The South African Chamber of Commerce and Industry (Sacci) yesterday called on the government to seriously consider adopting a system of meritocracy, in light of the turbulence at state-owned enterprises (SOEs) as it related to leadership and executive changes.
“This reflects instability that requires urgent attention,” Sacci said it a statement.
Meritocracy is the notion of a system in which economic goods or political power are vested in individual people based on ability and talent.
The call comes as Eskom and Transnet have been in the spotlight over recent rapid management and board changes with key executives exiting both SOEs.
The Department of Public Enterprises (DPE) at the weekend announced the resignation of board member Popo Molefe. Transnet Freight Rails’ CEO Sizakele Mzimela quit this month, hot on the heels of Transnet group CEO Portia Derby, and chief financial officer Nonkululeko Dlamini - precipitated by a year of lobbying by business and organised labour due to non-performance of the rail entity.
Eskom’s chairman Mpho Makwana announced his resignation the previous weekend; this as the power utility lacks a CEO.
Sacci said yesterday it had over the years urged the government to bring a level of professionalism, and an acceptable scientific process in handling selection, recruitment, performance management, people development and an empowering and motivating employee relations environment in the SOEs and relevant public sector institutions.
“There is lack of evidence that the government relies on a credible scientific template in making leadership appointments in a consistent manner. Meritocracy does not appear to be part of a deliberate design and where people with merit have been appointed, this appears to have been accidental.
“We have also voiced our concerns whether cabinet, as a collective, should be the appointing authority, given its own limited corporate leadership experience, whether high level executive or non-executive board,” Sacci said.
Preventable mistakes were bound to happen due to this gap in experience, Sacci said, adding that the instability at the SOEs has had a devastating effect on the economy due to the challenges in the government-run energy and logistics platforms.
Sacci isn’t alone in its criticism.
Farhat Essack MP, the DA Deputy Shadow Minister of Public Enterprises, said on Sunday that Pravin Gordhan’s five-year tenure as Minister of Public Enterprises had turned SOEs into a financial wasteland.
The damage inflicted by Gordhan’s disastrous tenure went beyond Board and management levels and extended to the financial health of SOEs, he said.
The DA’s research had revealed that, over the past five years, the seven SOEs that fall under the department – Eskom, Transnet, Denel, Safcol, Alexkor, SAA and SA Express, had incurred R300 billion in irregular expenditure, and R1.3bn in fruitless and wasteful expenditure.
“The breakdown in financial controls and prudent financial management is a direct indictment to (sic) Gordhan’s avowed promise to clean up SOEs that were ravaged by State Capture and wholesale looting under Jacob Zuma. Not only has Gordhan failed to stop the bleeding, he has made it worse by failing to provide a clear plan to fix the precarious financial health of these entities.
“Gordhan’s inexcusable performance has had real world consequences. The precipitous decline of Transnet’s freight rail system has robbed the country of the much needed export receipts – which has left Treasury struggling to balance the budget.
“Eskom’s terminal decline, mirrored in rolling blackouts, has stalled South Africa’s economic growth. With this overwhelming evidence of failure, Gordhan should not be kept in office any minute longer and must be fired as a matter of urgency,” he said.
Dr Sibongile Vilakazi, the president of the Black Management Forum, in her Business Report column, on Monday, said: “Reputation is everything, why does the SA government seem not to care about its reputation?
”Last week both Eskom and Transnet, our crucial state-owned enterprises in driving economic development, saw some disturbing leadership resignations that send a message of instability at these entities.
“Eskom’s board chairman, Mpho Makwana, quietly walked away after having served just more than a year in the position. This happens in the middle of trying to fix the biggest energy crisis yet.
“Former chairman of Transnet, Popo Molefe, did the same, along with the CEO Portia Derby, Chief Financial Officer (CFO) Nonkululeko Dlamini and Transnet Rail CEO Siza Mzimela,” she said.
Vilakazi said in a normal company that respected its shareholders and care about what customers think, these developments would be sending shock waves, and shareholders would be demanding answers.
“Yet here we are as South Africans feeling helpless at how our state companies are run. We watch as the minister responsible for both entities, Minister Pravin Gordhan, simply issues a statement that replacements will be found and it’s business as usual,” she said.
BUSINESS REPORT