Hope not enough to get out of dire straits
President Cyril Ramaphosa flew to London last Monday to address the Financial Times Africa summit as part of his efforts to attract R1.2-trillion in foreign direct investment. His address, published in the ANC’s newsletter, was upbeat, reinforcing the message that SA and the rest of the continent are open for business.
This was bolstered by two positive developments: SA’s improvement in the World Economic Forum’s global competitiveness rankings, and the award of the Nobel peace prize to Ethiopia’s Prime Minister Abiy Ahmed for the peace deal with Eritrea.
Ramaphosa repeated this message in his weekly diary, From the Desk of the President, and continued to preach the message of hope in interviews. But unbeknown to him, Eskom had other plans: last week, without advance warning, it switched off the lights, causing anger across a fragile economy that is stuck in job-shedding low-growth mode.
After much dithering, it was only on Monday that the Treasury confirmed the date (next Wednesday) for the tabling of the medium-term budget policy statement.
In the same week, the department of minerals & energy published the wrong version of the Integrated Resource Plan. This came after a few months of announcing a nonexistent mineral find.
Worse, all this is coming a few weeks before Moody’s Investor Service, still the credit ratings agency that rates SA the highest, is to publish its review.
Increasingly, the sense is that the country is drifting. The optimism from Ramaphosa’s election as ANC president in December 2017 and his election as the president of the republic appears to be dissipating.
Even though the president and his deputy, David Mabuza, have at last expressed support for the Treasury’s discussion paper on SA’s economic strategy, no announcement has been made about the final strategy — incorporating all the inputs received in the past month — which would be the blueprint of his presidency.
The biggest blow to confidence has been in the area of the economy directly within government control: the stateowned enterprises (SOEs).
Large SOEs continue to operate without full boards or executive leadership. Eskom has yet to appoint a permanent CEO after the departure of Phakamani Hadebe, and SAA, the Airports Company SA, the Public Investment Corporation, the Passenger Rail Agency of SA, Transnet and the Post Office Group are limping along without full-time CEOs or finance directors.
Even more disconcerting is that some of these — such as Eskom and SAA — are recipients of billions of state support. It boggles the mind how interim CEOs and finance directors are expected to carry out far-reaching organisational reforms and conditions that have come with bailout support.
In his last budget finance, minister Tito Mboweni announced the appointment of chief restructuring officers (CROs) as one of the main conditions for these bailouts. Even more concerning was the departure from the norm — that CROs are typically appointed by CEOs (just like chief M&A officers) not shareholders, let alone politicians. The advertisement for the CEO and CRO of SAA shows how blurred the accountability lines for the two roles are.
Still, months later, major recipients of government largesse — SAA, the SABC and Eskom — have yet to see these CROs, though a few months ago the government announced the establishment of the office of the Eskom CRO. This means no restructuring is happening even though money continues to be spent by executives in which so-called shareholder ministries have no confidence.
Also, after months, South Africans have yet to be told how breaking up Eskom into three subsidiaries will help keep the lights on 365 days a year. More important, when is this unbundling going to happen?
South Africans are still paying an arm and a leg for data, yet the process to allocate highspeed broadband spectrum has yet to even start.
Drip-feeding information to the SA public is fuelling the sense that there is a drift —a combination of inaction and lack of a sense of urgency amid deteriorating economic conditions — under way. Whether in the rural areas, townships, Stellenbosch or London, this feeling is becoming pervasive. In part, it was the reason that Johann Rupert, an SA patriot, major job creator and investor, gave an unusually blunt and pessimistic interview to writer Pieter du Toit.
Interestingly, The Economist, which endorsed Ramaphosa as SA’s best hope in the May elections, noted this week that the president is running out of time even though he remains hopeful things will turn around as he has made good appointments at critical institutions like the SA Revenue Service and the National Prosecuting Authority.
It remains an open question, though, whether his executive team has what it takes to turn things around, and whether they share his sense of urgency or are happy just drifting.
NO RESTRUCTURING IS HAPPENING AT STATE ENTITIES EVEN THOUGH MONEY CONTINUES TO BE SPENT
● Dludlu, a former Sowetan editor, is executive for strategy and public affairs at the Small Business Institute.