At last, the ANC’s policy disarray has been exposed by public clashes among its senior executives. This is an opportunity to have the much-needed discourse about fixing failing state-owned enterprises (SOEs), which are dragging the economy down in their free-fall.
A week ago, Fikile Mbalula, the former transport minister and current secretary-general of the ANC, tore into Pravin Gordhan and Gwede Mantashe — public enterprises and energy ministers, respectively — over their performance.
He scolded Gordhan “to move fast” in fixing Transnet or face being “moved” from his cabinet post by the ANC. He also called on them to implement ANC policy.
Mantashe and Gordhan, allies of President Cyril Ramaphosa, are presiding over Transnet, the beleaguered state-owned freight logistics company, and Eskom, the energy utility that is failing to keep the lights on and factories running.
Despite claiming to snatch victory from the jaws of defeat, with moves such as the appointment of the electricity minister, every plan to fix the two entities is running behind schedule. The splitting of Eskom into three subsidiaries — for generation, distribution and transmission — under a holdings company is behind schedule.
Only Eskom Holdings has a new board, but no CEO since the abrupt exit of Andre de Ruyter earlier in 2023. The three subsidiaries have neither board nor executive management in place.
The parking of more than 100 locomotives, thanks to a long-running dispute with CRRC, the Chinese state-owned locomotives manufacturer, has catapulted Transnet, which also runs ports and pipelines, into the public spotlight. Also, the terminal concession at the Durban port has attracted ANC and labour’s attention to Transnet.
Opportunistic
Mbalula was opportunistic and unguarded in his tirade. After all, up until this March, he was a cabinet minister. There is no evidence that he ever raised objections about the underperformance or policy deviation by his colleagues — Mantashe and Gordhan — during cabinet discussions where plans to fix these SOEs must have been discussed.
It was under his political leadership that the Passenger Rail Agency of SA collapsed to a point where the Western Cape is seeking approval to run its own passenger rail services.
Understandably, Mbalula’s colleagues, who are his political seniors, are peeved at his public rebuke. However, to his credit, he is raising an important and timely conversation: what is guiding the restructuring of SOEs? Is it ANC policy or government policy or accidental privatisation, as fellow columnist Khaya Sithole has characterised the recent transactions?
Mbalula’s outburst reflects strong sentiments swirling in ANC and alliance partner circles over three recent transactions and a proposed new shareholder model for managing major SOEs including Transnet, Eskom, Denel and Alexkor.
The three transactions in question are the sale of a significant stake in SAA to private investors; the concession of a terminal by Transnet to a Filipino company; and bringing competition to Eskom’s generation and distribution businesses. The state will continue to have a monopoly in the transmission business of Eskom.
Over the years all these entities have suffered from common problems such as poor leadership, governance weaknesses, undercapitalisation and political meddling.
SAA collapsed and had to be revived through partial privatisation and a fiscal injection. It took major crises to invite private sector competition in the energy and freight logistics industries. This is the accidental privatisation Sithole is referring to.
The unions are unhappy about these transactions, as are some of the ANC’s allies. Party leaders have been caught up in factional battles about which slate leads them into next year’s general election. Policy has hardly featured in their discussions.
During the era of Thabo Mbeki as president of the ANC and the country, the planned restructuring of SOEs hit a snag. This was only resolved by the national framework agreement — a pact requiring consensus among labour, business, civil society and government — at the National Economic Development and Labour Council (Nedlac).
As good as dead
For a variety of reasons, including the weakness of labour federation Cosatu and a turbulent phase for Nedlac, this agreement is as good as dead.
When he came to power, Jacob Zuma appointed a commission to advise him on effectively organising and overseeing the governance of SOEs. This he did in his capacity as head of state, not as ANC leader.
Over time, the ANC embraced the thinking of the government: that is, that all SOEs should report to policy departments instead of the standalone public enterprises department.
When he came to power, Ramaphosa did what he always does when faced with a problem. He appointed an SOE advisory council to advise him on fixing ailing SOEs. An emerging idea, which he announced recently, is that the department of public enterprises will cease to exist at the end of this administration’s term. This would be a victory for the ANC as it would mean SOEs must now report to policy departments and end the confusion.
In what is likely to further irritate Mbalula and company, however, a new SOE holding company is envisaged. This is despite the state’s poor track record of institution building and the economic benefit of this new structure — let alone alignment with ANC policy — is not immediately clear.
Two things need to happen now. First, the private sector’s help to fix SOEs should continue as a matter of urgency; and second, a proper discourse must be held about what is guiding the current restructuring of SOEs. Assuming there is a central organising idea behind the current restructurings, the latter will obviate current suspicions that what is under way is privatisation through stealth.
• Dludlu is CEO of the Small Business Institute
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