Around
1am this morning when I woke up, I saw tweets from
Economist Thabi Leoka summarising the statement from global
rating agency S&P and their opinion on the
dismal state of the South African economy. We are at a tipping point
and this need strong political will to solve. For
years we have debated
if South Africa will become another failed African state the way
Zambia, Zimbabwe, Uganda etc. went after the attainment of
independence. We are only now realising the full negative effects of
the economy mismanagement and corruption that became more
apparent especially during the reign of Jacob Zuma. What is happening
to SAA is not new it has happened elsewhere in Africa after
independence. At independence in 1980 Rhodesian Airways was a vibrant
airline with a fleet of aircraft and as we speak Air Zimbabwe has
only 1 functioning old aeroplane with hundreds of employees. Zimbabwe
Electricity Supply Authority the equivalent of Eskom in Zimbabwe is
on its knees and it generates less than 700 mega watts of electricity
and has to rely on imports from Eskom and Mozambique. In 2005 as
part of insurance managers risk survery I once visited Hwange Colliery company
that digs coal and pass it on to ZESA. It boggled my mind how a
company would fail in a simple task of digging and transporting coal
less than 15kms to the power stations.
National
Railways of Zimbabwe once a giant in the Southern Africa region an
equivalent of Transnet Freight Rail and
PRASA combined in
South Africa is on its knees. Almost all SOEs in Zimbabwe are
technically insolvent as is the case in South Africa with
the likes of SAA, ESKOM, Denel, RAF, PetroSA, SABC etc.
Some have argued that blacks can’t run government and
SOEs efficiently and that has been debunked if you look at the
experience of Botswana. Botswana once a
protectorate of Britain and
when it attained its independence in 1966 it was one of the
poorest countries in the world. I visited Gaborone in 1989 during a
school trip from Zimbabwe, I can tell you there was nothing
impressive about Gaborone then. At the end of 2006 my family visited
Gaborone, I could see the marked difference and the road from
Francistown to Gaborone was being constructed afresh yet
Zimbabwe still relies on road constructed by Ian Smith over
40 years ago. I will be visiting the Botswana soon and I expect to
see major changes. Now tens of thousands of Zimbabweans work in
Botswana.
Another
proof to debunk that blacks are incompetent is my experience in
Zimbabwe from 2002 to 2007 as an insurance manager. I dealt
with executives from big
companies such as OK Zimbabwe, Zimasco, Bindura Nickel Corporation,
Anglo American, Rio Tinto, TA Holdings, United Refineries,
Cairns, Astra, Dairiboard, Kindgom Financial Holdings, Econet
Wireless etc. and those companies were being managed predominantly
managed by Africans. Some of those managers are my friends on social
media and some of them were my MBA classmates in Harare in 2005. Many
South African owned subsidiaries in Zimbabwe are being run by Africans
in Harare despite their refusal to transform here in South Africa.
Examples include Stanbic Bank owned by Standard Bank, Old
Mutual, Zimplats owned by Implats of South Africa, Pick and Pay,
Nedbank Zimbabwe, National Breweries owned by South African
Breweries, Anglo American etc., Megapak
Zimbabwe owned by Nampak, African Distillers Ltd owned by
Distell etc.
The
problem that these liberation movements did was to remove meritocracy
and they started rewarding home girls and home boys and gave them
complex institutions to manage. They rewarded political cronies to these top positions and ignored experts. As we speak African executives do not last long in these SOEs due to too much political interference. For example SAA was under the
leadership of Ms Dudu Myeni for a number of years and from what I
know her only qualifications was being a teacher and being
close to former president Jacob Zuma. The government has no business
running any business because of the way government is set up it is
bound to fail. Government managers and politicians cannot stand
up to unions because these unions are part of the governing party. In
South Africa for almost every R1 the government collects almost 50c
is going towards paying state employees and the percentage is rising at a faster pace than inflation yet we are seeing economic growth rates of closer to 0%. On average a government
employee earns more that an employee in private sector. The
government needs to be strict with public section unions on
sustainable wage bill and also with how it manages public funds as
any mismanagement has a direct negative effect on citizens and no
wonder tens of thousands are migrating to stable economies. Money
does not grow on trees.
