Another week, another fattening of the albatross around SA’s neck

The two state-owned enterprises must give President Cyril Ramaphosa sleepless nights, forcing government to put them on top of the agenda of the do-or-die high level gathering of ministers and senior managers.

According to Sandile Tshabalala, corporate governance consultant at Mazars South Africa, the two most vital traits lacking from SA’s SOEs were forward-looking governance and optimistic solutions.

“SOEs are managed by people who, in turn, deliver services to other people. People-centrality should therefore be essential in the governance. Understand the expectations of the populace and have the capacity to meet these expectations,” he said.

With no hope of profits in the near future, Eskom and SAA will continue to survive on government bailouts or Development Bank of Southern Africa handouts. Billions have been pumped into Eskom while the DBSA intervened with R3.5 billion to resuscitate SAA.

This week, ANC headquarters Luthuli House praised the way government handled the entities’ issues, saying this would assist “to stabilise the economy and minimise the impact on job losses”.

“The ANC also welcomes the decisive intervention taken by government to salvage the national carrier, SAA, from possible collapse, which would have led to massive job losses. The ANC is confident that the interventions will contribute towards stability,” an ANC statement said.

The ruling party undertook to ensure the bankrupt airline was retained as a “capable” national airline that continued to “proudly fly the South African flag higher”.

But not everybody was optimistic. Freedom Front Plus MP and the party’s trade and industry spokesperson Jaco Mulder said the DBSA intervention was misleading the public.

“Clearly the R3.5 billion that was allocated to SAA is a lifeline that is covertly financed by taxpayers. This will decrease the country’s chances for economic growth seeing as it is highly unlikely that the bankrupt SAA will be able to pay back the loan,” Mulder said.

Tshabalala said there is a need for public leadership to adhere to the constitutional guaranteed values such as human dignity, integrity and transparency as core values of society.

“Public interest should always be central, since advancing self-interest with public resources is a practice that has for long gone unquestioned due to the lack of consequence management mechanisms in the SOEs.”

The expert outlined seven priorities that were imperative to transforming SOE governance.

SOEs needed to strategically prepare for optimising operations and service delivery based on scenario-planning that was crucial for political, economic and social uncertainties.

“Professionalise the board of directors: the composition of the board should reflect the diversity of thought and experts who are able to add independent and professional value to the long-term sustainability of the SOE,” he said.

Another priority should be to continuously improve the boards’ independence, manage politically exposed individuals on the board so as to minimise politics and maximise the boards’ effectiveness.

“Each board member should have key performance indicators developed for them, to ensure they discharge their fiduciary duties with skill, care and diligence,” Tshabalala said.

There is a need to embrace long-term value; to focus on human capital management, especially succession planning in managerial positions, he said.

The fifth priority should be to accelerate consequence management, accompanied by impartial and vigorous ethics management mechanisms that encouraged and protected whistleblowing.

Performance management tools will ensure that public servants were appraised for their overall performance in SOEs. “The inability to deliver on set objectives should not be rewarded,” he said.

“Evolving and refreshing should take place after at least five years. This will allow for reliable diverse competencies, innovative thinking, complex problem-solving and stronger governance in the interest of the public,” Tshabalala said.

Although political analyst Xolani Dube of the Xubera Institute for Research and Development was pessimistic about the results of the recent lekgotla, he said there was an urgent need to democratise the economy if government was to fulfil its constitutional mandate to the citizens.

State funders such as the National Empowerment Fund (NEF), Industrial Development Corporation (IDC) and Public Investment Corporation (PIC) must come to the party to help grow the economy, he said.

“What interventions are the NEF, PIC and IDC doing in our economy in terms of their funding objectives vis-à-vis the economic growth? There is no real monitoring of how these are impacting on the economy and addressing unemployment,” Dube said.

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