‘Decade to recover from state capture’
Eskom a textbook case of what went wrong, says Trevor Manuel
We’re paying the price of the costs of capture and of inefficiencies
● Former finance minister Trevor Manuel has warned that it will take more than a decade for the economy to recover from the destruction left by state capture.
“We’re paying the price of the costs of capture and of inefficiencies,” said Manuel in an interview this week about South Africa’s investment prospects. He said the strike at Eskom was a case in point.
This week coal deliveries to power stations were disrupted and water bottles were thrown at CEO Phakamani Hadebe as he signed a memorandum of demands from protesting workers. This came after Eskom said there would be no wage increase as the utility was battling to trim costs.
Manuel said: “The fact [is] that they’ve employed all these people and borrowed money to pay people who shouldn’t be employed.
It all speaks to bankruptcy. Within the organisation there were a number of people who worked in Eskom for many years and they got caught up in malfeasance.
“Eskom is a textbook case of how things go wrong. When I became minister of finance in 1996, Eskom had a better credit rating than the sovereign [South Africa]. They could borrow. They were well administered and did what they had to.
“None of the state-owned companies were dependent on handouts from the state. They applied to the Treasury for guarantees and were charged for their guarantees.”
The contingent liabilities of state-owned companies are now among the biggest on the national balance sheet.
“Now Hadebe is in a Catch-22. Transnet operated on the strength of its balance sheet. Today, all of it is gone. Look at Prasa [the Passenger Rail Agency of South Africa]. In the scale of things, it’s smaller than the others, but the fact that you can’t get your rolling stock improved means you can’t utilise commuter rail as an important part of your urban policy.”
Manuel said the stacking of public company boards and the fact that huge fuel supply contracts, like one for SA Express, could go to individuals such as a relatively unknown music promoter, were further instances of squandering.
“All of it acts together to create the problem we now have. Now you can see the trail of destruction that has taken place. This trail of destruction will be there for a long, long time. You can’t fix it in a smaller time [than it took to create it]. The descent is steep and the climb-out is much slower. People consumed reserves that had been built up. The seed bank is empty if you’ve eaten the seed corn. There must be a fightback and it is a difficult thing.”
Asked how long it would take to emerge from capture, he said more than a decade.
“The president needs competence and he needs it quickly. To deal with the corruption, you need to operate at three levels.”
The first challenge was to fix the NPA; the second was for the Zondo commission of inquiry to get into gear and get cases ready for prosecution so justice was seen to be done.
“The third front in my view is to understand that [former public protector Thuli Madonsela’s] State of Capture report only dealt with a sliver of corruption, the Saxonwold project. You have to get into all three spheres of government to deal with all of those issues.
“You have to begin to change what happens at local government level, where mayors and municipal speakers are able to scrape off the cream and leave poor people without elementary services like water and sanitation.”
Trevor Manuel, above Former finance minister