Gwede Mantashe says the ‘mice are running’ from SOEs

There’s been a stampede of executives from state-owned companies in recent months, leaving Eskom, Transnet, Denel, SAA and Alexkor under acting CEOs, with SA Express now liquidated.

In the last month, rail and logistics operator Transnet lost its CEO and chief financial officer, while Transnet Freight Rail’s CEO Sizakele Mzimela announced she will leave at the end of October.

Read all our Transnet coverage here.

Michelle Phillips, CEO of Transnet Pipelines, moves in as acting group CEO to replace the outgoing Portia Derby.

Eskom has no permanent replacement for André de Ruyter, who left as CEO 10 months ago after what appeared to be an attempt on his life by poisoning.

Read: André de Ruyter resigns as Eskom CEO

This week, it was announced that Eskom chair Mpho Makwana would resign after just a year in the job. He was formerly CEO of Altron and MTN South Africa.

The exodus wasn’t lost on mineral resources and energy minister Gwede Mantashe, who commented at the Africa Oil Week in Cape Town: “If you are underground and you see mice running, you don’t go and look at what it is they see, you just follow them. Because when they run they are smelling methane. In order to save yourself you just follow them.

“It’s concerning to have a number of executives (in SOEs) just running like mice, running from methane. What is the methane that they are running away from? That is what we should investigate.”

Many read this as a not-so-subtle dig at his cabinet colleague, public enterprises minister Pravin Gordhan, who is ultimately responsible for state-owned enterprises (SOEs).

Uncle Gweezy is being so spicy here! pic.twitter.com/eU638ptPsC

— Scapegoat (@AndiMakinana) October 10, 2023

Shadow public enterprises minister Ghaleb Cachalia says Gordhan has presided over unprecedented governance chaos at executive and board levels in SOEs, most of which are operating under acting CEOs or interim boards. Cachalia provided the following scorecard:

Entity	Status of executive and board
Transnet	· Transnet has no CEO after the resignation of Portia Derby ·  Of the 12 independent non-executive directors, six have subsequently resigned or retired without being replaced
Eskom	· Eskom has had no CEO for 8 months since the resignation of André     de Ruyer in February · Eskom board chair resigned on 9 October 2022
Denel	· Denel has operated under 3 acting CEOs from 2020 to date ADVERTISEMENT CONTINUE READING BELOW · Denel is operating under an interim board
South African Airways	· SAA has operated under 4 acting CEOs from 2019 to date · SAA has operated under an interim board from 2020 to date
South African Express	· The final liquidation order for South African Express was granted in     September 2022
Alexkor	·  Alexkor has been under an acting CEO since 2022

“Whenever he speaks, Pravin talks of ‘green shoots’ appearing in the SOEs. All I see is weeds. How can he talk of ‘green shoots’ when all we see are companies losing money hand over fist,” Cachalia told Moneyweb.

The depth of the governance crisis triggered by Gordhan’s failure has become endemic to such an extent that SOEs are essentially in operational drift with no strategic direction, he adds.

“I sit in committees where all they measure is transformation. Transformation of what? Dying entities?” says Cachalia.

“Gordhan is good at pointing fingers and has never once taken responsibility for the chaos currently occurring in SOEs. Even at the height of state capture, Transnet was still able to keep our export sector ticking along, but under Gordhan, the entity’s ability to transport goods to ports has significantly collapsed,” said Cachalia in a statement issued this week.

The two critical chokeholds on national growth are Eskom and Transnet, which together robbed the GDP of 10% growth in 2022, according to Stellenbosch University logistics professor Jan Havenga. The post-Covid resurgence in global demand essentially passed South Africa by. PwC’s SA Economic Outlook puts the damage at around 7% in 2002, largely due to load shedding and Transnet’s inability to ship sufficient product to port in the midst of a commodity boom.

Read:
Here’s what needs to happen after the night of long knives at Transnet
Economy would’ve hit 10% growth in 2022 but for Eskom and Transnet

Cachalia says Gordhan has become a liability, not only to the well-being of SOEs but to the entire national economy and should be fired as a matter of urgency. “Then we can get down to the real business of restoring governance, privatising as appropriate and dispensing with barking mad policies and procedures around preferential procurement, cadre deployment and BBBEE. Only then business, industry and citizens will be able to breathe again as we rebuild the spine, heart and arteries of our economy.”

While the Department of Public Enterprises wrestles with its SOE leadership problem, eventually, the responsible ministries are going to have to raise that dreaded word: privatisation.

Transnet has made some diffident moves in this direction with a 25 year concession to run the Durban Container Terminal recently awarded to Philippines-based International Container Terminal Services (ICTS). It is also soliciting enquiries for a 20 year operating lease to run the 670km Container Corridor between Gauteng and Durban, but with conditions that are certain to drive many concessionaires away – such as a likely R5 billion tab for upgrading facilities and assumption of thousands of Transnet Freight Rail staff.

This belated nod to market realities is proceeding far too slowly for some. Andrew Pike, head of ports, transport and logistics at Bowmans Law, says unless the business units within Transnet are cut loose and given autonomy, whether privatised or not, we are likely to see the same problems perpetuate.

Adds Cachalia: “What they are putting on the table for prospective concessionaires is not attractive enough. The time span has to be more attractive, and the state has to step up to the plate and say it will look after security (of infrastructure) arrangements.”