South Africa’s real problem is not its geographic isolation.
It is certainly a problem. South Africa sits well outside the main routes along which LNG tankers typically move, and the countries surrounding it do little to create the kind of large regional market that would make the southern African region a more attractive destination for substantial LNG volumes.
Those are real disadvantages.
But they are manageable.
Distance can be overcome. Markets can be developed. Infrastructure can be built. Commercial incentives can compensate for geography. None of these obstacles is inherently fatal.
The much more serious problem is what the country has done to the process of actually getting anything built.
Affirmative action has evolved into an extraordinarily elaborate system of competing claims, organized interests and mandatory stakeholders. Virtually every significant initiative seems to require navigating an expanding constellation of groups that have acquired the institutional ability to obstruct, delay or extract concessions from entrepreneurial activity.
The result is a system in which participation itself becomes a form of leverage.
Too often, organizations exist less to create value than to establish a claim over somebody else’s attempt to create it. Their contribution to a project may be negligible, but their ability to demand consideration is not.
That is blackmail in its most bureaucratically respectable form.
And then there is the sheer number of stakeholders.
I was involved in a couple of meetings concerning an LNG project in the port of Coega. I had attended large meetings before. These were something else entirely.
Huge rooms filled to capacity. Person after person, organization after organization, each with a claim to be heard, consulted or accommodated. Everyone had an interest. Everyone had an entitlement. Everyone wanted a seat at the table.
At some point, however, a table stops being a place where decisions are made and becomes a monument to the impossibility of making them.
How do you build anything in an environment like that?
A project does not become economically viable because more people are invited into the room. It becomes viable when someone is empowered to make decisions, accept responsibility and execute them.
Consultation has its place.
So does redress. South Africa’s history created profound inequalities, and pretending otherwise would be intellectually dishonest. But there is a point at which corrective policy stops correcting and starts suffocating.
That point matters.
Because investment does not merely compare wages, taxes and resources. It compares the probability that something will actually get done.
Capital is remarkably good at understanding this.
It does not need to hate a country to avoid it. It merely needs to conclude that the friction is too great, the timelines too uncertain and the number of people capable of stopping the project too large.
That is the lesson South Africa ought to be examining.
The tragedy is not that the country has attempted to correct historical injustice.
The tragedy is that, in doing so, it risks constructing a system in which almost everyone has a veto and almost nobody has responsibility.
And when everybody can stop something, eventually nobody can build anything.
South Africa is therefore more than a story about LNG, geography or infrastructure.
It is a cautionary story about what happens when political objectives accumulate layers of institutional obligation until productive activity becomes an obstacle course.
Affirmative action may begin as a mechanism for redress.
Taken too far, it can become a mechanism for paralysis.
And countries cannot prosper indefinitely by making it easier to claim a piece of the economy than to create something within it.