This column was first published in Business Day
Sometimes it is the smallest thing that riles the most.
I have a pet peeve, which is SA hotels, and particularly safari lodges, only offering bad, tasteless foreign gin instead of the amazing diversity of (only marginally more expensive) high-quality local gins.
It drives me mad that an inferior product I wouldn’t drink in the UK gets offered as somehow something that can answer the question of “what is the best, affordable, thing to drink”. Are there not local content rules on such things? The department of trade & industry should regulate gin now!
This situation rings quite a bell with the choice of a new Eskom CEO as well as many other state-owned enterprise (SOE) issues. There is much gnashing of teeth and moans of doom from the usual quarters, who would rather have the inferior product that is foreign to running a large complex organisation and lacks the requisite leadership skills.
In some sense SAA’s impending demise comes at just the right time for the wider SOE complex.
The economic death-cult of social compacting means many in the political economy mistake leadership and the self-confidence of knowing what needs to be done based on long experience for arrogance. It champions mediocrity on “skills” for the right tick boxes elsewhere in terms of the developmental state and cadre deployment.
Parts of the governing party are at risk of doing the same with SOEs. Listening to, rather than shutting down, contestation and vested interest groups who clearly don’t have the best interests of the employment and development at heart has delayed processes. This says a lot about a crisis of leadership in SA in general. That anyone can be put in any role because ultimately the compacting system will magically conjure up the right answers for such a deployed person to implement. This is crazy.
But in the end pragmatism, from the department of public enterprises especially, seems to be winning the day. The crisis Eskom is in means options are constrained to the point where only one choice is left standing. This is also increasingly happening (albeit with more of a lag) at SAA.
The presidency seems to still be stuck. Others, however, have come to their senses and pragmatism has won out — Tito Mboweni and Pravin Gordhan and their respective teams in particular (though, given nuance, sometimes pragmatism comes in different flavours that can conflict, but that is another story for another day).
What is about to happen at Eskom and SAA will be a fascinating experiment of which side of this debate can work out.
With Eskom, we certainly never want to hear “I never knew how bad it was”, which has been uttered by so many other SOE leaders.
But decisiveness and knowledge creates the potential for conflict, especially after double- and triple-checking all stakeholders have been consulted and vs the innumerable commissions and working groups. The roles of shareholder vs board vs c-suite at SOEs have never really been sorted out in the past because each was as weak as the other. It will now have to be sorted out for Eskom and other SOEs if Eskom is to be allowed to function and rescue itself.
In some sense SAA’s impending demise comes at just the right time for the wider SOE complex. It will highlight the hard decisions required, the need (and ability) to avoid pain by acting early.
Eskom needs to be stabilised (both operationally and financially) while also undergoing radical shifts in its role as part of a just energy transition. The government is so bad at these things precisely because these processes require the choosing of winners and losers, and as such the death-cult of social compacting can achieve little.
A theoretical path out has now been laid for Eskom by the department of public enterprises but can easily be derailed with too many cooks and too much sticky status quo developmental monopoly mindset from some parts of government.
SAA equally is more at risk of a sudden stop in sentiment forcing a shift towards sustainable solutions and where winners and losers will have to (legally under business rescue) be picked.
It was extremely tough to get to this point in both cases. A running out of other options and so “late” arrival at the necessary place were the order of the day, though the government will still demand praise for the decision (and should get some).
It has been the same on child tourist visas, where the government wants praise but has completely messed up the process and shot the tourism industry in the foot over the past two years. Similarly on spectrum auctions, a huge amount of pressure has had to be applied to get the government to now try to finally move, but only by bypassing the minister-shaped blockage.
Reform is happening, but too slow and creating too much uncertainty, cost and fallout risk in the delayed interim. A different way of doing things is now going to happen at Eskom and SAA, forced by a lack of alternatives.
Attard Montalto is head of Capital Markets Research at Intellidex