Hello and a healthy, happy and prosperous 2022 to all our Business Report readers.
Around this time of year, many are sitting down to take stock of their lives, making resolutions, which may or may not be adhered to, and looking to the hope of a future that must surely be better than the past 24 months or so.
Sometimes, in order to better plan for tomorrow it is pertinent to take stock of the past. If it is necessary to do this in our personal lives, I can safely say that as a country, South Africa should consider doing the same and urgently.
Over the past few years, we have collectively faced serious challenges. We have been subjected to several viruses and diseases - not only corona, but corruption, looting, theft, burning of assets - the list is long. They all add up to a serious malaise that has the country in an iron-fisted grip.
South Africa is sick. More besides, the populace is now sick and tired of government excuses for the paralysing of our economy, engrained poverty and lack of employment opportunities.
Parliament burning, rail and power stations, schools, libraries, state buildings and other key infrastructure - destroyed, among other catastrophic transgressions. It’s beyond heartbreaking.
Why? For what purpose? To disrupt the State? To distract so the plundering can continue?
Many of us have questions for the government, and here are mine:
– Why doesn't the government protect and maintain its assets? Is it because they were simply handed over, so there is little to no appreciation of what they are and their importance? If you worked for years to buy your own house or car, you protect it, service the loan and take the vehicle for a service. You maintain this asset.
– What is the actual role that the Minister of State Owned Enterprises (SOE), Pravin Gordhan, fulfils? Under Gordhan, most, if not all, SEOs are loss making. Note: Gordhan has a degree in pharmacy...
– Who approved, and reappointed, the services of Bain & Company?
Gordhan, as the previous minister of finance, should be aware of the financial cost of consultants; not only their exorbitant consultation fees, but the loss of jobs to employees working within enterprises and the knock-on cost this has on the sector and the country.
On May 16, 2018, Gordhan, addressed Parliament as the minister of the then public enterprises department, now known as the Department of SOEs. Since then, Gordhan is aggressively seeking public-private partnerships to save sinking SOEs (not that he has had any luck so far). Anyway, in his 2018 concluding remarks Gordhan stated that the state should be “recaptured”, those involved in malfeasance should be held to account, governance should be strengthened, entities should be stabilised and returned to financial stability and the companies should be used to transform and boost the economy.
He said, “We shall seek to ensure that the SOEs are positioned so that they can facilitate: inclusive growth, massive investment, both foreign and local, job creation, skills development; and assist with enterprise-wide and business creation.
“The actions will involve the recapture of SOEs through: boards with capacity and integrity, skilled management with integrity. Conduct forensics and ensure the consequence of management, integrity and good governance, including lifestyle audits and officials must be prevented from doing business with SOEs, auditors and legal firms – in other words, they need to clean up their act.”
Gordhan also referred to the merger of airlines, the requirement for procurement processes with transparency and oversight, business models, both now and for the future where issues of sustainability will be integral to any solution that are arrived at. The role of the SOE in the economy needed to be able to promote investment, job development, enable skills acquisition and enable growth of business.
The Department of Public Enterprises itself, he noted, also needed to be enhanced so that it is able to accommodate these changes; “We need to identify, locate and trace stolen assets so that these can be restored to SOEs and the South African people to whom they belong. The Team in the Ministry have demonstrated their loyalty to the ’New Dawn’ and making government work.”
In 2022 and now looking back, how do you rate yourself so far in achieving your 2018 KPIs Minister Gordhan? How do you feel about the burning of our Parliament, the humiliation of a prized strategic asset not being insured? The ongoing disasters at Transnet, SAA, the Land Bank, the Post Office, Denel and any of the other enterprises in your portfolio?
Well, according to a Dublin-based research company report in July 2021 (the company focuses on South Africa's major state-owned entities and their performance, including leadership issues): “The ongoing financial and operational crises faced by a number of major SOEs cast doubt on their practicality and survival. Total SOE debt stands at a staggering R692.9bn. The most recent budget review indicated that SOEs have reported poor growth, high costs and elevated debt servicing costs, and several appear to be at risk of defaulting on their debts. Prospective reforms and increasing private-sector participation provide some hope for South Africa's SOEs".
The Zondo Commission of Inquiry into allegations of state capture in the public sector, including organs of state, has outlined corruption at the highest echelons of entities such as Transnet, Eskom, SAA and Denel, and provides some explanation for the extent of the financial mismanagement at these enterprises. The poor performance of SOEs continues to reflect “crumbling infrastructure, poor and ever-changing leadership, corruption, wasteful expenditure and mismanagement of funds“.
Your “patients” are ill Minister Gordhan and our patience has run out. What’s your next injection shot?
Adri Senekal De Wet is the Executive Editor of Business Report.
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