Parastatals and economic transformation in South Africa: The political economy of the eskom crisis

Abstract

This article analyses the causes, outcomes, and political significance of the inter-connected operational, financial, and governance crises afflicting Eskom, South Africa’s electricity parastatal. These crises emerged in the context of African National Congress initiatives to turn Eskom and other key parastatals into instruments of an envisaged South African developmental state, through increased investment and strategic procurement to support economic transformation goals. Instead, Eskom’s spiralling costs, procurement irregularities and inability to translate increased investment into functional new infrastructure meant it impeded these goals. Its indebtedness became a severe macro-economic risk, making Eskom a precarious nexus for the circulation of public funds, while the cost and unreliability of electricity has undermined South Africa’s energy-intensive industrial core. Intertwined with this were multiple high-profile corruption scandals associated with the ‘state-capture’ controversies of the latter stages of Jacob Zuma’s presidency. The article argues that Eskom’s extreme dysfunctionality results from long-running, and as yet unresolved, contestation of the parastatal and electricity policy more broadly by various interest groups, in a context of an increasingly fragmented political and business elite. This created a range of incoherent distributional pressures and institutional constraints. Rather than a straightforward outcome of corruption and ‘state capture’, this reflects deeper tensions in the post-apartheid political economy.