Founder: Turnaround Talk
The countdown to 21 February has begun in earnest as the country waits to hear about the troublesome state of the economy when Finance Minister Enoch Godongwana delivers the 2024 National Budget. Will we see strong leadership?
Expectations need to be managed now. There will be no miraculous solution to end the energy and Logistics crises. Further, global headwinds will put pressure on the economy.
If we ignore the global headwinds issue, South Africa’s economic woes are its own making. There is no third force driving the energy and logistics crises; South Africa is making poor leadership decisions which are impacting growth.
It will all become apparent during the article.
The revolving door of executives
A Daily Investor article points out that, for 85 years, Eskom provided South Africa with reliable, affordable electricity. It was a well-run company which supplied more than half of the electricity in Africa in 1990. Eskom even won the Power Company of the Year at the Global Energy Awards in 2001 and was commended for its efficiency.
The article adds that one of Eskom’s biggest challenges has been its leadership – or lack thereof. It can clearly be seen in what has become known as the Eskom CEO revolving door. Between 1985 and 2007, Eskom only had three CEOs – Ian McRae (1985–1994), Allen Morgan (1994-2000), and Thulani Gcabashe (2000-2007). However, since 2007 (16 years) Eskom has had 14 CEOs, interim CEOs, and acting CEOs.
Efficient Group chief economist Dawie Roodt said frequent CEO turnover could be “hugely disruptive” to an organisation. “You cannot run a company – any company – if you have a new CEO all the time,” he told Daily Investor. Roodt added that the instability within Eskom’s top leadership could be seen in the company’s performance over this time.
The Daily Investor article points out that former Eskom CEO Andre de Ruyter said he was also a victim of the incredibly difficult operating conditions of the power utility’s head. “I would have liked to be seen as the knight on the white horse coming in and fixing all the problems. Clearly, this is impossible,” he said. In his book, Truth to Power: My Three Years Inside Eskom, De Ruyter explains that Eskom is an extremely complex environment with tremendous political pressure. “After being Eskom CEO, I feel bruised, especially after being accused of high treason, told not to play policeman, and suffering an attempted poisoning,” he said.
Image By: Daily Investor
Let’s look at the political influence on Eskom. The utility falls under the ambit of no less than three departments, each led by a leader pushing a political agenda. Public Enterprises Minister Pravin Gordhan arguably has the biggest influence on the utility. At the same time, Gwede Mantashe, Minister of the Department of Mineral Resources and Energy, provides Eskom with the fuel to run its power stations. Then there is Electricity Minister Kgosientsho Ramokgopa, who has to seemingly manage these two personalities while developing a strategy to end load shedding. With three Ministers on your back, no wonder the CEO position at Eskom is a poisoned chalice.
However, the Ministers are supposed to be responsible for drawing up policies that will transform Eskom into a functional company. It is then up to the CEO and his team to carry this out. However, if we believe De Ruyter, the Ministers are overstepping significantly.
Transnet is not immune to the leadership crisis
A Daily Maverick article points out that the CEO of the Transnet division responsible for improving the infrastructure of ports across South Africa, Pepi Silinga, has taken leave of absence while a probe into allegations against him of corruption and mismanagement is ongoing.
Transnet has shared little information about the nature of the allegations Silinga faces, which are being investigated by an independent law firm that has been appointed by the state-owned transport group.
In a short statement, Transnet said it had received “a number of allegations regarding activities” at Transnet National Ports Authority, headed by Silinga, without saying he is implicated in wrongdoing.
The article adds that Transnet added that Silinga had offered to take leave of absence to allow the investigation to proceed “without the perception of interference and to ensure that the integrity of the process is not compromised”.
The state-owned enterprise has accepted Silinga’s offer to step aside, and he will be replaced on an acting basis by Phyllis Difeto, a ports managing executive, while the law firm carries out its investigation.
More insight
The Daily Maverick article points out that the trade union movement has more insight into the allegations that Silinga faces. The South African Trade and Allied Workers Union (Satawu), one of the trade unions recognised at Transnet, has long called for Silinga to be suspended with immediate effect, saying he faces “serious allegations of corruption and mismanagement” regarding contracts issued by Transnet National Ports Authority.
Satawu said Silinga allegedly awarded a R300-million security fencing tender to a former employer — a process the trade union believes was marred by irregularities.
“The union has previously called on the management several times, including board members, the CEO and the minister of public enterprises, to take actions against Mr Silinga following allegations that he appointed his close allies in his office who did not even meet the minimum requirements for those top positions at the entity,” Satawu said.
Image By: Fleet Watch
The union sent a complaint to the Special Investigating Unit (SIU) about the allegations against Silinga. The SIU is already investigating a raft of corruption and impropriety allegations relating to Transnet’s affairs. Most of the allegations stem from the State Capture period when Transnet was a key site of theft and looting through improperly awarded tenders.
Are we shooting ourselves in the foot?
You may recognise this subheading from my previous editorial. However, the question is still an important one to ask. Is leadership an issue?
We will only have functional State Owned Entities with competent leadership. And I am not referring to CEOs and Executives; I am referring to political leaders. There have been calls for Gordhan to step down in the past, and while this was laughed off, perhaps it is an issue that warrants further investigation. The same rings true for all of our leaders.
Perhaps a political change is the tonic the country needs to address its issues.
