SOEs must be dynamic growth enablers if they are to be deemed strategic assets for the economy
The state needs to apportion stickers on its list of more than 700 state-owned enterprises indicating those which it considers to be strategic to the country’s economic development and those which are not. Under each of those tags, it must outline just why it deems the institution to be so.
I suppose there are arguments on both sides of the fence, but as Business Leadership SA we are certainly in the camp that believes there aren’t many merits for SAA’s strategic importance. The same can be said of SA Express. This is a question that must be posed about all of the states’ assets and urgently, with some conviction to each case – outside of merely the protection of jobs. Assets that are labelled strategic must be deemed as such on the basis that they are growth enablers. There’s a lot of romanticism surrounding how the state views some of its legacy assets – assets that have long become uncompetitive and burdened with large workforces.
In last year’s budget speech, Finance Minister Tito Mboweni said the state should consider selling SA Express “as a case study” for privatisation. Then, in September, SA Express received R300-million to keep on flying and that was on top of the R1.2-billion it got in last year’s budget.Mboweni’s suggestion was a pragmatic step for the struggling airline that flies to secondary local and regional routes such as Bloemfontein and Lubumbashi in the Democratic Republic of Congo.
Given the shock reaction to the steps to dramatically reduce SAA’s domestic routes, it’s clearly a hard pill to swallow. The same can be expected when SA Express falls into the same position: to conserve cash, a similar course should be expected. To avoid all this, I guess the state could mobilise all its resources, including selling its stake in Telkom, to fund SAA and SA Express. Those are just some of the stark and unpopular choices the country now faces.
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