Transformation shouldn’t be reduced to handouts

By Sanjeev “Mahatma” Gupta
The people of Soweto went up in arms the other day after not having power for ten hours due to a technical problem (according to Eskom’s PR Department). This was confounding as they reportedly have close to R6 billion in arrears of unpaid bills to settle.
Why did they think they are entitled to services gratis then? And at the time Eskom is in desperate need of cash to keep the lights on at that?
Imagine what huge difference to its balance sheet the arrears can make if they had collected the money.
It is most likely that the people of Soweto will not be compelled to pay and their astronomical bill will have to be written off and tax payer’s money will be poured into Eskom.
 
Only the tip of the iceberg
 
The failure of parastatals and other government agencies to collect revenue from low income areas is only the tip of the iceberg.
 
The queues at social grant collecting points are getting longer. This is only due tough economic conditions.  Some social grant recipients are not eligible as they are at an economically active age and are employed.
Actually, the system of free things for the destitute has been abused and, evidently, is reaching tipping point based on two observations. Firstly, unlike first world countries, South Africa has a very narrow tax base and fragile economy.
Secondly, as a prominent economist puts it eloquently in her column on New24.com: “Since the financial crisis of the late 2000s, government’s budget deficit has experienced major expansion. And fiscal deficit means government borrowing needs are growing.”
Indeed, this is a sign that promises of ‘free” things made in 1994, understandably in the heat of watershed political change, are proving expensive to manage and are becoming unsustainable.
Reducing the burden
Ultimately, subsidizing services and throwing money at complex problems only postpones the inevitable: action will have to be taken at some point. And the first port of call is introducing programmes that should reduce the number of people who access welfare initiatives and introduce some form of cost recovery measures for basic services.
Indeed all told, economic transformation should not be reduced to lavishing people with handouts, which, unwittingly, narrows their ambitions to getting bare essentials.
Sanjeev “Mahtma” Gupta, popularly known as Sanjay among his peers, is a freelance writer, based in Chatsworth, Kwazulu Natal.