SAA privatisation: Could Prasa and Denel be next?

Government has run out of money and options to keep the looted and rundown state entities afloat, with experts convinced that the Public Rail Agency of SA (Prasa) and Denel are likely next in line to be sold off to private partners.

Political analyst Levy Ndou went as far as suggesting that Takatso Consortium’s acquisition of 51% of state airliner South African Airways (SAA) was a culmination of deliberate running down of state entities in order to justify selling them off to the connected black business elite.

Ndou said SAA, which, according to financial statements for 2018 and 2019, recorded R16 billion in losses over the last three years, was a text book case of how to waste public money and run a strong entity to the ground.

ALSO READ: DA questions SAA privatisation

‘The modus operandi is to loot’

“It is the beginning of things to come, the fruition of a programme to collapse state entities for them to be bought off by the influential, powerful black economic empowerment [BEE] moguls,” Ndou said.

“SAA was deliberately collapsed, run at a loss and bailed out every year. How do you fly a 96-seater plane from Wonderboom to Cape Town with only 16 passengers?”

Ndou said most of he country’s major railway network had collapsed, with billions of rands that government does not have needed to fix the massive infrastructural damage.

He said taxpayers were also increasingly annoyed by government’s continued bailing out of state entities, while failing to capacitate them to stay afloat.

“The modus operandi is to loot and not capacitate, so that tells you what the real intention is. Run them down and sell them to BEE elite at next to nothing,” Ndou added.

The consortium, which will inject R3 billion into the airline, is made up of pan African infrastructure development fund manager Harith General Partners, as well as Global Airways.

The deal has not gone down well with the National Union of Metalworkers of South Africa (Numsa), charging that the same Department of Public Enterprise that refused to act to stop the looting of SAA through the bloated, corrupt procurement spend, has now privatised it.

Numsa general secretary Irvin Jim said in a statement that Global Airways is owned by former Transnet board chairperson Popo Molefe. Jabu Moleketi, deputy finance minister between 2004 and 2008, is chairperson of the Harith board.

ALSO READ: Government employees, taxpayers still footing the bill for privatised SAA

“…the same ANC which destroyed SAA, can then claim to have ‘saved’ the airline through a public-private partnership. And at the same time, those who are benefitting from these deals are ANC cadres and their crony capitalist friends,” he charged.

‘Denel should be next in line’

The Organisation Undoing Tax Abuse (Outa) believe privatisation is the way to go for SOEs and that the ANC’s alliance with labour is clearly one that does not favour the strategy to collapse SOEs.

Outa executive Wayne Duvenage said Denel, which he described as a tragedy, should definitely be the next in line for privatisation.

“But we are not surprised, because the past decade has shown us how the state has lost its ability to stay out of interfering with its business entities and has no idea how to run such complex business systems… In fact, I don’t think they’ll get much for Denel, which should probably just be liquidated.,” Duvenage said.

SA would have saved billions of rands in bailouts had this been the case, he said, charging that in fact government should get out of the business of business and enable a healthy competitive enterprise, with strong oversight role.

“The fact that Telkom went the privatisation route they did is an indication of how SOEs can survive. Believe me, if Telkom did not do so, it would have been dead in the water today. This notion of job losses due to the sale and privatisation of SOEs is a fallacy,” Duvenage said.

He added that the other side of that coin, was to keep all the jobs and let government become an employment agency, and against that backdrop, we must simply accept the continuous bailouts of failed SOEs until we become a failed state.

Business Unity South Africa (Busa) also believed partnerships between the private sector and government in non-strategic SOEs was the appropriate way to go, as it enabled private capital injection and expertise.

“We also remain clear that government must continue to review its SOEs with a view to rationalisation to ensure fewer SOEs that are efficient and sustainable. The closure of SOEs that serve no social or economic purpose must also be considered,” Busa chief executive Cas Coovadia said.

North-West University political analyst André Duvenhage said government could no longer afford and justify bailing out failed SOEs, which he described as an environment of decay that has crept into the private business.

“It is the rot, it is the incompetence, and that leads to the environment of decay we see now with the closure of a cheese factory in Lichtenburg. Everything is falling apart and privatisation is what I see as the strategic soft landing and I have no doubt more SOEs will be sold off,” he said.

siphom@citizen.co.za