GWEN NGWENYA | SA’s welcome lean into privately delivered public services

Something remarkable has happened to South Africa’s public services over the past few years. We have, piece by piece, even if reluctantly, opened the door to private sector participation in ways that would have been unthinkable a decade ago.

There’s reasonable analysis that says we’ve arrived here not by institutional design but via wars of attrition. Depending on the sector, they’ve been waged by actors, institutional and individual, until the cost of systemic failure outweighed the cost of concession.
The question is whether this changes how collaboration will be arrived at in future: stumbling from bruising battle or on purpose?

The evidence of liberalisation (the removal or loosening of restrictions on private sector participation) in public services is hard to ignore:
The Electricity Regulation Amendment Act of 2024 established open grid access and a competitive wholesale electricity market, ending Eskom’s near-total monopoly. Self-generation capacity surged fivefold after 2021 to more than 6GW.

In rail, 11 private freight operators were announced in 2025 as having met requirements to run services across Transnet’s network, introducing the most significant structural reform in a sector that has been haemorrhaging capacity for a decade.

The 2024 Water Services Amendment Act introduced a mandate for public-private partnerships, with a dedicated water partnerships office at the Development Bank to facilitate private capital.

These are not trivial changes and have rightfully had a positive impact on sentiment in these areas. They are the kind of actions that make one inclined to say South Africa is moving in the right direction.

The full picture is, unfortunately, deeply inconsistent. For every sector where private provision is being enabled, there is another where it is either merely tolerated or actively resisted. For instance, municipal barriers to solar grid connection remain patchy and slow for myriad reasons, including it being a competitive threat.

Ensuring the private sector can compete on equal terms is what crucially sets apart service areas where it is enabled versus tolerated private providers concerned it will curtail private sector sustainability, which, in practice, serves not only the wealthy but about 28% of the population, including many uninsured, low-income patients who pay out of pocket.

Perhaps the most instructive example is the postal sector. The South African Post Office
was placed under business rescue in 2023 and lost R2.17bn in its2024 financial year. To say private postal and courier services have stepped in is an understatement. Companies in the courier industry have experienced more than 25% year-on-year growth despite resistance to their ability to deliver where the state operator has faced challenges.

In December 2025 a directive was eventually issued to end the Post Office’s25-year exclusivity over parcels under 1kg, but there are supporters in some quarters for shoring up the monopoly of an institution that has in effect ceased to function. Ensuring the private sector can compete on equal terms is what crucially sets apart service areas where it is enabled versus tolerated.

Public services are too important for their future to unfold byaccident. The option of waiting for the next crisis to usher in thenext private sector concession is one South Africa cannot afford

Overall victories have been ad hoc and concessions reluctant. A deal to partially privatise
SAA collapsed after three years of negotiation in 2024, with analysts noting persistent reluctance to relinquish control of state enterprise seven when those enterprises were destroying public value.

More recently, Eskom’s objection to the granting of new electricity trading licences has shaken confidence in full reform of the market.

What would a deliberate approach look like? A strategy would consider, ideally sector by sector, policy issues linked to private participation in public services:

• Prerequisites for a competitive playing field where there are state and private providers;

• Universal service obligations or demand-side vouchers or other interventions to extend private provision to lower-income users and address equity concerns;

• Interventions to liberalise trade in services to attract and export foreign expertise; and 

• Whether or how to minimise the double burden that falls on householdsand businesses that contribute to taxes while also funding privatealternatives across a multitude of areas.
   

Public services are too important for their future to unfold by accident. Theoption of waiting for the next crisis to usher in the next private sectorconcession is one South Africa cannot afford. It’s a welcome development thatthe policy space — and momentum — is leaning towards wider recognitionthat a public service need not equate to a publicly delivered one.
 

• Ngwenya chairs the American Chamber of Commerce (South Africa)Policy Forum. She writes in her personal capacity.