The most common lived experience in South Africa, affecting all races, classes, regions and sectors, is growing frustration with the state’s inability to provide basic services.
All South Africans are experiencing the sinking feeling of coming home to a dark house with a cold or unprepared meal as we experience another episode of power outages.
Adding to this frustration is that we are all driving increasingly dangerous roads due to potholes, water supply disruptions and even water quality disruptions. The list goes on.
A compendium of recent issues we are facing includes:
- The number of potholes in South Africa went from 15 million to 25 million in five years;
- Johannesburg, the country’s economic hub, is experiencing a water crisis: some suburbs were without water for up to three weeks and the sound of slowly filling toilet tanks has now become a source of joy and celebration. This is despite the fact that the Vaal Dam is 90% full and the Sterkfontein Dam, which feeds the Vaal Dam, is at full capacity;
- Eskom’s proven unreliability continues with power disruptions due to unscheduled maintenance at aging coal-fired power plants, generation of less than capacity at grossly overpriced Medupi and Kusile power plants, and insufficient diesel supplies to run emergency generators;
- Coal exports through the privately developed and owned Richard’s Bay Coal Terminal (RBCT) totaled just 58.7 million tonnes in 2021, the lowest since 1996 and well below the projected capacity of 91 million tonnes. The restrictions were due to cable theft and Transnet’s poorly maintained rails, which meant mined coal failed to reach the export terminal despite massive international demand.
- Although the efficiency of South Africa’s ports is well below the global average and steadily declining, the National Port Authority’s latest report indicates that it has been unable to implement major investment projects and has spent less than 50% of the R39.8 billion , intended for port improvements;
- Several of Durban’s once famous Blue Flag beaches have been turned into salty sewage-polluted stretches, and raw sewage still flows into the Vaal Dam at Deneysville;
- Local authorities fail to maintain their water distribution networks and have lost R9.82 billion worth of water in a single financial year; and
- The collapse of Prasa rail passenger services across the country.
The scale of the national collapse of infrastructure-dependent services has long been apparent. There have been numerous technical reports and warnings from professional bodies and experts that underinvestment in infrastructure and poor maintenance would result in underpower generation capacity, severely polluted rivers and severe logistical constraints.
Already in 2006, the SA Institute for Civil Engineering (Saice) has its Infrastructure Report Card (IRC) Warning: “While South Africa’s built environmental infrastructure is very good, in some cases world-class, the relatively poor overall score reflects extensive maintenance and renovation backlogs, mainly caused by a lack of funding and skilled workers.”
Subsequent Saice IRCs in 2011 and 2017 conveyed the same message, but the tone became more strident: “The below average grade reflects continued low maintenance and even neglect in many areas. A lack of commitment to long-term planning, adequate dedicated funding, appropriate management systems, data collection and deployment of skills are important factors contributing to…”.
Infrastructure asset management is the recognized engineering discipline that encompasses the global knowledge base upon which organizations manage assets. It is a well-trodden path that has recently led to the development of an international standard for asset management (ISO 55000). This standard provides the structure and methodology around which organizations can organize and deploy asset maintenance to achieve organizational goals. South Africa has considerable expertise in this area and has contributed significantly to the development of the standard.
As a proponent and supporter of the tremendous benefits that adopting a professional approach to asset management would bring to government and state-owned companies, I have spent the last 10 years spreading the word in this sector.
I almost succeeded when Eskom commissioned me to implement an ISO 55000 asset management system at Kusile and Medupi in 2012, only to have it reversed. I have had similar experiences at Prasa, Sanral, Portnet and Municipalities. I’ve spoken to senior government managers and staff professionals (who listen in frustration, knowing they could do better).
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The phenomenon of executive employment has created an almost insurmountable barrier to keeping available wealth management skills out of the public sector. There are many reasons for this, ranging from slow adoption to direct/open corruption (that’s what I’ve experienced too) and a generally prevailing ideological distrust of wealth management or technical expertise as colonial phenomena or proxies for neoliberalism and what the state knows preferably.
