Exclusive Interview: From Cape Town Mayor to DA Leader?

Cape Town Mayor Geordin Hill-Lewis sat down with The Common Sense executive producer Gabriel Makin last week for an interview focused on the national challenges facing South Africa and the policy choices that will determine the country’s future. What follows is an extract from that interview, in which Hill-Lewis sets out his views on economic reform, investor confidence, energy policy, labour market constraints, coalition politics, and what must be done to place South Africa on a path to sustained growth and recovery. Watch the full interview here.

The following has been lightly edited for print.

What does South Africa need in order to become a success? What are some of the core national policies that we should pursue to be successful?

The most important thing that we need is a much faster growing economy. That is the only way that we will bring down our astronomical levels of unemployment, still around 40% on the expanded definition, and get many millions of people out of poverty.

We have to deregulate the economy dramatically and we have to make sure that those essential services that businesses need to succeed and invest and grow and create jobs are actually functional. I strongly believe that the way to ensure that their success is to take them out of the hands of the state as much as possible because the state has proven emphatically that it does not have the capacity to run these things properly. And so, it should get out of the way, allow the private sector, which has the expertise and the capital to invest properly in these services, to run them and invest in them. And the state should play its proper role, which is to be a regulator and a referee rather than an active participant. 

Do you support the Government of National Unity?

I do, strongly. It is the best chance that South Africa has had in at least two decades to actually fix our country and start to rebuild that which has been so broken.

So of course, the ideal scenario would be to have a majority DA-led government, but that is not on the cards. I think coalitions are going to be a part of our future for the long term. And we have to show that it is as centrist and sensible a coalition as possible, that we try to starve the radical destructive left from getting into that coalition, because it will destroy our country.

And so even though there's no love lost between us and the African National Congress (ANC), we have to try to use our leverage there to influence the direction of the state and make sure that our values, our worldview, are actioned through the state.

Investor confidence levels are half of what they were at their peak 20 years ago. In your opinion, why are investor confidence levels so low now?

Well, because we've had 20 years of shocking government and a government that has actively attacked investors, made them feel unwelcome, even accusing them of racism for not investing. Fundamentally not understanding that capital and investment have choices, lots of choices around the world, and they will go where things are most secure, where they feel this is a safe bet on a growing economy, and where things work.

I do think there's an important point around the security of property rights. The fact that we have spent so much time in our country these last 10 years or so constantly undermining the security of property rights has really hurt investor confidence and so we need an emphatic statement that property rights are sacrosanct.

They are the bedrock of all prosperity and investment and [we need an emphatic statement that] that they will be respected in South Africa. And in fact, what we should be doing is looking for every way to extend private property rights to the poor rather than undermine them for everyone.

What then exactly does South Africa need to do to start lifting its fixed investment rates? What are the solutions to these problems?

Part of it lies with the state. There is a shocking underinvestment from the state in public infrastructure. Then part of it lies in allowing the private sector to invest in a lot of the parts of the state that are not working.

Again, I go back to ports and harbours and railway lines and so on. The state will never actually be able to invest adequately, well, not for a long time, because of our public finances, in those pieces of infrastructure. So, if you want to unlock 10, 20, many billions of rands of investment in those things, you have to allow them to be managed and operated by private management players, by the private sector. That would unleash a huge amount of fixed investment in the country.

And then, I think, if we can carry on there will be some green shoots of reform, you will start to see that investor confidence pick up and so you will start to see fixed investment pick up as well.

We estimate that in order for South Africa to maintain growth levels of 4% or 5% what we need to do over the next decade is essentially double the energy output. So how do we achieve the kind of doubling of that energy output to enable us to maintain the high levels of growth?

Well, there, it's a great example of deregulation. If we think back to just three years ago, not a long time ago, it was absolutely illegal to purchase power from any other supplier other than Eskom. Eskom had an ironclad legal monopoly. And the result was there for all to see, as you always get with state monopoly, the result was mass service failure.

In 2022 we had the stage six load-shedding crisis. The president flew back from overseas and very quickly, almost overnight in the great scheme of things, we saw the dismantling of the Eskom monopoly. And just look at what has happened with that single deregulation. You've seen this explosion of private investment into power generation. It's a perfect case study of what we can achieve in our economy if we deregulate, end these state monopolies, and get out of the way. And so I think that there will be huge power investment over the coming decades because the private sector is now able to invest. They are not prohibited from investing as they were before.

What is your position on the continued use of our coal-fired power stations that currently serve asthe vast majority of South Africa's energy output?  And what is your position on developing South Africa’s significant gas and oil resources and expanding the role of hydrocarbons in the national energy mix?

Supportive, supportive, can be no doubt. For as long as those supplies are plentiful and they are cheap, we must use them to drive economic growth. That is the most important objective in our country, to get a fast-growing economy so that we can get people out of poverty and into work. Without that we do not have a sustainable society. So, it would be mad to look a gift horse in the mouth and say that we are not going to use these abundant supplies and the existing investments that we have.

Now, of course, there is a problem in that we have a very old fleet. So, I'm not sure how much those old power stations can be made to keep going. You can only use so much duct tape and chewing gum to hold the things together. So, for as long as they go, we should absolutely be using them and there's nothing wrong with that.

Do you think that South Africa's labour market policies currently work? Or do they need to be changed? Or what else should we think about in terms of bringing more people into employment?

I think the biggest change is the rigidity of collective bargaining. I deal with this from a local government perspective, where time and time again, year after year, the collective bargaining agreements […] are imposed on us as a major city, but we have very little, if any, say in that wage negotiation, but yet we have to abide by its outcome.

That, I think, makes for a very inflexible labour market. And I think that's probably the biggest issue. It's quite a big issue for a city. It's a much bigger issue for a small business that finds it very tough to hire more and more people when it is struggling to keep up with collective bargaining agreements. And we've seen how this has caused mass unemployment in a number of industries, in large-scale manufacturing, in mining, this has been one of the great contributing factors, perhaps not the only contributing factor, but one of the great contributing factors.

Then of course we must talk about the employability of South Africa's workforce, because, of course, probably the single greatest failure of our democratic era is the failure to improve education for the poor and particularly the vast majority of young black children in our country.

Patrice Motsepe has stepped down as the executive chairman of African Rainbow Minerals. And we at The Common Sense think that there is a chance that he will be running for leadership of the ANC or for a version of the ANC. If that were to come to pass, what do you think it does for the national calculus in South Africa?

Look, I try not to spend too much time trying to work out the internal machinations of the ANC, because firstly that organisation is so bereft of principle and ethics that it's impossible to work out what's going on in it, and usually what's going on is mainly determined by money rather than any principle or philosophical stand.

But also, I'm not really interested in the ANC, I'm interested in the future of South Africa and building an alternative to the ANC. So, whoever comes up with the leadership of the ANC, good for them, but we'll meet them on the streets of South Africa and try our very best, work our very best to grow and outnumber them and beat them. Because we have to build an alternative.

The ANC is the dominant force in South African politics. Our country will not achieve the incredible, vast potential that it has because that organisation is simply incapable of actually leading our country out of poverty. We are in the business of building an alternative. So, if he wants to run, good luck to him, but we'll keep building the alternative.

John Steenhuisen has announced that he will not seek re-election as leader of the DA. Are you planning on running for the DA leadership?

Well, I don't usually ever dodge questions, but the DA has an internal rule that says that we may only declare our candidacy one way or the other publicly on the day on which nominations formally open. So, I am only allowed to say on that day, Friday 27 February, and you can read into that what you will.