The merger of SAA and SA Express is probably one of the biggest announcements to come out of the Budget vote of the minister of finance.
In one fell swoop, the policy of government owning 100 percent of the airline has been thrown overboard. Now this is sensible. There is no reason to own 100 percent of SAA – it has sucked the public purse dry over the last 20 years to no end. It is a pity that such a straightforward solution of public-private partnership took so many decades of a financial meltdown to be arrived at.
But we take time to learn – a report analysing the inefficiencies of many state-owned enterprises that account for billions of rands of revenue and infrastructure supporting the economy has been gathering dust for years.
Reckless trading
One wonders how long it will take to identify the worst among the 700 or so state-owned companies that have been continuing on a reckless trading path for years with no one paying attention. Some have been technically insolvent for years, risking life and limb with their hapless boards going on their merry ways.
You need to understand that sitting on the board of a parastatal is seen as some kind of a cash relief and deployment.
The responsibility to govern actually comes second to many of the “directors”, some of whom either don’t attend meetings regularly or when in meetings don’t add much value.
I was impressed recently when I read that the City of Johannesburg some 10 years ago actually advertised for people of the city to come forward to serve on the boards of the city on a non-remunerative basis. Citizens who came forward had to be interviewed and then selected to sit on one of the many boards of the city-owned companies. I thought this was truly a start of a new era.
Firstly, this meant that people who might not even have a political bone in them nor know or be connected in any way to the politicians could come forward to volunteer their skills knowing fully well that they would not be getting a cent in remuneration.
Secondly, the chances of appointing competent and dedicated people increased.
These are people who stepped forward themselves without being prompted by anybody. Now this is what is missing in many of the parastatals. A culture of servant leadership by some of the directors.
In a typical civil servant entitlement mentality approach, at SAA someone who should have resigned long ago is waiting to be fired and can’t see the train approaching and everything that has happened at that company has corruption written all over it.
It is the story of many parastatals. Stories are emerging of corporate capture where there is grand scale manipulation of tenders in these parastatals with the likes of Eskom leading the pack.
Hopefully, with the new management introduced there, it will put a stop to the rot. This is the key thing about the decision to bring in private sector shareholders, it will require an immediate change of culture of governance and alter the decision-making of the majority shareholder as well.
Shareholders who mind losing millions will have long fired someone like Dudu Myeni at SAA – a compact of shareholders will have to be signed in order for a collaboration to bear fruit for the airline. With such a terrible board in place any shareholder would see their investment diminishing with every day that such a board remained in office.
Collecting scheme
In realigning the state-owned enterprises, there would have to be a huge culture change among the directors. I would lean towards resisting appointing directors who have not achieved much else in their own careers and treat serving on the board of state-owned enterprises as some kind of allowance collecting scheme.
An honourarium instead of a sum akin to a salary should be the order of the day in these entities. After all, these are state-owned entities, not businesses with merely a profit motive.
The huge payments made to directors is inappropriate for many of them. I would appoint experts who have a heart to contribute and can hold the executives accountable without being entangled in tenders and so on.
In so many instances, the sooner anyone is appointed to a board, the sooner they sniff around for opportunities for their business and that of their friends placing strain on executives who receive late night calls from board members who are overly involved in things like tenders etc.
The point often either ignored or understated is that these parastatals are already a joint venture between the state and private business.
The only difficulty is that there is no sense of ownership by the involved private business, a situation which if changed, could influence and even dictate certain strategic decisions at board level that could lead to efficiency and profitability. Similarly, with the benefit of the private business networks, investment decisions that could propel the business to a higher level and attract strategic partners can be made.
The shareholders’ agreement must outline clearly that decisions, including who gets to be the chair and chief executive to avoid both corporate capture and political interference. What this will do immediately is to strengthen governance and create the necessary checks and balances at board level.
There is no argument against the fact that many parastatals are strategic for the economy. It is exactly for this reason that public-private partnerships should be created instead of the continuation slump that most of them are known for with government as shareholder trying to run the show. It is no exaggeration that this has largely failed.
When governance is in order and the operations are in top form you will be surprised how many investors will come flocking to invest in these companies.
* Onkgopotse JJ Tabane is the author of Let’s Talk Frankly: Letters to influential South Africans about the state of the nation. He is also anchor of Power Perspective on Power FM Mondays to Thursdays at 9pm.
** The views expressed here do not necessarily reflect those of Independent Media.
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