Political interference blamed for exodus of private sector talent from SOEs
Tough decisions needed on which SOEs can become viable and which are strategic, says Cas Coovadia
The top SA business people called on to help save ailing state-owned enterprises (SOEs) are abandoning their posts, frustrated by indecision and political interference.
SA Post Office CEO Mark Barnes, a former investment banker, on Thursday became the latest to quit. His announcement came after former banking executive Phakamani Hadebe left power utility Eskom Holdings and former Vodacom executive Vuyani Jarana resigned from SAA.
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The departures highlight the quandary confronting President Cyril Ramaphosa. His plans to revive the country’s faltering economy are floundering because of infighting in the ruling party and legal challenges that are undermining his authority.
“It’s become increasingly obvious to private sector talent that there is too much micro-management going on and too much political balancing and interference, which blocks decision-making,” said Peter Attard Montalto, the head of capital markets research at Intellidex. “Ultimately it means if all this plays out that talent levels decline.”
The walkout of top talent has forced the government to often appoint placeholder executives. Four critical state institutions — Eskom, transport and logistics company Transnet, SAA and state pension fund manager the Public Investment Corporation (PIC) — all have acting CEOs.
The circumstances under which executives have departed various entities were decidedly different, said Adrian Lackay, a spokesperson for the public enterprises ministry, which oversees the biggest state companies, including Eskom and SAA. The government will prioritise strengthening and reconfiguring their boards, and vacant CEO posts will be filled as soon as possible, he said.
It’s not a wholesale exit. Business executives such as Rothschild chair Martin Kingston and former Absa Group CEO Maria Ramos are helping out at SAA and the PIC, respectively.
In order to attract more talent from the private sector, the government is going to have to address key issues such as separating the roles between government boards and executives, according to Cas Coovadia, MD of the Banking Association of SA. The organisations’ mandates also need to be clarified, he said.
“To me this is the elephant in the room,” Coovadia said. “If you put an executive in place to manage an organisation that has virtually no possibility of viability, the executives will get frustrated and leave. A very tough discussion needs to happen on which are strategic SOEs and which have the possibility of becoming financially viable.