Johannesburg - The new Eskom board will need to urgently address serious structural problems at Eskom and a potentially devastating knock-on effect on the economy if it fails to meet its financial obligations, the Banking Association of South Africa (Basa) said on Sunday.

The appointment of a new board of directors for Eskom had been necessary to address the crisis of confidence in South Africa’s leadership and economy, Basa MD Cas Coovadia said.

"The new board will need to urgently address serious structural problems at Eskom and a potentially devastating knock-on effect on our economy if it fails to meet its financial obligations. Their appointment must be only the first step towards tackling the corruption and systemic mismanagement in state-owned enterprises [SoEs], which is contributing to the country’s ratings downgrades," he said.

If South Africa was to position itself as “open for business” at next week’s World Economic Forum in Davos, government would need to provide clarity on what other immediate actions it planned to take to re-establish domestic and international confidence in South Africa as an investment destination.

"The Banking Association South Africa wishes the new Eskom board well in the significant tasks ahead," Coovadia said.

The Black Business Council also welcomed the appointment of the new Eskom board and the inclusion of its secretary general George Sebulela on the board.

"The government has taken the bull by its horns by terminating the term of the [old] Eskom board and appointing a new board led by Jabu Mabuza. This action reflects the seriousness in which government is starting to take governance issues that are threatening the stability of the country’s finances," council chairman Sello Rasethaba said.

On Saturday, Deputy President Cyril Ramaphosa announced far reaching measures intended to improve governance as well as restore the integrity of Eskom.

Phakamani Hadebe had been appointed acting CEO with immediate effect, while Telkom  chairman Jabu Mabuza would take over as chairman of the Eskom board. All Eskom executives facing allegations of serious corruption and other acts of impropriety, including Matshela Koko and Anoj Singh, would be "removed immediately". The new board had also been instructed to appoint a permanent group chief executive officer and a group financial officer within the next three months.

"Eskom is critical to the South African economy. As a key enabler of economic growth and social transformation any further deterioration of Eskom’s financial and operational conditions could have a severe impact on the country," he said.

The new board members are Jabu Mabuza (chairman); Sifiso Dabengwa; Sindi Mabaso-Koyana; Mark Lamberti; Tshepo Mongalo; Malegapuru Makgoba; Busisiwe Mavuso; Nelisiwe Magubane; Rod Crompton; George Sebulela; Pulane Molokwane; Banothile Makhubela; and Jacky Molisane.

“We are confident this intervention will restore the important contribution Eskom makes to our economy. We are determined to address the damage that has been done to this institution and place it on a new path of efficiency and integrity," said Ramaphosa.

African News Agency/ANA