The high cost of driving Mister Maroga

We have read, with incredulity, in recent days that Jacob Maroga’s driver cost Eskom R1-million a year. He has now been deprived of this driver and is seeking R85-million as a settlement.

It would be nice if this was an isolated example, but parastataland is in such a mess that not one of the major state-owned entities actually has a functioning chief executive, the red ink is flowing freely and the economy faces tariff hikes sufficient to stop it in its tracks.

If ever there was a poster for why nationalisation sucks, Alexcor, Eskom, SAA, SABC, Denel and Sentech would feature boldly and largely on it.

(It has to be said, too, that in South Africa this poster would have on its reverse side examples of why the private sector can also stink, with Sasol, ArcelorMittal, Tiger Brands, Adcock-Ingram and Pioneer featuring for their price-fixing activities.)

The state-owned enterprises may suck, but this is not stopping the ANC Youth League from pushing an agenda to nationalise 60% of the country’s mines.

The league is now apparently in the driver’s seat on key matters of policy, for instance this week shooting down Susan Shabangu, the minister of mineral resources, when she declared that the nationalisation of the mines was not on the agenda, at least in her lifetime.

The league’s document — “Towards the transfer of the mineral wealth to the ownership of the people as a whole: a perspective on nationalisation of mines”, which was requested by the national executive committee of the ANC — acknowledges that state-owned enterprises are in a mess, but brazens it out anyway, saying a comparison with SAA, Eskom, SABC and Denel is not fair because “in most instances these have failed due to sheer criminality, mismanagement and patronage which characterised most of these entities.

“The capacity to decisively intervene in SAA and Eskom, for instance, was inhibited by a lack of interventions the state can make alongside boards of directors.”

The league said that with the lessons learned from state-owned enterprises, the country was suitably located to propose a more effective, efficient and durable mechanism, (as well as) systems and a legislative framework to manage mines more efficiently.

It said that it met executives of what must be one of its key targets, Anglo American, but details of the meeting are sketchy.

Anglo American’s chief executive, Cynthia Carroll, has said that it was considering investing in Kusile, the second of the two giant coal-fired power stations that Eskom intends to bring on stream.

Carroll made it clear that any investment in Kusile would be linked to it getting a dedicated power feed from the facility.

I wonder if Eskom will do the same for me? If I put up a chunk of cash to help build Kusile, can I also get a dedicated power feed while my neighbours sit in darkness?

But I’d be mad to do this, according to experts outside Eskom. This is because Medupi and Kusile cost a bomb — about twice what equivalent coal-fired stations cost based on the figures published by the department of energy in the United States, where prices are set by competition rather than monopoly power.

The youth league’s assertion that more companies should be publicly managed when state-owned enterprises are falling over like skittles is so much nonsense.

Except, the constituency the league speaks for, the youth, has an unemployment rate of 50%.

Significant voices within the ruling alliance, led by trade union federation Cosatu, see a partial solution in cheaper money by lowering interest rates. They want Finance Minister Pravin Gordhan to address this in the annual budget on February 17 through easing or scrapping inflation targeting or changing the mandate of the Reserve Bank.

Our Constitution gives the Reserve Bank the job “to protect the value of the currency in the interest of balanced and sustainable economic growth”.

Should the mandate be widened? Should it be as wide of that of the Federal Reserve in the US, which is to promote price stability and full employment?

Full employment is a worthy goal. It should be an achievable one also, mainly through raising the competitive temperature in all our markets, including the labour market.

Where there is insufficient competition, we end up paying R1-million a year to ferry a chief executive around, as was the case with Eskom’s Maroga.

Kevin Davie

Kevin Davie is M&G's business editor. A journalist for more than 30 years, he has worked in senior positions at most major titles in the country. Davie is a Nieman Fellow (1995-1996) and cyberspace innovator, having co-founded SA's first online-only news portal, Woza, and the first online stockbroking operation. He is a lecturer at Wits Journalism. In his spare time he can be found riding a bicycle, usually somewhere remote.


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