SOEs, the face of enterprise collapse

Eskom has been the star of the African electricity industry. It was properly managed; in fact, it was excellently managed. There were no theft; expect, perhaps, for small amounts, in the format of small contracts awarded to family members of the politically connected. But this was nothing worse than what’s happening in the best-run Western democracies. Experts were employed in positions they were properly training for, and promoted when they achieved the desired level of experience and proven competence.

That was Eskom prior to 1994. That was SOEs prior to 1994. Don’t give me that bullshit about the extreme corruption prior to 1994. I live that period. The sin was that Black people of the country were deliberately excluded from the system; not inefficiency or ineffectiveness. I am not interested in the nonsense propaganda about the corrupting and inefficiencies of the pre-1994 dispensation. It was not the case.

I have not worked in SOEs, but I did work in government, and I still remember the excellence of SOEs, at the time.

There were, perhaps, in some instances, a mild version of cadre deployment, in the sense that members of the Broederbond will enjoy a degree of preference when appointments were done. But it would never have dominated the recruitment and selection processes to the extended that incompetent appoints would have been done. Either the successful candidate would have had the required minimum competencies, qualifications or experience, in spite of his or her membership of the Broederbond, or rationality would have prevailed, and a compliant Rooinek would have been appointed.

Procurement practices would have been competitive and promoting value-for-money. There were no billion-rand premiums paid for BBBEE and other ideologies. There were no large-scale looting. Perhaps (although I have never see any real evidence of this), but perhaps, minor contracts would have been awarded to companies known for their “friendliness towards government policies” (reading “supporting the National Party). Perhaps, but, in my experience, this was not the case. Tenders specifications were compiled according scientific criteria, based on the advice of real experts, and tender offers were professionally adjudicated, based on functionality, price and value-for-money.

Trains were running on rails in excellent condition. They were reliable, efficient, and transported hundreds-of-millions of people of all races on a daily basis. Nobody even doubt that, because people appointed on merit, growing through the ranks, knowing what they are doing, dutifully maintain infrastructure and keep trains running. It was there job, that was what were accepted of them, and that was what they were doing. Everyone just accepted it was obvious, as the norm. This included Black and White workers.

I am not making the argument that there were justice. Clearly that was not Black workers, in spite of their competencies and merit, were prevented from achieving promotion to senior positions. White people were the bosses. There was extreme discrimination against non-White workers. Point is that everyone know what they were doing, in the jobs they were expected to do, and everyone did it proficiently. There were certainly non collapse of Transnet.

This is the story of State Owned Enterprises in South Africa. Denel was a globally reputable weapon manufacturer that produce weapon systems regarded as state-of-the-art of the time. It was profitable, in spite of severe international sanctions against South Africa.

Cadre deployment, the ideology of the National Democratic Revolution, Broad-based Black Economic Empowerment and Employment Equity have destroyed SOEs in South Africa. It drained highly efficient enterprises from the knowledge resources required to ensure its performance and efficiency. These institutions have been stolen rotten, using ideology as an excuse for self-enrichment.

Now, astonishing beyond words, government has not only doubling down on malfunctioning SOEs, but are continuously expanding it scope and impact.

For the South African government, SOEs are the golden keys that bind together the state and the ideology of the developmental state; SOEs must actively intervene in the country’s economy to achieve economic development. However, in practice, these enterprises are flooded with impotent, poorly qualified and inexperienced cadres from the moment of inception, and immediately the stripping and looting of assets start. The lack of skills gains through career progression and experience make these enterprise unable to achieve success. Ideologies, instead of practicalities, are pursued.

But Ideology and pride (and the need to retain pools of money and assets to loot) make it impossible for the governing elite to let go of the more than 700 SOEs in the country, which is constantly growing and expanding. The net result is billions of Rands pumped into a bottomless pit of destruction.

The IMF estimates that government support to SOEs adds up to 13,5% to South Africa's national debt.

SOEs, the face of a state driven by ideology and the quest for self-enrichment.

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