Tim Cohen Senior editor: Business Day

It is significant how the pattern of disaster at state-owned entities is so often exactly the same. The political heads of the organisations, who very often have no real idea of their actual needs and requirements, are incapable of seeing the organisation from anything other than a political perspective. That means they have an incentive to favour expansion, to increase salaries, and to expand the organisation’s mandate. It’s hard-wired into the structure. The actual managers of the organisation are often willing to go along with this view, particularly since they can leverage their own salary packages upwards in the process. Gradually, the salary budget starts eating into the operational budget, and the performance of the organisation begins to slide. This continues for a year or so until the organisation runs out of money, at which point there is a crisis and the finance minister is called in towave his magic money wand. The finance minister tries to put in place measures to ensur...

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