Don’t back wasteful SOEs

Once the Treasury had slammed the door in Pravin Gordhan’s face when he requested R9bn to conclude SAA’s “business rescue” (an unsurprising [response] given that it doesn’t even want to pay Denel’s wages) the public enterprises minister approached the banks for funding instead.

Subsequent delays in concluding a funding deal are not surprising, as a significant part of the sum consists of grossly inflated retrenchment packages for previously disadvantaged unionised staff. They were bought off by Gordhan, who when the business-rescue deal was done had no compunction about throwing additional taxpayer money at them to secure their support, thus creating an unhelpful precedent. The banks agreed to the business rescue deal mainly to finalise recovery of their existing loans, so why should they suddenly be keen to extend fresh ones to a business that has lost money for years and whose future, given Covid-19, is anything but bright?

During the continuing Covid-19 disaster, my company applied for a bank loan to buy production machinery. We have been clients for 25 years and have more than enough in our account to cover the machine cost. But we need to manage cash flow. We were turned down. If taxpayers like us are refused small loans, why should SAA, with its history be eligible for one many times the size?

Small businesses cannot run to the minister when cash runs out. They pay tax that enables the government to function. Despite the fine political words, bankrupt government enterprises always seem to get aid while small private businesses struggle. It should be the other way around.

James Cunningham Camps Bay