SAA: Turning something into nothing

Douglas Gibson writes on the proposal before Malusi Gigaba that govt pensioners bail-out Dudu Myeni's failed airline

Turning something into nothing

Would you invest your life savings in a dodgy company, losing billions each year, insolvent and run by a close friend of the president, qualified as a primary school teacher? Minister Gigaba would.  Your money, that is; not his. The minister’s parliamentary pension is safely invested in a fund quite separate from that of over a million officials whose Government Employees’ Pension Fund (GEPF) is administered by the Public Investment Corporation (PIC).

The minister is expected to announce during September that around ten billion Rand is to be handed over to South African Airways as a lifeboat to cover its debts and give it some running capital. One option he is considering is to use GEPF money from the PIC for this purpose.

A further question is the following: if you had precious savings invested in good shares in Telkom that are paying dividends and increasing in value, would you sell them and give your money to SAA to waste? Believe it or not, this is another option the minister is considering.

Apart from SAA and the SABC, which is also in a financial jam, there is a whole string of other state-owned enterprises (SOEs) waiting in line for government handouts. 

Remember that there is little prospect, if any, of SAA ever becoming profitable under state management.

The members of the present government have touching faith in the ability of SOEs, despite all the evidence to the contrary, to produce the goods for our people.  ANC members cling to a utopian dream about the state owning everything and running everything for the public benefit. They have little faith in the private sector; their attitude towards people who power the economy varies from disdain to downright enmity. The goose that lays the golden eggs of employment for millions and the tax-payment billions is kept at arm’s length except when the finance minister or the president has to rope business in to help prevent a ratings downgrade or present a shiny image at Davos.

Government officials are not businessmen or women and loyal party cadres appointed as SOE directors generally know little about business.  That is the reason so many SOEs are mismanaged, poorly governed, corrupt and subject to looting.  That is why the continuing call by our socialist and communist friends for nationalisation, for example of the mines and banks, is enough to make a horse laugh.  One can imagine the mess that would be made of our mining companies and our banks by government officials and friends of the ministers appointed as directors.  Within a year or two, they would require bail-outs, stop paying tax because there would be no profits, face insolvency, and hundreds of thousands of jobs would vanish.

Many in government have a romantic idea about South Africa being a “developmental state.”  This is nonsense because our country simply lacks the required skills at government and administrative level to be a convincing candidate to take over from the private sector the management and development of a growing economy.

Governments should regulate and should create the conditions for economic growth and success.  Very few are capable of much more than that.   Some point to China and would use this as a model.  The problem is that we are a constitutional democracy, not a dictatorship.  A further problem is that China has layers of educational excellence and a work ethic that we seem to lack. Then, of course, when the Chinese expose corruption, they are merciless.            

Here we fire a person found unfit to be National Police Commissioner and then immediately appoint him as a deputy minister.  Or we accept the resignation of a person implicated in state capture, appoint him to parliament, then re-appoint him to the job from which he resigned, then propose paying him R30million, then allow him to leave the job again and propose paying him, over and above the salary and perks he has already received, another R10 million for eighteen months’ work, so that he will go away. The Chinese jail people implicated in corruption, or they shoot them.  Perhaps we should try that?

Minister Gigaba stated recently that in the last ten years, the government had bailed out SOEs to the tune of R125 billion. Most of that has been wasted and we have nothing to show for it. Just think what we could have done to improve the lives of our people by using that money for infrastructure, housing, roads, education and health. 

Then there is the money that has been looted and corruptly misspent and misappropriated by politicians and officials.  No-one knows how much that is but it must be an enormous amount when one considers what has been permitted to go on at national provincial and especially local government level for a generation. The corruption levels that we know about in town and city councils throughout South Africa are sickening. Had this money been available for public purposes we might have been able to change the face of our country and largely overcome the legacy of colonial and apartheid underdevelopment.

Minister Gigaba has a big job in trying to turn the ship. Instead of trying too hard to do that he might more profitably sell off SAA, perhaps for R1.00 to Comair or to Emirates.  He might have to pay them a billion or two, but it might be cheap at the price because there would be no more bail outs.  Then he should close down or privatise, or partially privatise every SOE that fails to earn its keep.  That way, he might start earning dividends and taxes from entities that have become an enormous drag on our country. Instead of turning something (our national savings) into nothing, he might then turn nothing into something for the benefit of all of us.

Douglas Gibson is a former opposition chief whip and former ambassador to Thailand.

This article first appeared in The Star.