News / Opinion / Columns

Warren Thompson
2 minute read
16 Oct 2017
7:41 am

Killing SAA could change the course of a nation

Warren Thompson

What the money could have been used for is a far greater sin.

The sins of commission are one thing, the sins of omission are entirely another was what my Sunday School teacher always used to say.

But it seems the sins of omission and poor policy priorities is a whole other league.

As the South African government mulls yet another bailout of South African Airways, the CEO of Business Leadership South Africa, Bonang Mohale, last week drew a parallel in terms of what could have been bought with the R50 billion the South African government has thrown at SAA since 1999: Emirates Airlines.

Yes, Emirates Airlines – one of, if not the, biggest airline in the world. Lock, stock, and barrel. But let’s take the comparison further. If the government had decided owning an airline with as poor a track record as SAA’s was no longer a strategic priority, and instead elected to use the money to fund tertiary education for poor students. What could the money have bought?

In fact, with a little bit of imagination, they could have replaced one state-owned entity with another. By selling SAA and capitalising a student bank for instance, the government could have taken its hypothetical R50 billion and created a financial institution with a balance sheet conservatively twice that size. It wouldn’t have happened overnight, but incrementally; first with the proceeds from the sale of the airline and secondly with the hypothetical bailouts the government would have committed instead being injected as additional equity into the new financial institution.

So how do you double the money to get to R100 billion? Well that is the miracle of banking. By telling universities and other tertiary institutions to deposit a portion of their surplus cash with the government-backed bank (that is sponsoring their clients), the institution would begin to grow its balance sheet with the deposits of related parties.

So how many students could we educate with R100 billion? Assuming a degree – tuition only – over three years costs R150 000, then the numbers become astounding. Six hundred and sixty-six thousand additional students would have been able to access tertiary education based on these assumptions.

Assuming just 80% of those go on to complete their degrees, that has a staggering effect on the trajectory of a nation. Almost half a million more people who are more likely to get a job, start a business, and ultimately, become taxpayers.

If part of the #Feesmustfall campaign was about allowing poor students to access tertiary education, then this appears to be a no-brainer. But the combination of poor execution and the wrong political priorities means that we are instead lumped with a poorly performing, inefficient airline, that exists to serve a predatory elite while poor students are turned away from accessing higher education. This is simply ridiculous. 

Brought to you by Moneyweb