What needs to happen for an SOE turnaround

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South Africa - Cape Town - 14 November 2019 - South African Airlines check-in desk at Cape Town International Airport. South African Airlines (SAA) said on Thursday it would offer unions a revised wage increase in a bid to avert a strike that has forced the airline to cancel domestic and international flights scheduled for Friday. Picture: Henk Kruger/African News Agency (ANA)

The SOE turnaround is an urgent matter that needs to be sorted and given the necessary attention by our government. Government finances are not in sound financial health, and this requires all the SOEs captains to be on board revitalizing all those entities. Let the SOEs drive the South African economic recovery. The sooner they return to operational excellence, the better our government finances. As it is said, we can’t be doing the same thing year in and year out, bailing these state-owned entities and expect different outcomes.

We can do the follow-up step to ensure the money given to SAA is used for the business rescue as the Minister assured us in the budget. Suppose the money is solely going to be used for that specific purpose of the business rescue. How will be the financing of its operational activities be done?

In my view, I don’t think we will be solving the problem, if we ignore the operational requirements but rather prolonging the entities continued suffering. It is clear now that as a country, we won’t let SAA fail. If we believe that we can’t let this company die, let us instead ensure that all the necessary funding requirements are considered to ensure that we don’t return to the treasury for extra future funding. If the entities funded appropriately, specifically this entity, would enable the general public criticism to be directed appropriately. If we succeed, we succeed with this entity turnaround, which will be good for the entity and the country to serve as a model for all our struggling SOEs.

It also needs to be noted that this recovery would be about their funding requirements and the governance systems. We need to ensure that the SOE turnaround strategy can focus on one entity to implement the appropriate governance systems, employing the board that will be thoughtful, entrepreneurial, and supported by Executive management that understands the industry.

What went wrong to the country’s state-owned entities, especially for SAA, and now they seem to be bringing their begging bowl when given the opportunity. Let SAA change the fortunes, they use to be part of the exemplary entities, and we need to get there again.

In conclusion, the ministries of finance involvement should not end after transferring the R10.5 billion but should be involved in its turnaround strategy. SAA’s operational survival can be one entity that can used as a prototype in future SOE revitalization.