. Many private sector shareholders, the majority of whom are white and based in Western countries, are effectively shielded from these risks, while the state shoulders any losses. Inviting the private sector to take over public functions is, therefore, equivalent to letting wolves into the henhouse.
If this misguided plan is allowed to proceed, South Africa will face a future in which essential services are accessible only to those who can afford them, and the state’s role in providing for the people will be gradually eroded.
This is the time for progressive forces to come together and fight against a privatisation agenda that seeks to place state-owned entities in direct competition with a private sector that is solely interested in profit. The state, funded by public money, must take on the risks and responsibilities necessary for the people’s well-being, rather than allowing private interests to dictate the country’s future.
* Omphile Maotwe is the EFF Treasurer General and a Member of Parliament serving in the Standing Committee on Finance.
** The views expressed do not necessarily reflect the views of IOL or Independent Media.