At last Ramaphosa takes a stand

William Saunderson-Meyer says battleground the govt has chosen is SAA, not Eskom


In a month, President Cyril Ramaphosa will mark two years in the presidency. Let’s be clear, it’s “mark”, not celebrate.

Not much to celebrate. While the extent of damage wrought by a decade of state capture has become more brutally apparent over the past two years, little has yet been achieved by what his ministers self-importantly refer to as the “Sixth Administration”. In capital letters.

You can pick your explanation for the lack of action, depending on your bias.

It may be, as his critics continually carp, that the paralysis is because CR is in an ideological shapeshifter, more committed to holding together a fracturing African National Congress alliance than saving a sinking nation. Or, as his admirers stoutly maintain, that it is a tactical truce, as he tries first to inoculate against a palace coup before sallying forth against the forces of darkness.

It doesn’t really matter, because pressures are escalating so quickly that action has become unavoidable. The imminent collapse of a range of state-owned entities (SOEs), sinking the entire economy, means neither prevarication nor stealth is any longer an option.

This week, Eskom — R480bn in debt, 10 CEOs in 10-years — got a new CEO, one with both extensive private and public sector experience. Andre de Ruyter’s five-year tenure as Nampak CEO has been less than stellar, but he was highly regarded for his leadership skills at Sasol.

So far, most of the criticism to his appointment has revolved not around shortfalls in his curriculum vitae but around but shortfalls in his melanin levels. To the dismay of the Economic Freedom Fighters, the unions, and black business organisations, Andre de Ruyter is white. 

But the battleground that the Ramaphosa government has chosen is not Eskom — which would be less of a battle than an entire war — but South African Airways (SAA), where the government has refused to provide yet another bailout.

It’s a canny decision.

Inflation is running comfortably below 5%, SAA management has offered a 5.9% salary increase — already unaffordable to the entity, by the way — while the workers are demanding 8%. To get it, the workers are willing not only to destroy SAA but are, through secondary strike action, targeting the entire aviation sector. That in the country with the worst unemployment profile in the world.

The strike is a strategically poor move by the unions, who promise “no surrender”. Cross-party public opinion is outraged that the overpaid workers of an overstaffed entity can be so out of touch with the economic misery that most South Africans are having to deal with.

Unlike Eskom, SAA is surplus to requirements. SAA, which has not published its financial statements for two years, most likely because it is technically insolvent, is “not too big to fail”, as Public Enterprises Minister Pravin Gordhan told a New York investment conference last week.

SAA is a vanity project, not an essential service. While it might warm our hearts to see our flag carrier travelling the world, its sale or closure would end the financial haemorrhaging, with R28bn in accumulated losses over the past dozen years. And it is a hole that it is digging deeper at an increasingly frenetic pace, with a R500m per month revenue shortfall to which the strike adds another R50m, every single day that the carrier is not flying.

SAA is not only not too big to fail, it is also simply too bloated to survive the chilly winds of international competition. It has more 10,000 staff, working out at an annual wage bill of R610,000 per person. That’s a person-to-plane ratio of around 200 to 1, compared to the benchmarks of 120-130 to1 for international routes and 90-100 to1 for domestic routes. Out of the 90 destinations to which SAA flies, reportedly only five are profitable.

Ramaphosa, always ultra cautious about being linked to an unpopular move, has allowed the Public Enterprises and Labour ministers to set the scene for this battle royal. The survival of his administration now depends on the ANC government triumphing over its Congress of Trade Unions (Cosatu) partner.

For the first time, natural ideological alliances are not as clear as they have been. The SA Communist Party (SACP) appears to be uncomfortably ambivalent, not automatically siding with the unions as it invariably used to.

So far, it has restrained itself, doing no more than criticising the “cavalier” approach of SAA management to the strike. Instead, it says SAA should engage in “meaningful consultation” to resolve matters “amicably”.

These platitudes are not the normal fire and brimstone of SACP rhetoric. Clearly, the SACP is waiting to see which way the winds of victory are blowing before it commits its forces.

If Ramaphosa wins the confrontation with the SAA strikers, it will immeasurably improve his chances of being able to impose radical solutions upon the other bloated SOEs and on the public service. If he fails, at best SA’s state of drift will continue. At worst, he will be recalled at the next leadership conference and SA’s only hope of a reformed ANC government could be permanently lost.

Ramaphosa is about to be blooded in battle and the events of the next week or so will determine whether he attends his second-anniversary party in presidential finery or sackcloth and ashes.

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