Business

Gigaba's star rises as key SOEs fade

Lynley Donnelly

Key public enterprises in Malusi Gigaba's care are not faring well, raising eyebrows over his record.

Public Enterprises Minister Malusi Gigaba has an unenviable job, analysts say. (Madelene Cronjé)

Minister Malusi Gigaba's political star has continued to rise, even as the fortunes of some of the key parastatals he is responsible for wane. The most critical in question is Eskom, a lynchpin to the country's economic growth, but it is battling to keep the lights on as delays and costs in the construction of new power stations mount.

The flagging condition of key institutions has caused political analysts and industry players to question Gigaba's record in one of the state's most challenging portfolios. Others argue that the minister of public enterprises is faced with legacy problems that far outdate his tenure, in a portfolio that would be a challenge for any politician. The ministry itself is adamant that while two key state-owned enterprises (SOEs) face distinct challenges, the rest have seen vast performance improvements and their successes far outweigh any failures.

Gigaba has risen steadily through the ranks, and is now in third place on the ANC's parliamentary candidates list. He was also handed the task of managing the ANC's elections campaign in what looks to be one of its toughest ballots yet.

The recent appointment of longserving board member Collin Matjila as Eskom's temporary chief executive has courted controversy because of his time as the head of Cosatu's investment arm, Kopano Ke Matla. Kopano Ke Matla Employee Benefits was stripped of its license after an investigation by the Financial Services Board found evidence of serious transgressions and "possible criminality". Matjila's appointment sparked outrage among unions such as the National Union of Mineworkers.

Meanwhile, South African Airways, – although it has developed another turnaround strategy under its new chief executive Monwabisi Kalawe – is still going to the government for money. One airline industry expert also queried the lack of progress in a key leg in the turnaround strategy – the merger of the country's three carriers – SAA, SA Express and budget airline Mango.

Dismal
Ralph Mathekga, a political analyst at consultancy Clear Content, said Gigaba's track record at public enterprises has been dismal.

Key state entities such as SAA and Eskom, meant to be the pinnacle of government efforts to grow the economy and create jobs were in crisis, he argued. Gigaba's political ascendency was driven by a "leadership deficit" within the ANC of credible young candidates, as well as his determined loyalty to the party and President Jacob Zuma, said Mathekga.

Like the treasury, public enterprises is a key portfolio, he said and Gigaba should have been given the chance to accumulate experience in other roles before being "thrown into the deep end".

But Professor Tinyiko Maluleke, political analyst and deputy vice-chancellor of the University of Johannesburg, pointed out that Cabinet appointments are at the whim of the president, and not based on track records. But it was concerning that despite early commitments by the Zuma administration to introduce performance contracts for ministers, this had not gained traction.

Gigaba is by no means incompetent, said Maluleke. Many ministers appointed to key positions – such as Trevor Manuel at the treasury – did not have the requisite experience or knowledge when they started. In addition the public enterprises portfolio, given its turbulent history, would be a challenge for anyone.

But to ensure Eskom is well run requires more than a brave minister, said Maluleke: "You need a brave president, you need a brave administration, to rethink fundamentally how an entity such as Eskom ought to be run and structured, beyond even the stale public-private divide."

Gigaba's spokesperson Mayihlome Tshwete dismissed criticism of the minister, saying that six out of the eight SOEs in his portfolio had achieved greater efficiency and better performance under his watch. Eskom's current challenges were thanks to energy policy decisions taken by government in the late 90s, and the utility was keeping the lights on against immense odds. Medupi was being built four times faster than any other power project previously, despite the past attrition of project management skills within its ranks.

He said Matjila's appointment was undertaken by Eskom's board, which underlined Matjila's prior experience as chairperson of National Energy Regulator of South Africa and chairperson of the South African Local Government Association.

Tshwete said SAA's key problem was its undercapitalisation, which was being addressed along with the merger as part of the turnaround plan. The minister's role as an activist shareholder was thanks to a shift in government policy, Tshwete said, grounded in ANC policy and its election manifesto.

Contrary to criticism of the emphasis of transformation at SOEs, entities that could create a "more inclusive economy for black people" should be seen as a success.

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