Former President Kgalema Motlanthe believes South Africa must prioritise if it is to rebuild its broken economy. “The possibility exists that at this late hour government, civil society, labour and business can come together to keep the lights on and lift ourselves out of this morass,” he told a GIBS forum event.
This can’t be achieved with a business as usual approach, he cautioned: “Neither government nor business can do it alone.”
Motlanthe said poverty and unemployment were bordering on crisis levels. He drew a comparison between South Africa and post World War Two Germany, where all sectors of society had “buckled down and pulled themselves up, as they all understood they faced a national crisis.”
Eskom and SOEs in crisis
“If we are to rebuild this country, we need to prioritise. We can’t pay attention to all our problems, social, political and economic, at the same time. We are in crisis, and Eskom is an immediate threat to this democracy,” Motlanthe continued.
He said the power utility was central to the South African economy and was in dire straits due to a leadership crisis, out of control debt levels, a lack of maintenance and aging infrastructure. “If we don’t get Eskom right, nothing will work,” he added.
“Eskom is in a desperate situation and needs to be saved, but it is unrealistic to expect the fiscus to continue pumping money in when we don’t know what the nub of the problem is,” he said. “We need engineers to lay bare the problem and a suggested solution in simple terms, so it can be understood by all South Africans.” Motlanthe said renewable energy sources were still at a fledgling stage and were not yet reliable enough to be added to the energy mix.
Continuing to spend money on servicing Eskom’s debt and salary bill would result in doubt, “which in turn breeds suspicion.” Motlanthe said Telkom, which is partly owned by private shareholders, offered other state-owned enterprises a lesson in how they should be structured and managed. “All our SOEs are under a debt burden, and simply reprioritising the budget and cutting luxuries won’t be enough to pull us out,” he said.
Following the resignations of Eskom CEO Phakamani Hadebe and SAA’s head Vuyani Jarana in the past week, Motlanthe said interference in the affairs of SOE boards was unacceptable. “The state and its institutions should be allowed to function as independent entities. Luthuli House should never be involved in the selection of those appointed to boards, it is the responsibility of the Minister, as the representative of government as majority shareholder and of the people.
“If there is an attempt to select weak people to boards with the view to control them, we will get into trouble as it is likely that your name will come up at a commission of inquiry.”
Motlanthe said the calibre of SOE boards was integral to the successful turnaround of SOEs, and that the role of the board is to provide leadership and strategic direction.
Eskom “hasn’t had a competent board for a while and suffers from weak leadership,” he argued, adding, “The board must be populated by those who can be respected by the engineers. Hadebe never stood a chance of turning Eskom around” as he was a banker.
Motlanthe said boards must be responsible for devising a compelling strategy and for interactions with Ministers, allowing CEOs “the space to do what they have been employed to do.”
“When we appoint SOE boards, we must trust them,” he added.
Opportunities for Foreign Direct Investment
Rebuilding the South African economy would require finding new ways to ulitise the country’s natural resources in the interest of the nation as a whole, with prosperity in mind. Motlanthe spoke of the Norwegian model of using the proceeds from the sale of the country’s oil and gas reserves to create a sovereign wealth fund through the injection of new money. “We are in a crisis. However, it is never good to waste a crisis, it can also become an opportunity.”
Furthermore, he suggested it would be “worth our while to consider new solutions,” such as shift work, to create employment opportunities. “To get out of the rut we are in calls for change. It is not possible to go on with a business as usual attitude.”
A capable state
Motlanthe also spoke of the need for a capable state, as outlined in Chapter 13 of the National Development Plan, and clear differentiation between the state and the elected government. “If we are to move forward, we need a capable state.” He distinguished between the state as a permanent entity, and the government, which only serves as the face of the state for a term.
Motlanthe emphasised the importance of capable departments which retain institutional memory and have stable senior management in building the capacity of the state for delivery.
The current appointment process for department Director Generals “lacks rigor and transparency,” Motlanthe said, and should be the responsibility of the Public Service Commission and not the President, who delegates it to Ministers. “We must have a transparent selection procedure and appoint people on a permanent basis to ensure a stable and capable state.”
“We have made some progress, but it requires all hands on deck to pull us out of this crisis,” he said.