Business Leadership South Africa (BLSA) CEO Busi Mavuso has warned of the deteriorating health sector without the prospect of recovery, owing in large part to the passage last week of the National Health Insurance (NHI) Bill into law, barring the assent of President Cyril Ramaphosa. 

In her weekly newsletter published on December 11, Mavuso called this development a "shocking negative" for the health sector and noted its potentially dire consequences for the South African economy. 

Earlier this year, Mavuso noted that the NHI Bill was "hopelessly unworkable" and predicted that it would never be implemented.  

Despite this, the pretense of government still trying to make it work continued to do serious damage, creating uncertainty for the health sector and leading to investment delays, she said.  

Mavuso noted that medical professionals who could choose to work anywhere in the world now faced yet another reason to leave the country. She said serious damage was being done to both private and public health systems as a result, as the government attempted to set up a single-payer fund to acquire all significant health services in the country, effectively destroying the private health system in the process, without any plan on how capacity would be created in the Public Health Service.  

She also noted with regret that the National Council of Provinces (NCOP) passed the Bill last week completely unaltered from earlier drafts, despite extensive representations from many parties, including business, on how it was unworkable and unconstitutional.  

"The tragedy is that business put together a proposal on how the Bill could be amended to deliver on its aims of universal health cover by drawing on the strengths of both private and public sectors. We know that it can work.  

“The Covid-19 crisis showed how public and private sectors can work together to deliver health services effectively through our joint effort in the vaccine rollout. But those representations were ignored by the NCOP," Mavuso lamented.  

She noted that, since the Bill currently sats before Ramaphosa awaiting his signature, there remained an opportunity to change the course.  

"It would be a tragedy if we undermine the good work business and government have managed to achieve together, by weakening the health system, forcing not just health professionals to emigrate but also the many businesspeople who would lose faith that they and their families can rely on access to healthcare," Mavuso said, noting the NHI Bill was a clear low point in the year. 

ELECTRICITY SECTOR REVIVAL

On the other hand, she said the country was on its way to a resolution in the electricity crisis, owing to the significant amounts of investment that the private sector had poured into new generation capacity and the work that business and government had done together to resolve the crisis. 

She said a highlight of the year had been the new partnership established between organised business, represented by Business for South Africa, and the government, represented by the Presidency.  

These partnerships had established three workstreams to deal with the energy crisis, the logistics crisis, and crime and corruption. Certain initiatives within those streams were now making good progress, Mavuso said. 

"We certainly can still do more, and faster, but the regulatory space that was opened up for private generation has meant that the private sector is now investing,” she said.  

In 2023, the National Energy Regulator of South Africa (Nersa) received registrations for 4.1 GW of new generation, adding to the 1.7 GW of registrations last year.  

“I've also noted that about R111-billion of investment is currently going into making those goals realised," she said, noting that the added capacity is gradually coming online, adding about 20% to the country's total working generation capacity.  

"Also, a significant amount of small-scale generation has been added from households to small businesses that have taken advantage of tax incentives and the falling cost of solar energy to install their own panels, estimated at over 4 GW," Mavuso said.  

She also noted that there was improved resilience within the South African economy to loadshedding, to the extent that, despite record levels of loadshedding during the year, the economy still managed to eke out some growth.  

Mavuso noted that not all developments in the electricity space had been positive, however, with a clear problem emerging in the form of constant delays in the Renewable Energy Independent Power Producer Procurement Programme, which she said had gone from being the envy of the world in effective power procurement to barely managing to procure any new electricity this year.  

“Some are declaring the end of the programme, but its role in acquiring new utility-scale electricity production remains important,” Mavuso said. 

She noted that there were two other fronts in the electricity sector where continued progress needed to be made. One of those fronts was on the unbundling and establishment of an independent system operator out of Eskom, as well as the publishing of an updated Integrated Resource Plan that set out a rational least-cost vision for energy development in the country for the future. 

"I have also noted that the unbundling would require the completion of the Electricity Regulation Amendment Bill, which is currently before Parliament, among several other steps that must be made to get the independent grid operator up and running," Mavuso said.  

She also pointed out that the appointment of new Eskom CEO Dan Marokane provided an opportunity to accelerate the process of establishing the grid operator and improve the performance of the power utility.  

"Business and Eskom have established a good working relationship that has allowed us to, for example, fast-track the return to service of Kusile units one and three. Together, I believe we can achieve much more to consolidate the country's escape from the power crisis," Mavuso said.  

LOGISTICS SECTOR CHALLENGES

She also pointed to the logistics sector, where a growing crisis has emerged as the next major challenge to the economy.  

"We have seen sharp reductions in the volume of materials we can move across the rail network and through the ports for export. This is critical to the whole economy that now struggles to get goods into or out of the country.  

"There are many reasons, from theft and vandalism to poor maintenance, but the impact is now clear in our economic growth numbers, which are showing falling sales and production of commodities and other goods because of the crisis," Mavuso said. 

However, she noted that there was good news in that there had been more urgency in tackling the crisis, with a strong joint effort being highlighted through the National Logistics Crisis Committee (NLCC).  

Learning from successes in the electricity sector, the NLCC had drawn up a roadmap that would see major participation by the private sector in logistics. Mavuso noted that some steps towards this had already been made, including a process to concession the Durban container port terminal.  

However, she noted that this needed to accelerate, including allowing the private sector to operate certain rail corridors.  

"There are task teams already working to improve the performance of key lines, and we are starting to see some successes, although more could be done. Chief among those is the appointment of a new leadership team at Transnet that is committed to the roadmap after the resignation this year of the CEO and several other executives," Mavuso said. 

Mavuso said it was possible to say that South Africa broke the back of the electricity crisis in 2023, but she was hoping the same could be said of the logistics crisis in 2024.