Fiddling while South Africa burns
Nero was only 16 when he became ‘first among equals’ in Rome. The fifth emperor of the Judio-Claudian dynasty soon won acclaim among the ‘common’ people. His 12-year rein was characterised by extravagance, tyranny and executions, ending abruptly when he t
South Africa is full of modern-day Neros. Companies fold as politicians, chief executives and board members divert their attention from operations to political point-scoring. It’s a case of ‘too little too late’ where top-level decision-making is concerned. You need only look at results from three state-run institutions to support this argument. The South African Broadcast Corporation (SABC), South African Airways (SAA) and power utility Eskom have cost taxpayers billions in recent years. And in the case of Eskom the entire economy is suffering too.
Is cadre deployment eroding state institutions?
Why are the state-run enterprises in such poor health? And can we pinpoint a single reason for the successive financial disasters at taxpayer funded institutions? One popular explanation for the carnage is undue political interference. Government companies are perfect vehicles for the implementation of the ruling party’s cadre deployment policy. Before you shoot the messenger consider the board-level shenanigans at the SABC shortly after the African National Congress’ (ANC) December 2007 National Conference. As ex-President Thabo Mbeki’s ANC era drew to a close the SABC board was plunged into a desperate (and unsuccessful) battle for survival.
If management has ruling party support its tenure is guaranteed. Every time action is taken to address incompetence a cohort of ruling party allies joins the battle. The pseudo-resignation of Eskom’s chief executive, Jacob Maroga is a case in point. After weathering a number of damning media allegations Maroga apparently resigned his positions. This decision was announced by Eskom board chairperson, Bobby Godsell who issued a statement to Eskom management and staff last Thursday: “Mr Maroga tendered his resignation – which we have accepted. We wish him well in his future endeavours!” Not everyone was singing from the same hymn sheet as four days later the decision remains unconfirmed.
Maroga has friends in high places. In the days before and immediately following his ‘resignation’ he received tacit support from President Jacob Zuma, Public Enterprises minister Barbara Hogan, the Black Management Forum (chaired by the Director General for Labour) and the ANC Youth League. They say Eskom’s nightmares have nothing to do with the embattled chief executive and insist he remain in his position! Opposition politicians and the largely white trade union Solidarity take a different stance. Solidarity spokesperson, Jaco Klynhans noted that “Maroga simply could not manage the electricity supplier efficiently and even failed to appoint competent executive management to salvage the crisis situation at Eskom.” What do the insiders say? Fin24.com reports Maroga’s resignation was ‘won’ after Godsell took a ‘him or me’ stance at a recent board meeting. The insider says Maroga hasn’t yet signed severance papers. And given the masses of support he enjoys it’s unlikely he’ll sign those papers any time soon. The more likely outcome is the entire Eskom board being asked to fall on its sword and for the company to suffer sub-par management for years to come!
Time to strip race and politics from business
There are plenty of wrongs in this equation. The first question that springs to mind is why the Eskom board, which granted Maroga a 23% annual salary hike a couple of weeks ago, is now baying for his resignation. At the time Godsell was singing Maroga’s praises – today he’s holding a pistol to Maroga’s ear and ordering him to walk the plank. What changed in those few short months?
Our second question is directed at the country’s favourite youth movement, the ANC Youth League. Quoted in an I-Net Bridge article the league claims: “The [Eskom] board, which is under the manipulative control of Bobby Godsell, has tried every trick in the book to get rid of Maroga, including through increment of his salary amidst electricity challenges, so that the South African public can perceive him as greedy.” It’s classic comedy from the league as they suggest a 23% hike in salary was part of a racist plot to topple the chief executive… The same ‘protectors’ had little to say about the six senior black managers who left the power company under Maroga’s tenure. Why is the youth league once again furthering race-based argument in a competency hearing?
The third and final question is for government. As the only shareholder in Eskom they have the power to appoint a board to oversee the company. Why doesn’t government trust its board to make the decisions necessary to keep Eskom running effectively? President Zuma and Hogan have thrown their weight behind Maroga despite mountains of leaked internal reports raising serious concerns over his management style. It’s time to confine the politicking and race-aligned thinking that dominates South African business to the history books before incompetence sinks the country forever!
Rampant electricity prices spell disaster for SA Inc
Do the politicians realise how serious the Eskom debacle is? If the National Energy Regulator of SA (Nersa) grants Eskom its 45% per annum electricity price hike the country’s gold mining industry could collapse. The bigwigs at Harmony Gold, Gold Fields and AngloGold Ashanti warn the price hikes could push operating costs up by a quarter to a third by 2012 – and South Africa is already one of the highest-cost gold producers on the world stage. Lest you forget, Eskom has already pushed through 67% in electricity price increases since the crisis manifested.
Other sectors of the economy will be sorely affected too. Pick ‘n Pay chief executive Nick Badminton says electricity charges will severely dent earnings potential in coming periods. Addressing shareholders at the group’s interim result presentation he noted: “Electricity costs soared and look set to escalate further. These costs grew markedly from 3.1% of expenses for the six months ended August 08 to 3.8% of costs for the [latest half-year]. The impact of Eskom’s increases is expected to result in a 40% increase in our electricity bill for the full year, with more to come in subsequent years!”
Editor’s thoughts: While the politicians and executives waste time apportioning blame for the dire state of the country’s power infrastructure, consumers are faced with skyrocketing electricity bills. It’s time to take steps to reduce electricity consumption including optimising energy usage and switching, as far as possible, to solar energy alternatives. Have you taken steps to reduce electricity consumption at your home and business? If yes – then how? Add your comment below, or send it to gareth@fanews.co.za
