Nhlanhla Nene on the arithmetic of transformation
'We have to dig ourselves out of economic hole together'
Former finance minister Nhlanhla Nene says Finance Minister Malusi Gigaba had no choice but to bail out SAA, even if he had to use a state emergency fund intended for natural disasters.
Nene says that without the R2.2-billion bail-out the national carrier would have defaulted, with ruinously expensive consequences.
But without "a clear plan for the future" and its immediate implementation by an "independent board and strong, credible leadership", the airline's nosedive, and expensive bail-outs by the state, will continue. "With the right leadership and right plan in place it can still be turned around," says Nene.
Nene was fired as finance minister in December 2015 after forcing SAA chairwoman Dudu Myeni, a close friend of President Jacob Zuma, to reverse a shady transaction she had pushed through with the help of a pliant board.
In the wake of the latest bail-out there have been renewed calls for SAA to be privatised, but Nene doesn't agree.
He says that apart from anything else, SAA's liabilities are so high - about R19-billion - that he can't imagine any private company wanting it. "What value would it have if it has such liabilities? Because the liabilities are not going to disappear."
With the right plan SAA can still be turned around
Nevertheless, private sector participation in its turnaround is crucial, he believes.
"I would like to see the private sector, as patriotic South Africans, work with government to make SAA sustainable for the benefit of the country."
Although opposed to the privatisation of state-owned enterprises, Nenesupports more equity partnerships that bring in expertise from the private sector so that SOEs can fulfil their social mandate.
Nene, 59, has just been appointed interim director of Wits Business School. He says he wants to make it more responsive to the needs of the public sector.
"There is a need for business schools to reposition themselves, to ask: what does the economy really need in terms of skills and expertise?"
He wants business graduates to be better prepared for roles in the public sector.
"At the end of the day SOEs are businesses and they should be run by people with business expertise."
Business graduates need to be more politically and socially aware so that they understand how what they do as business leaders fits into the national agenda.
"For instance, as a country we have a blueprint which is the National Development Plan. If you have a business graduate who only has the knowledge to execute what the corporate requires without taking into account what the country agenda is, then that person will not be able to make the right contribution."
There is also a "serious need" for graduates who are capable of starting their own businesses.
"South Africa lacks that entrepreneurial spirit and expertise in a way that I cannot describe," he says. Small businesses are critical to economic growth, which is necessary for transformation.
"The economy can't fulfil its transformational agenda if it is only redistributive."
R19-billion: What SAA's liabilities amount to
He says a decent education in maths is also critical for transformation. He is disturbed by recent reports that maths may no longer be a requirement for grade progression at school.
"We need a completely transformed socioeconomic environment, and to be able to play in that space a basic knowledge of maths is critical," he says.
Improving the quality of maths teaching should be at the top of the education agenda, he says, not downgrading its importance.
Something else that he finds seriously baffling is public protector Busisiwe Mkhwebane's remedial action concerning the Reserve Bank.
She has instructed parliament to amend the constitution so that the central bank prioritises socioeconomic development rather than protecting the value of the rand.
"I honestly don't understand what she was trying to address," he says. "Maybe I'm out of touch with the real world."
The bottom line is that "the Reserve Bank's function is to protect not only our monetary policy but also our financial system".
Is he concerned that independence of the bank is under threat?
"I would want to believe that as a country we are not going to take such an irresponsible route. Its independence is critical for the stability of the country."
He won't comment on Deputy Finance Minister Sfiso Buthelezi's apparent willingness to entertain the public protector's views, or on Buthelezi's role in awarding a R3.5-billion locomotive contract riddled with irregularities while he was chairman of the Passenger Rail Agency of South Africa.
As deputy finance minister Buthelezi is also chairman of the Public Investment Corporation, which dispenses assets worth around R2-trillion. Can he be said to be fit and proper for this position?
"It is common cause that the fitness and properness of people in such positions must be beyond reproach, and I would want to believe that this will be tested in the correct manner," says Nene.
Nene's outlook for the economy is gloomy. He believes South Africa will be in recession for longer than the politicians who helped dig the hole seem to think.
"It is not going to be easy for South Africa to come out of recession in the current environment. It will require the input of all stakeholders working together to dig ourselves out of this. So it's going to be a difficult one."