News / Opinion / Columns

Sydney Majoko
3 minute read
13 Mar 2018
9:50 am

Give up on SAA to save SA

Sydney Majoko

It would come as no shock if Gigaba presented another sick note to avoid having to account for a R5.7 billion loss to date.

Former SAA chairperson Dudu Myeni. Picture: Gallo Images

It is said that Albert Einstein defined madness as doing the same thing over and over again and expecting a different result. If we really believed this to be true, then the various ministers of public enterprises that we’ve had over the years can be classified as clinically mad, especially with regards to their actions over South African Airways.

Of all the state-owned enterprises (SOEs), SAA is the one that operates in a highly competitive market that requires a skilled team of people just to make sure it breaks even, let alone make a profit.

When Auditor-General Kimi Makwetu announced that SAA had lost in the region of R5.7 billion in the past financial year alone, it ignited the usual rounds of gasps and shock. But we quickly moved on to other matters because we have become accustomed to those sort of losses from SAA.

It is only a matter of time before we hear the usual sort of remedies being announced: new board with a turnaround strategy accompanied by a several billion rands to aid the national carrier. And the madness will continue.

The first thing that new Minister of Public Enterprises Pravin Gordhan should do is to get all stakeholders concerned to agree on one thing: the madness must stop. We cannot cry foul that there is a budget deficit of R50 billion but still take from the little that we have and put the money in an entity that is guaranteed to put the money down the drain.

Gordhan needs to get the country’s leaders to agree that SAA is an expensive vanity project that no one in government will ever get right because the right skills to run it profitably are not in government, but in the private sector. Except for a few bruised egos, government will not lose a thing by going into a deal with the private sector regarding the running of SAA.

The benefits to the country’s fiscus would be immense. Due to the large amounts of public money that is pumped into state-owned enterprises, they become ideal vehicles for those who want to loot public funds because they are shielded from everyday scrutiny due to their requirement to report only once a year through the publication of financial results.

In the case of SAA under Dudu Myeni and a Gupta-selected board, they could even delay the publication of those results by several years, knowing that when a bail out is required it would always be granted, because of the false notion that the national carrier is the nation’s pride.

Shareholders of a private SAA would never allow their company to lose R15 million a day. Heads would roll before that happened. Whenever violent service delivery protests spring up around the country, financial experts fail the public by not making the link between lack of money for those services and the continued waste of money through SOEs.

An interesting start to Gordhan’s plan in dealing with SAA would be to call Malusi Gigaba to explain what the plan was when his then treasury gave the national carrier R10 billion in the second half of 2017, enthusing that this was part of a bigger plan to turn the airline around.

It would come as no shock if Gigaba presented another sick note to avoid having to account to the nation because the results of the bailout are there for all to see: a R5.7 billion loss to date.

Sydney Majoko.

Sydney Majoko.


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