CAROL PATON: The fatal flaw in state companies has not been sorted out
In a column in the Sunday Times public enterprises minister Pravin Gordhan said there are lessons to be learnt from the SAA experience: the government must be “more diligent” about governance; and state-owned enterprises (SOEs) need to manage the relationship between cost and revenue more carefully, because no business can survive if it is unable to meet its costs.
These are simple enough lessons and anyone who doesn’t learn them fast won’t run a business for long. But the lessons for the government in the SAA saga are bigger and less generic. They go to the heart of whether the state has the right governance arrangements and incentives in place to successfully run businesses, particularly in a competitive commercial market.