However, the irony is that the best-selling ISO standard in China is the ISO 55000 standard. I was fortunate to be invited by the proactive Chinese government to attend the launch in Beijing.
The failure to protect our assets is exacerbated by deliberate underinvestment by governments and SOEs in infrastructure management. See Figure 1, which is based on data from StatsSA – which I refer to as “Driving our Assets in the Ground”.
This chart shows how we have consistently underinvested in the country’s wealth infrastructure since 2015. The more likely explanation for the 2015 peak is amplification due to the peak in government coverage.
A typical benchmark for best practice asset management is that companies should invest about 6-7% of the replacement capital in maintenance and asset management; at around 2% we make an explicit decision to destroy our assets.
Can we flip this?
In the body of human knowledge there is only one technical discipline that can deal with the technical and financial aspects of managing asset base failure in South Africa. There is no alternative methodology or ideology. Asset Management is expertise compiled by the industry’s most knowledgeable and experienced individuals and institutions. It has no ideological basis.
In order for us as a nation to begin addressing our various infrastructure crises, we need a rational starting point and asset management supported by the ISO 55000 standard is that. How to do this and what the priorities might be is worth discussing, but we all need a common knowledge base to initiate this discussion.
My sincere appeal to the Treasury Department and senior government decision-makers is that we reach that consensus sooner rather than later. If we do that, we can at least develop a common language around which to deploy capital (however limited) and align knowledge and intent towards a common national goal. We can then slow down the degradation curve and start building a stable platform on which to improve.
Is that real?
As an indication of what can be achieved with a supportive political will and a shared goal, my experience over a 10 year period with an energy supplier in Asia is a testament.
At the start of the project, there was a restricted electricity grid, rolling blackouts across the country, even preventing sessions of their parliament (don’t we all resonate with that?). The availability factor, the so-called EAF, which Eskom is now trying to improve, was in the low 60% range and was deteriorating.
Like Eskom, the energy supplier operated old systems with all the associated challenges. There was a nationwide outcry against the poor performance of the generation network and criticism of the utility’s leadership.
At the start of the project, the utility president told me that it felt like he was trying to land a 747 with none of the instruments or controls working.
We have developed an institutional asset management project for a network of thermal and hydroelectric power plants. Today the plants are running at least at the high EAF of the 80’s and some in the early 90’s.
The project was discussed in the parliament of this country as an example of how transformation can take place. And they present figures for millions of dollars more electricity being sold into the national grid at lower operating costs.
A summary of the success of the project is shown in Figure 2 based on data published by the utility. (For tech heads who want to read more deeply, the case study is fully published in the International Asset Management Handbook.)
The question remains – can this be repeated in South Africa? My simple answer is that if there is the same political will shown in the 2010 World Cup, yes – it can be done.
We have the skills.
Where to from here?
There is clear and daily evidence of a massive failure of the state and state-owned companies to properly look after our national wealth. We have lost the necessary skills and organizational acumen and are constrained by political underinvestment in wealth management. Continuing this path leads to a wasteland that is becoming increasingly difficult to recover from.
I’m calling our political leaders and managers in the public sector. You will not reinvent the skills, competencies, processes and technology base internally to create the necessary basis for a turnaround – you have tried and failed. They have been isolated from global best practice and industry communities for too long to have the knowledge base to do this.
It’s time to look outside your organizations for support from the willing and able technical communities and available expertise. Asset management has proven to be a key enabler of best practices in the energy, water and urban infrastructure sectors. Ignoring the opportunities that wealth management can offer is simply delusional at this point in our national destiny.
In the spirit of Thuma Mina – “I want to be there when people start turning things around”, I am open to any meaningful dialogue.
Otherwise, the decline of the ANC as a political entity will be compounded. DM
Grahame Fogel is a recognized global asset management professional having been involved in infrastructure asset management for over 40 years.
