[Letter] Grandiose shipping project a waste of resources

That the SA government is aiming to establish the country’s first national shipping company should come as no surprise. Instead of focusing on the low-hanging fruit of trade infrastructure liberalisation and implementing the reforms that are necessary to unlock private sector investment, resources and energy are set to be wasted on yet another grandiose project that will deliver little in terms of benefits for the vast majority of citizens.

SA’s ports are regularly ranked at or near the bottom of annual global container port performance indices. Railway operations and reliability have steadily deteriorated. A national shipping company will not solve these basic shortcomings and problems. Opening up these spaces to private sector competition and investment would do far more to ease the rising prices of imported materials, components and goods than the establishment of yet another bureaucratic behemoth ever could.

Given the government’s own ideological and policy choices, the country has become more exposed to imported inflation. But a national shipping line will not somehow reverse the decline of the country’s manufacturing sector, or magically spawn a supply of reliable and cheap electricity. Absent real reforms and solutions in these areas, the country will always be more reliant on all kinds of imports.

It is one thing to argue for a “capable state”; quite another to push for various institutions of such a state, when those that have existed up to this point have performed so abysmally and are only kept “functional” on the back of bailouts. A national shipping company cannot account for the country’s myriad trade infrastructure shortcomings, and will only add yet another burden to the state fiscus — and to taxpayers over the long run.

Letter originally appeared here.

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