Eskom U-turn would kill a critical mission

At first glance, there is little that connects Mteto Nyati, Clarence Thomas and an alliance of 60 major US business enterprises. Nyati is one of the country’s most distinguished business leaders. His stellar reputation, and commitment to the country’s cause, saw him elevated to the board of Eskom in the latest shuffle aimed at turning around the electricity supplier.

Thomas — a member of the US Supreme Court — distinguished himself as its longest-serving black member. He is also an arch conservative whose opposition to affirmative action is well documented.

This week Nyati was quoted in the Sunday Times as having said that “empowerment must go” if Eskom is to be saved. The basis for this statement requires some historical reflections. Eskom has failed to deliver on its mandate to provide electricity. The poor state of its power stations, coupled with dire maintenance, has plunged the country into a crisis. In 2022, the crisis deepened as Eskom implemented its longest streak of blackouts. This motivated the department of public enterprises to appoint a new board that includes Nyati.

It is also a historical fact that Eskom’s procurement practices have been tainted by corruption involving internal and external players who regard the large procurement budget as a gold mine. Such practices have been blamed for high levels of wasteful expenditure. As an organ of state, Eskom is subject to the country’s laws, including those on affirmative action and fair procurement.

In a week in which the US Supreme Court heard a case challenging the validity of affirmative action policies, the debate in South Africa emboldened rightwing elements whose opposition to affirmative action is long-standing. Accusations emerged again of affirmative action being reverse racism preventing white people from economic participation in South Africa — and white students from admission to elite institutions in the US — though it has done little to dampen the prospects for white citizens in either country.

During the case this week, Thomas said he has no clue what diversity means and the other conservative justices asked what the “endpoint” was for affirmative action. In a utopian society, the preferred destination would be the point where economic participation and benefits mirror the country’s national demographics. In

If we follow Nyati’s path, we would open the floodgates for every ... institution to ignore the country’s commitment to fixing the sins of the past

South Africa’s case, in view of the challenges associated with reversing 350 years of discrimination in the shortest time possible, the country chose a compromise where businesses and institutions were required to support transformation in their employment and procurement practices. Rather than demanding that 80% of economic rights, jobs and executive appointments be allocated to black people, South Africa preferred a practical rather than utopian model. This means that even if affirmative action and employment equity were fully implemented, white South Africans would still be relatively over-represented in key economic sectors.

Key to this compromise was the acknowledgment that black businesses and workers lacked access to capital and organisations like Eskom and Transnet would struggle to find black businesses with the scale to supply large expenditure items. Such companies are required to promote localisation and empowerment. Nyati’s view is that such commitments have created unintended consequences, where Eskom has to either compromise on quality or pay more than fair prices. It is these elements that Nyati seeks to abolish.

The problem with this view is that it represents an abrogation of responsibility for an organisation like Eskom. If we followed Nyati’s path, we would open the floodgates for every other institution to ignore the country’s commitment to fixing the sins of the past. The view also appears to represent a myopic analysis of a single institution rather than its immediate economic and social ecosystem.

The reality is that institutions like Eskom are central to the national mandate of economic transformation.

The fact that localisation and empowerment structures at Eskom have been riddled with corruption is not a transformation problem but a criminal problem. Board members like Nyati have a responsibility to tackle the criminality without using it as an opt-out clause from such a critical national mission.

In its submission to the US Supreme Court this week, the business alliance emphasised that since universities create the pipeline for future business, political and judicial leaders, admissions need to mirror the diversity of the country. In the absence of that diversity in the classroom, no such diversity could be expected in the boardroom.

In the absence of a commitment to transformation from strategic entities like Eskom, no economic transformation can be expected from any other part of South Africa’s economic ecosystem.