Re­trench­ments are only way out de­spite pos­tur­ing

Business Day - - Front Page - TIM CO­HEN ● Co­hen is Busi­ness Day se­nior edi­tor.

I t is sig­nif­i­cant how the pat­tern of dis­as­ter at state-owned en­ti­ties is so of­ten ex­actly the same. The po­lit­i­cal heads of the or­gan­i­sa­tions, who very of­ten have no real idea of their ac­tual needs and re­quire­ments, are in­ca­pable of see­ing the or­gan­i­sa­tion from any­thing other than a po­lit­i­cal per­spec­tive. They there­fore have an in­cen­tive to favour ex­pan­sion, to in­crease salaries and to ex­pand the or­gan­i­sa­tion’s man­date.

The man­agers of the or­gan­i­sa­tion are of­ten will­ing to go along with this view, par­tic­u­larly since they can lever­age their own salary pack­ages up­wards. Grad­u­ally, the salary bud­get starts eat­ing into the op­er­a­tional bud­get, and the per­for­mance of the or­gan­i­sa­tion be­gins to slide.

This con­tin­ues un­til the or­gan­i­sa­tion runs out of money, at which point there is a cri­sis and the fi­nance min­is­ter is called in to wave his magic money wand. The fi­nance min­is­ter tries to put in place mea­sures to en­sure the or­gan­i­sa­tion re­mains within ra­tio­nal bounds, but in cer­tain or­gan­i­sa­tions that never works be­cause some are so po­lit­i­cally im­por­tant that the min­is­ter is out­voted.

The SABC is one of those po­lit­i­cal foot­balls. Ev­ery now and then some brave per­son stands up and tries to right the ship. Mis­take. Big mis­take. In this case, the lucky per­son is new SABC CEO Madoda Mx­akwe. Formerly a Nestlé ex­ec­u­tive, he de­cided there was noth­ing to do but launch a re­trench­ment process.

The ex­tent of the process is dra­matic — about 1,000 em­ploy­ees and 1,200 free­lancers. But bear in mind that the av­er­age SABC staff mem­ber is paid about R600,000 a year, and the or­gan­i­sa­tion is los­ing about R600m a year.

This is al­most ex­actly what the re­trench­ment process would gain.

It seems to me that Mx­akwe was just ap­ply­ing sim­ple math­e­mat­ics; he needed to save R600m a year, and he looked at his salary bill and made an es­ti­mate of what would be re­quired to bal­ance the books. Be­cause it is the only real so­lu­tion, I’m will­ing to bet Mx­akwe is now as­tounded at what tran­spired.

The new com­mu­ni­ca­tions min­is­ter, Stella Nd­abeniAbra­hams, had a hissy fit and “broke off re­la­tions” with the board, what­ever that means. The ANC also jumped in and pulled its nom­i­nees off the board, so now the board is not quo­rate. Some of the board mem­bers claim they have left be­cause they dis­agree with the re­trench­ment process. Trust me, they know — or should know — that there is no real al­ter­na­tive other than stab­bing the SA tax­payer in the pocket yet again.

The DA’s po­si­tion on this is equally per­plex­ing, since it also op­poses the re­trench­ment process. Com­mu­ni­ca­tions spokesper­son Phumzile van Damme and the port­fo­lio com­mit­tee want to con­duct an in­de­pen­dent skills and salary au­dit be­fore con­sid­er­ing re­trench­ments.

This seems to me like kick­ing for touch. In any nor­mal or­gan­i­sa­tion a re­trench­ment process is a man­age­ment pre­rog­a­tive. If an or­gan­i­sa­tion loses trac­tion in the mar­ket it re­ally has no other choice. You ab­so­lutely don’t need to be sec­ondguessed by out­siders whose in­cen­tive is to try to be Fa­ther Christ­mas to every­one.


The le­gal po­si­tion is also very com­pli­cated, be­cause the com­mu­ni­ca­tions min­istry is the sole share­holder, but the con­sti­tu­tion and Broad­cast­ing Act des­ig­nate the re­spon­si­bil­ity for pol­icy and se­nior ap­point­ments to par­lia­ment. Nd­abeni-Abra­hams’s po­si­tion is that as share­holder she “pleaded” with the board to sus­pend the sec­tion 189 no­tice to al­low her an op­por­tu­nity to fa­mil­iarise her­self with the turn­around strat­egy and the bail-out ap­pli­ca­tion. She also had a meet­ing with fi­nance min­is­ter Tito Mboweni to “dis­cuss the SABC’s fi­nan­cial po­si­tion ”— in other words, beg for money.

The prob­lem is that the SABC is legally a pub­lic broad­caster, and no­tion­ally re­lies on a pub­lic li­cence fee, not the fis­cus. But the se­nior staff of the or­gan­i­sa­tion have al­most al­ways been ANC lack­eys and it has never been able to shake its “pro­pa­ganda or­gan” rep­u­ta­tion.

This has re­sulted in it los­ing huge chunks of its au­di­ence, in­clud­ing many ANC sup­port­ers.

SABC apol­o­gists al­ways cite the struc­ture of the or­gan­i­sa­tion as an an­ti­dote to “cor­po­rate in­ter­ests” in the me­dia, but at least with “cor­po­rate in­ter­ests” the con­sumer is king, not some nook of the po­lit­i­cal process.

Given that there is an elec­tion in 2019, pre­pare as a tax­payer to get stabbed in the pocket — yet again.

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