South Africa’s SOE spend in a fantastical realm

For an organisation which proclaims that it is committed to a “better life for all”, the ANC has an odd set of priorities when it comes to spending public money as a government.

While the Treasury was this week expressing the concern that the R4.3 billion allocated for the Covid-19 vaccination programme might not be enough, at the same time came the announcement that R1.7 billion had, somehow, been found for yet another bailout for South African Airways (SAA).

An additional amount of R819 million will go to SAA subsidiary Mango and the airline’s other subsidiary, Air Chefs, will get R218 million.

READ MORE: Jets before jabs: Latest SAA bailout takes from Covid-19 vaccines

According to Zukiswa Kota, programme head at the Public Service Accountability Monitor, Rhodes University, the latest bailout money for the national airline brings total taxpayer support for SAA to more than R25 billion in recent years.

SAA was removed from business rescue this week after a receivership process which itself cost many millions more.

Yet, by all accounts, the major problems of its liquidity and business feasibility – which were an issue before the advent of the Covid pandemic that crippled the air transport industry globally – still remain. SAA is bankrupt.

The fact that the subsidies are being used to prop up an organisation which is little more than an ego trip for a government, rather than on vaccines to help bring the country back to normality, is only part of the injustice of the bailouts.

Private airlines like Safair, Comair and Airlink are getting nothing.

ALSO READ: Mango airline flies again, as SAA exits business rescue

This, in effect, means government is promoting uncompetitive behaviour and suppressing real competition in the airline industry.

Serious questions need to be asked about SAA and other state-owned enterprises (SOEs). Are they necessary and must we, the taxpayers, continue to bail them out?

As an economically struggling developing country, we cannot afford these sort of high-flying dreams.