It's time we talked about the state of our state-owned enterprises (SOEs). The past two months have been especially depressing to the transformation project in our country. A month ago, Basani Maluleke, the chief executive of the African Bank, inexplicably walked out of her job after stabilising the distressed bank, and placing it on a growth path.
As this sordid saga was unfolding, another seasoned black African executive, Tryphosa Ramano, was on her way out of her job as chief financial officer, with a toxic narrative running about her departure terms including a standard payout to fund her gardening leave (restraint of trade). This is normally given to many white male CEOs and CFOs, raising the question why it was deemed relevant to mention it when it comes to her.
A month ago, Monhla Hlahla, also a black African female, resigned from her job as chair of Denel, the financially distressed state-owned arms manufacturer.
At the end of March, hundreds of employees of the national broadcaster, the SABC, left their work after being retrenched to cut costs. Thousands of workers from state-owned airlines SAA and SA Express haven’t set foot at work for months as part of the restructuring programme, and there’s no end to this hiatus. Some have accepted retrenchment while others took early retirement packages.
Fears are mounting that the splitting of Eskom into three subsidiaries – for generation, distribution and transmission – will result in thousands of workers losing their jobs before it stops load-shedding.
The net effect of all these developments is two-fold: first, the result is to grow the army of unemployed workers beyond the current 42% (including workers who are discouraged from looking for work); and second, the transformation project is set back by a few more years.
In a country where the majority of citizens are black Africans, the inescapable conclusion from this is that the numbers of casualties – unemployed and poor – will be black Africans. And the departure of senior black African women from top jobs is especially a major blow to transformation.
The chaotic state of our SOEs is very concerning. For many years, the SOEs have been the most fertile ground for black African talent, especially women, to flourish. It goes without saying that if they are permanently distressed, transformation will suffer. This situation cannot be allowed to continue. An urgent intervention is required.
A few years ago, former president Jacob Zuma appointed a commission to review the role and mandates of these SOEs – numbering in excess of 700 including the ones attached from municipalities.
He also appointed his then deputy Cyril Ramaphosa to lead interventions on distressed ones such as Eskom and the Post Office.
Last year, Ramaphosa named a top-class team to his SOE Council. A year on, it is unclear what this world-class brains trust has achieved. Instead, SA Express and SAA are grounded; the Land Bank and Denel are in trouble; in between switching off the lights, Eskom, which has just been given a massive price increase, is battling financial sustainability with its crippling debt; and the SABC cannot say whether its retrenchments will result in profitability after years of bailouts.
It remains unclear whether these above-referenced interventions were approved by the SOE Council or they happened despite, not because of, it.
The crisis facing our SOEs is three-fold: first, most have overlapping and unclear mandates; second, most are poorly governed (they are led by weak boards and executive teams); and, crucially, most are under-funded.
Indeed, the other major problem is leadership instability arising from frequent clashes between boards and the so-called shareholder ministries.
Perhaps the SOE Council will eventually come up with a comprehensive and durable solution about the most optimal architecture of our SOE ecosystem. But that is the discussion for tomorrow.
For today, the country – and this economy – desperately requires a crack team to manage the current crisis. Clearly, the various piecemeal interventions have failed to stabilise our SOEs.
The current restructurings which are often shrouded in secrecy are unhelpful, and they need to be stopped while this team looks into the crises in a systematic manner. The first task of this team is to strengthen the boards and management teams especially of the large and consequential SOEs such as Eskom.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.