My
first job after high school was working for the government as a
temporary teacher from 1996 to 1997. I had to adjust when I joined
the private sector in 1997. My first posting was a school very close to the
border with Mozambique in Mudzi, we had one bus plying our route. Each
month teachers would miss school one Friday and one Monday as you had
to catch the bus in the morning on Friday in order to get to the
nearest bank in Murewa. On the Monday
you would catch the bus in Harare on Monday morning and only arrive
at work in the evening. Everyone on the same grade earned the same
salary your performance did not matter, people would be paid slightly more depending on the number of years in service,
qualifications etc. Some of the most demoralised people
I ever met were teachers. In private sector a person is not
paid according to qualifications but mainly due to the value they
bring to the company. You might have 40 years experience and a young
guy who just finished Matric can potentially come and earn more that
you if he can give more value to the company. It is no coincidence
that China has rose over the last four decades and is on course
to overtake United States to become the biggest economy in the world.
The following quotation from former Chinese leader Deng Xiaoping sums
it all,” It doesn’t matter whether a cat is white or black, as
long as it catches mice”. Deng led China through far reaching
market-economy reforms. China is no longer a socialist country as
they discover that it does not work.
The
same laid back workers you find in organisations such as Home
Affairs especially at Beitbridge Border post, if you put them in
private companies they will become top performers. In government
there is very little consequence management. I will give an example,
a few months ago I knocked off work around 6pm and I left home to go
and pay our electricity and property rates monthly bill. The revenue
office at Tramshed Pretoria CBD is supposed to close at 7pm. Around
6:50pm as I climbed the stairs, I met three
ladies on their way home and they asked me if I was going
to City of Tshwane offices and I said yes, they then informed me that
they had already closed for the day and they started laughing. I
looked at the time and I thought they were joking and I proceeded to
the entrance and sure enough it was closed a good 10 minutes early
Wow. Incidentally last year, I was working on a shift that ended at
8pm on a Thursday evening. Exactly at 7:59pm, I received a call from
a client who was worried that the guard who had been arranged early
in the day had not arrived at 6pm as discussed. It took me almost 30
minutes to sort out the problem. I could not say sorry my shift is
ending in 60seconds I can’t help.
Another
problem is with unions. A few months ago, I had a discussion with a
gentleman and he told me that he was a headmaster/principal for a
government school around Pretoria and in the same sentence he told me
that he was the union representative. That discussion has been
bugging me ever since. From my school days and my days as a teacher,
I always knew that the headmaster is the manager for the school on
behalf of the department of education. How can a manager also be a
unionised worker? So the unions have a say on who gets promoted. How
does he then manage teachers and other staff members at the
school. In my 22 years working in the private sector both as an
ordinary employee or as a manager, I had never came across such a
confusing situation. Maybe it explains why the standard of education
in most government township and rural schools is below par. A
school manager should not involve himself or herself in union matters
period. The biggest hurdle that President Cyril Ramaphosa will have
is dealing with the unions in both parastatals and public service, he
better not blink as we are on a tipping point. SAA owes more than R13
billion, ESKOM has a debt of over R400 billion and Road Accident Fund
has a short fall of R26 billion. Other SOEs such as PRASA, Denel,
SABC etc. also owes billions of Rands.
The
ruling party has indicated that it is ready to implement the National
Health Insurance and that is a disaster waiting to happen it will be
on the scale of Eskom if not worse. I see government employing tens
of thousands of health and support employees who will demand huge
salaries thereby increasing public spending to unsustainable levels.
My take is that the government has no business running businesses,
they should rather spend their time enforcing existing laws such as
Employment equity and establishing the enabling environment for
business.
I
really fear for the future of South Africa. If South Africa is
downgraded by all rating agents, I fear the Rand devaluing further
and the foreign debt repayments increasing. The disaster we saw in
Zimbabwe will be a picnic given the volatility of the South African
society and the huge size of South African economy. We saw this week the Monetary Policy Committe of South African Reserve Bank was nervous about cutting interest rates. I remember vividly the crisis in Zimbabwe after the fall of the Zimbabwean dollar in 1997, the Reserve Bank of Zimbabwe increased interest rates to try and defend the country, I struggled to pay my debts then. Imagine the disaster in South Africa if interest rates are increased by even 3% many people will not manage. President Cyril
Ramaphosa and Ministers Tito Mboweni and Pravin Gordhan please do not
blink. I hope the leader of the opposition Mr John Steenhuisen
supports the president in parliament should the vote of no confidence
motion be introduced to stop Mr Ramaphosa from going ahead with the
necessary restructuring processes.
God
bless South Africa and Africa.