Lesson in how value is created - and how it can get destroyed
South Africa has confronted many challenges. Besides apartheid, it is living through the scourge of HIV/Aids that ravaged society at the turn of this millennium.
Adding to that, 10 years later the country is in the throes of corrupt leadership, state capture, lacklustre economic growth and high unemployment rate, with threats of restive labour season, while Moody’s hold the sword of Damocles over our heads with a ratings downgrade.
The Washington Consensus and the structural reforms that the World Bank and the International World Bank imposed in the late 1980s advocated less government.
With that notion the private sector created terminology of turn-around-strategy and the 1000-day stay for executives. The SAA has been cycling management out for a quarter century. With that, they drained the purse of the state.
Today the government and trade unions have locked horns, although each for different reasons, but following different paths they are poised to close SAA down - this former jewel of the nation.
My superstitious mind is in overdrive whispering that South Africa's milieu of birth is cursed. It is drinking from Chinua Achebe’s wormwood.
Many of the state-owned enterprises are turning managers around and out continuously. Yet when South Africa repealed apartheid from the statutes, it created institutions that would ensure that the constitutional imperatives were realised and form a lived experience for citizens - a better life for all.
As part of building capacity to manage in a complex environment, the government decided to embark on a programme with the Harvard Business School where senior managers across the state and the continent attended senior executive programmes.
South African officials from the private sector, NGOs and the government had the privilege of jointly attending this programme that ran in block releases over 10 months.
The institutional and racial composition of participants revealed the cleavages which the programme precipitated into very heated and emotional debates by participants. The programme was designed that there was no escape route, and this was in a safe space. It created conditions for surfacing up facts.
My cohort was of 2002, and it came in the aftermath of the scandals of Enron, the Black Rock Bank of Scotland and the parcelling out of railways in the UK. Thus, my cohort anointed itself to a previewer of the 2008 financial and economic meltdown as emanated, this time from the structural adjustments and privatisation in the developed world.
The most important part of the programme for me, which is of relevance to South Africa today, was about the notion of value. How value is created and how it can get destroyed. Case studies abounded on leadership and succession. Enron stood out as a monument of private sector infractions of value destruction.
Ethics failed at the altar of profits and a whole community would be deprived of basic services such as electricity. The effects of this disaster in California are yet to be accounted for in full.
This unfettered private sector greed played itself out again in 2007 and led to the collapse of the too big to fail Lehman Brothers.
Working-class Americans lost property and savings and the world is still reeling from the effects of the 2008 crisis.
Given the history of behaviour of capital and its impact on ordinary citizens, countries including the US under Obama Care have endorsed the World Health Organisation call for the provision of Universal Health Care to citizens and in South Africa it is the National Health Insurance (NHI).
The stance of the South African government led by former president Thabo Mbeki on HIV and Aids continues to be vilified, yet the experience of the October 1929 crash of the markets, the Enron crash of 2001 and finally the 2008 financial crisis have continued to prove beyond doubt what the behaviour of capital is and their hostile position to Dr Zweli Mkhize’s NHI comes as no surprise, it is consistent.
Add to that the now revealed secret that at the height of “swart gevaar”, apartheid led a highly advanced scientific research and biological warfare on first black females to render them infertile and second experimentation on pigmentation aimed at the introduction of HIV and Aids to selectively decimate blacks.
Those of us who labelled Mbeki as a denialist when he asked a necessary question in science and political economy now have very little to say.
As regards Eskom, Alec Erwin, the former Minister of Trade and Industry, at the Motlanthe Foundation Drakensberg Dialogue of Equals, discussing the energy crisis, had wise nuggets for South African policy makers.
In this regard he draws on lessons from Ontario, Canada, where an Eskom equivalent went into a similar crisis, and there they did not follow the California solution but had a state-led long-term view of more than 30 years.
The Ontario Eskom is functioning well, with a delighted customer base, a healthy balance sheet and a committed workforce. We should not parcel out Eskom. We should manage it ruthlessly out of corruption, debt and inefficiency. Yet rebuild it prudently towards a jewel of the nation it once was.
Just as Dr Van der Bijl, its founding chairperson in 1923, was able to pay back its state loan in 10 years. This is the message prominent in Erwin’s advice and perhaps we can be saved from sipping from the wormwood bowl, world without end.
Dr Pali Lehohla is the former Statistician-General of South Africa and former head of Statistics South Africa. Meet him at www.pie.org.za or @PaliLehohla