State-owned enterprises need stability and continuity if they are to be well-run, yet South Africa keeps shooting itself in the foot by replacing executives, writes Victor Kgomoeswana.
Johannesburg - State-owned enterprises have driven China’s growth into the entire world. From banking, oil and construction to telecommunications, these government enterprises have allowed China to dominate the world economic order, especially in Africa.
To be able to do that, they must be well run and managed – with consistent leadership and certainly not with chief executives who are replaced after only seven months in office.
Why is it that South African state-owned enterprises, Eskom in particular, attracts so much media drama every week?
Even as I was lauding the electricity utility last week for bringing one unit on-stream, the new board suspended four senior executives. These four included none other than the chief executive officer, Tshediso Matona, who had been in office for less than a year.
Just in a week that I had thought would end without our hearing of load shedding, the utility shed the biggest load yet: four executives.
Investigation; inquiry; a loss of confidence in the chief executive?
Who cares! Considering how crucial power is to the growth of the economy, we should not be surprised when other African countries overtake us. They surely keep the chief executives of their state-owned enterprises in office much longer than we do.
The M-Pesa juggernaut roars on – my toast of the week
You have probably heard of M-Pesa by now – the mobile money solution that uses cellphone technology to send money between people who do not have bank accounts. This innovation from Kenya once again made headlines this week.
This happened even as the chief executive of Safaricom, the pioneer of M-Pesa, was mopping up the public relations disaster in which his company tried to impose limitations on data subscribers. This time, Safaricom teamed up with East Africa’s biggest lender, the Kenya Commercial Bank (KCB).
Fresh from its announcement of an 18 percent rise in post-tax profit the previous week, KCB Group and Safaricom announced the launch of their new mobile banking product: the “KCB-M-PESA Account”.
Reportedly, this account will make it easier for account-holders to get loans with the help of their cellphones, with repayment periods of up to six months. That is taking short-term lending to another level. Fees? The facility fee for a loan could be as low as 2 percent a month. Of course this is not only a loan facility, but savings as well.
Customers of KCB and Safaricom will now be able to open a fixed deposit and a target savings account. Amazing that when M-Pesa first came on to the scene in Kenya, some banks saw it as competition. Now, the biggest lender in the region sees a partner in it.
Another innovation linked to a mobile service provider in East Africa this week had to do with a link between cellphones and solar power. What is the connection between the two? A major telecommunications provider, French company Orange, has built a relationship with a solar energy provider to allow its subscribers to use solar energy to power their devices.
I am immensely impressed by the innovation in this part of the world. This is proof that one country can inspire a region, promote competition to the benefit of customers, and make the region attractive to investors. Kenya has truly become a trailblazer with M-Pesa.
I am losing count of the number of breakthroughs in Kenya – and the region.
More sunny headlines from the east of Africa
My persistent warning to clients whenever I speak about Africa being open for business is that they should not overlook Ethiopia.
This week, incidentally, one of my clients told me he was leading a team involved in the Grand Renaissance Dam – a hydropower initiative to take advantage of the River Nile in Ethiopia – putting it well on its way to becoming an exporter of electricity in the region.
Even before the Grand Renaissance Dam project begins generating power, Ethiopia is exporting electricity to Djibouti, Sudan and Kenya. Wait until this mega-power project kicks off.
However, my Ethiopian story this week is not about power, but aviation. Ethiopia, I read, intends to build a new international airport on the fringes of its capital – Addis Ababa. This announcement by the Ethiopian Airports Enterprise may not be entirely new.
But the enterprise’s head of public relations, Wondim Teklu, said they had identified three possible sites for this airport. Why another airport?
Not surprisingly, Teklu said the reason was that traffic through the Addis Ababa Bole International Airport was growing by 22 percent a year.
The airport services 150 flights a day, which is why a 22 percent increase would make another airport necessary.
The Ethiopian Airports Enterprise is also planning $225 million (about R2.7 billion) expansion of Bole.
Where will the money come from? The same place Ethiopia got the money for its 700km railway line from Addis to Djibouti: China!
The Export-Import Bank of China (China Exim) will provide the loan; of course, since there is nothing for mahala, China Communications’ Construction Company will do the construction. When the work is done, Bole will have an expanded main passengers’ terminal and a modern VIP terminal. Do not forget, VIPs fly a lot to Addis Ababa, with the AU headquarters (also built by the Chinese) being located there. Moral of the story?
