South Africa: Why Ramaphosa Is Wrong About SOEs.

analysis

In his weekly letter, President Cyril Ramaphosa made a case for the state retaining ownership of 700-plus state-owned enterprises, saying they enable the government to 'perform crucial economic and developmental functions that the market would not on its own be able to perform'. He is wrong, but the reasons he is wrong are not -- or at least not only -- the ones most often cited by South Africans.

Talk about bad timing. President Cyril Ramaphosa chose Monday to profess awe at the new Medupi power station, and use its prowess to found an argument for government retaining its icy grip on SA's enormous fleet of state-owned enterprises. Later in the day, Medupi power station failed in its entirety, sending the country into Stage 6 power cuts, and very possibly into a formal recession.

Ramaphosa's argument is one we have heard many times over the years from the ANC: they are the notional vilification of the "developmental state". These ideas have enormous support from theorists and economists around the world, and a broad cross-spectrum of SA's politicians, even from the extreme right. And yet they are profoundly outdated. The arguments are rooted in the philosophy of a bygone era and...

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