• Road to riches

    Taxpayers keep funding structures with big plans but who knows what efficacy, says Mandi Smallhorne.

  • Don't fall for Ponzi scams

    An expert unpacks the tell-tale signs to watch out for.

  • Inside Labour

    A smokescreen of misleading rhetoric won't make SA's problems go away, says Terry Bell.

See More

Hart: State infrastructure unaffordable

Sep 22 2011 10:47 Sapa

Related Articles

Gigaba: Transnet, Eskom won't be sold

Zuma's infrastructure body yet to meet

Cosatu slams new state commissions

New teams to tackle jobs, infrastructure

Davies: Sacu needs to diversify

Invest in people, Roubini urges SA

Cape Town - South Africa is building an infrastructure that is unaffordable, an economist said during a Black Management Forum debate in Cape Town on Thursday.

Chris Hart, an economist at Investment Solutions, said during the debate with Public Enterprise Minister Malusi Gigaba, that the government's enormous spending on infrastructure is leading the country towards an "infrastructure recession".

"We are building an infrastructure that is unaffordable to the economy," Hart said. "It is creating erratic pricing in South Africa and we are taking our country towards an infrastructure recession."

Hart said state-owned enterprises (SOEs) are preventing competition from entering the market. The state should not be running businesses at all as SOEs tend to be "undercapitalised" and uncompetitive.

The only way to solve South Africa's employment problem, he said, is for the government to make it easy for its citizens to start small businesses.

"To create massive employment you need a small business boom, but many small businesses are being shut out of the economy by state-owned monopolies."

The regulatory environment for small businesses is "extremely complicated" and should be changed to remove barriers to entry for small businesses, Hart said. Black economic empowerment and affirmative action are also not lasting solutions for the economy, but could only be "stepping stones".

Economies at full employment grow "from the communities up", he said.

Gigaba said South Africa is dealing with an economic legacy created by colonialism, and that the economy is still defined on racial lines. The free market has failed to solve that problem in the past 17 years.

"Everyone", he said, recognises that the state has a role to play in "facilitating networks" for the poor.

"Free markets are not going to solve the problems of racialised ownership in South Africa," he said. "Just go into the JSE and look at who owns what."

SOEs could easily be well managed and efficient, he said.
transnet  |  eskom  |  infrastructure


Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Company Snapshot

We're talking about:


Johannesburg has been selected to host the Global Entrepreneurship Congress in 2017. "[The congress] will ensure that small business development remains firmly on the national agenda and the radar screen of all stakeholders, the Small Business Development minister said.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

People who fall victim to Ponzi scams are:

Previous results · Suggest a vote