Ethiopia is bigger and more important to the African growth story than we think; and the Chinese are continuing to dominate the African growth narrative. Let other African countries learn from them.
Bretton Woods conundrum
I never quite know what to make of the Bretton Woods and the rebirth of Africa – in the interests of Africans.
Since the signing of the accords that led to the formation of the World Bank and the International Monetary Fund (IMF) in New Hampshire, US, between July 1 and July 22 in 1944, conditions have been shoved down the throats of African countries for far too long.
The two institutions – the IMF and the World Bank – have been called all kinds of names, including The Unholy Trinity(the title of a 2003 book by Richard Peet), which includes the Word Trade Organisation (WTO).
Under the influence of these financial institutions, which were built to regulate the international monetary system, African countries have been forced into unpalatable economic dispensations, arrangements and policies.
These Bretton Woods institutions are known for imposing – as conditions for lending to poor countries – requirements such as lower corporate taxes and public sector wages. The enforcement of these requirements has led to difficult living conditions in countries, when they are not implemented in the right context.
The reason I am raising this is that Ghana has found itself running to the IMF for a bailout of close to a billion dollars. The rising star of West Africa and the continent, Ghana’s economy tripped because of lower oil prices internationally, among other things.
While the Bretton Woods institutions have softened their stance when lending to emerging economies, old habits die hard. Already, the rating agencies are asking whether the turnaround plan for Ghana under the IMF bailout programme is not too ambitious.
Another African country is singing the Bretton Woods blues: Zimbabwe! With external debt of $10bn, this Southern African country owes the IMF $124m and the World Bank $1bn.
Under pressure to rebuild its economy while its political situation is iffy, Zimbabwe has hosted an IMF delegation on a review mission over the past two weeks. The head of the IMF delegation, Domenico Fanizza, said the country was paying about R18m a month. That was not going to cut it, said Fanizza.
The debt is ballooning and more investors are getting edgy about Zimbabwe’s sovereign risk profile.
The perpetual underperformer, which should be an overachiever, given its potential, Zimbabwe is one country in the Southern African Development Community that should be on the priority list of actions. It is far too crucial to be left alone.
For starters, it shares borders with key economies in the region, namely Mozambique, Zambia, Botswana and South Africa.
Its mining potential is immense; its skills level world-class. However, as long as the political story remains stagnated, it will continue to spew desperation to the rest of the region.
African leaders and even scholars like to talk about sovereignty. They demand African solutions to African problems: but when the fiscal crisis hits, as when it hit Ghana and Zimbabwe, they run to the same Bretton Woods institutions they like to demonise.
I hold no brief for the IMF or the World Bank, but if they keep on having to bail our economies out, then maybe we should learn to work with them and stop the rhetoric.
Whatever we do, it is going to take a long time before we finally get the Bretton Woods albatross off our neck. By then, we might have the Chinese dragon in its place – unless we get our African act together.
Lest we forget: snippets of African history and icons for inspiration
One of Africa’s foremost “operators” and diplomats was commemorated in Lesotho this week.
Although the jury is still out on whether their coalition government will work, perhaps the Basotho should look at one of the icons of the Mountain Kingdom for wisdom.
The country commemorated the death of Morena oa Basotho – the King of Basotho – Moshoeshoe I, who reigned between 1820 and 1870. He died on March 11, now a public holiday known as Moshoeshoe I Anniversary in Lesotho.
A warrior and diplomat of note, he is remembered for saving the Mountain Kingdom from all forms of attacks – including by asking the British to annex the territory – and for signing the Aliwal Treaty in 1869, which defined the borders of Lesotho as we know it today.
Diplomacy is one form of realism. When faced with a dilemma one has no means to deal with, it helps to befriend the powerful to help you through it. As long as you do not sell your natural soul in doing so.
King Moshoeshoe I was quick to pick those fights he could win. When he could not, he collaborated.
Would the parties in the coalition in Lesotho not go further if they learnt to think like His Majesty King Moshoeshoe I?
Methinks they would.
*Kgomoeswana is author of Africa is Open for Business, Anchor of CNBC Africa’s weekly show Africa Business News, and anchor of daily show Power Hour on PowerFM. He writes in his personal capacity.
** The views expressed here are not necessarily those of Independent Media.
The Sunday independent