JOHN DLUDLU: SOEs have again become a slaughterhouse for black executives

Phakamani Hadebe and Vuyani Jarana are gone. Is Madoda Mxakwe next? The crisis in the country’s state-owned enterprises (SOEs) is acute.

The resignations within days of each other of Hadebe as Eskom’s CEO and Jarana as CEO of state-owned airline SAA must worry everyone who cares about transformation. Why have the SOEs again become a slaughterhouse for black executives? 

The Black Management Forum (BMF) says more black executives are planning to resign and has urged other black executives not to apply for the vacant posts in key SOEs until a new governance framework is formulated. Talk on social media is that SABC CEO Mxakwe is next to fall.

Curiously, the so-called shareholder and common denominator in this crisis — the government — is silent, missing in action. Yet as this is being written five key SOEs are without CEOs: the Airports Company SA (Acsa), Passenger Rail Agency of SA (Prasa), Transnet, Eskom and SAA.

Some, like Transnet, have no CFOs either. In the case of Prasa, the board is an interim one. At Transnet and Prasa key executives, most of whom are black, are on suspension without being charged, which means they cannot avail themselves for consideration for these vacant positions.

In his empathetic account of Hadebe’s downfall, fellow columnist and editor Lukanyo Mnyanda has written eloquently about the humiliation of Hadebe by people who were supposed to be in his corner. This paternalistic tendency is also a thread that ran through Jarana’s letter of resignation. He wrote about all the hurdles that were created for him to fail, including uncertainty over funding. 

“Sixty percent of the problems of SAA are internal (within the control of management and staff, the board and the shareholder) while 40% are market challenges,” he wrote.

The government and the boards are the key causes of the uncertainty

The preceding paragraph applies equally to the SABC, Acsa, Prasa and Transnet. Only the role of executive management has been scrutinised. What hasn’t is the role of the shareholder and boards of these SOEs, which is presumably why the EFF is calling for a parliamentary inquiry into the public enterprises ministry.

At Eskom, for example, there are many task teams and blurred roles between the board and shareholder. In all these SOEs there are funding issues. The SABC is in limbo and Eskom is sinking under debt that is creeping up to half a trillion rand.

The government and the boards are the key causes of the uncertainty. During his budget speech, finance minister Tito Mboweni announced that funding for these ailing entities would be subject to the appointment of chief restructuring officers (CROs). But disturbingly, the CRO of Eskom would be appointed jointly by him and his beleaguered public enterprises counterpart, Pravin Gordhan.

CROs are also being considered for the SABC and SAA. No-one has explained the governance and reporting lines of this role. Will the CROs be reporting to the board or the shareholder that appoints them, or will they be reporting to the financiers? If to the latter, is this not privatisation through stealth?

Black executives have succeeded before in this treacherous territory. Peter Matlare, now a deputy CEO at Absa, ran a successful SABC; Thulani Gcabashe, now Standard Bank chair, ran Eskom well; and Sizwe Nxasana, now a philanthropist, was Telkom’s first black CEO.

New revenue streams

This was possible because they had supportive shareholders and professional boards. Crucially, the shareholders knew what they wanted — from a commercial and developmental perspective — and they knew what they didn’t know (namely, how to run a business).

Now the only obsession is about cutting costs, including headcount reduction. No-one talks about the importance of finding new revenue streams for the SABC or SAA.

Bernard Swanepoel, the executive director at the Small Business Institute, mentions another key ingredient to the success mix. Turnarounds require a perfect alignment between the management and the shareholders, he says. Judging by Jarana’s letter of resignation, this alignment was clearly missing. 

Perversely, the state capture project was enabled by this alignment between the management, boards and shareholder. Chartered accountant and columnist Khaya Sithole has raised an important question: what are the unique skills the shareholder ministries bring to the party? 

In the unlikely event that the BMF’s call is heeded, careful thought must be applied to the appointment of advantaged people. This cannot be without conditions if the transformation project is to be saved.

Conditions should include:

• In the Thuma Mina spirit, minimally they must have a proven track record of being agents of transformation — leaving jobs with no succession plan must surely be antitransformation.
• There has to be a transparent and publishable plan of how the advantaged one will transform the place — this must have timetables and window-dressing must invite public censure.
• These contracts must be fixed terms (no longer than three years).

• Dludlu, a former Sowetan editor, is executive for strategy and public affairs at the Small Business Institute.