- The Solidarity Research Institute (SRI) today, in their report on the state of South African state institutions and the value for tax money, announced that South African Airways (SAA) is the worst of all major state institutions. According to the report, the value SAA offers for taxpayers’ money is deplorable.
The report shows that state institutions are poorly managed in general. The second worst institution is Eskom, and the best-managed state institution is Telkom.
The SRI analysed five state institutions, namely Telkom, Eskom, Transnet, PetroSA and SAA. In the report, the state institutions are measured in terms of working capital ratio and net debt before earnings (EBITDA). These accounting ratios have been compared with the ratios of the top 40 companies on the JSE.
Depending on the accounting ratios and general management, the five companies were also placed on a scale depicting the value for tax money. This scale varies between very good, good, neutral, poor, and very poor.
The performance and non-performance of the companies are as follows:
Transnet: very poor
Eskom: very poor (deplorable)
SAA: very poor (deplorable)
Solidarity CEO Dr Dirk Hermann said that Eskom and the SAA are the companies with the worst performance. “Both companies’ value for tax payers’ money is considered to be deplorable. Eskom is overshadowed by allegations of state capture and corruption, which includes its former CEO Brian Molefe. The fiasco with Medupi and Kusile power stations that are both exceeding their budgets by far and are years overdue indicates serious mismanagement,” Hermann said.
According to Hermann, SAA, which has the poorest management score, has had four different chief executives over the past four years. The total losses suffered during the term of the previous chairperson of the SAA, Dudu Myeni, amounts to R13,7 billion. “Many allegations of misconduct hung over her head,” Hermann added.
According to Hermann, Telkom is the only passable state institution. “The state’s shareholding in Telkom is a mere 39%. One cannot but notice the correlation between the smaller state ownership and better performance,” Hermann said.
“State institutions are financed by taxpayers. The funds don’t come from a pot of gold belonging to the state; the funds come from the pockets of ordinary, hard-working taxpayers,” Hermann added.
In South African state institutions, the tendency is that personal interest trumps public interest. In a private environment, managements acting so rashly would have been dismissed and even prosecuted. In South Africa, state institutions are considered to be cadre-merry-go-rounds enriching a small elite. Every tax payer, irrespective of political party affiliations, race or class, simply has to rebel against pathetic value for tax money,” Hermann concluded.
To read the full report, click here.