NEWS ANALYSIS

Minister of Public Enterprises Pravin Gordhan.
Pravin Gordhan. (Pic: Bongiwe Gumede/Foto24)
  • South Africa is growing more volatile by the day, as fears grow over the impact of a bankrupt Eskom on a struggling economy.
  • But public enterprises minister Pravin Gordhan staged a fight-back on a radio show on Wednesday evening, promising that president Cyril Ramaphosa will give an update on the Eskom turnaround soon.
  • The outgoing and outspoken Post Office CEO Mark Barnes may be the perfect candidate to get Eskom back on track.
  • For more stories, go to Business Insider South Africa.

Some days South Africa feels like you are seated in the back of a car, with no seat belts or airbags to save you, careering along at 100/kmh straight at a brick wall. The driver, rather than applying the brakes or seeking to avoid a fatal collision, puts their foot flat... 110... 120… 130... and you brace for impact.

Tragically, those days are getting more frequent. But yesterday was different. It was one of those murky-with-a-chance-of-clearing days.

Right now, it’s about as good as it’s going to get.

Public enterprises minister Pravin Gordhan took the unusual step of calling into my radio show (on 702 and Cape Talk, from 18:00 daily) to strongly rebut remarks by top investment analyst Chris Logan. Earlier, Logan said that as shareholder representative, Gordhan had intervened to block retrenchments at the bankrupt Eskom and that he was also involved in the wage talks which saw Eskom capitulating in the face of vigorous trade union opposition.

Not so! retorted Gordhan angrily. The decision on wages was taken by the management team and the board. (He did, however, concede that government would be intolerant of mass firings, considering the rampant unemployment rate, without other avenues being explored first.)

Gordhan also took issue with the contentions that South Africa, which perpetually feels on the brink of self-immolation, won’t be able keep control of its own destiny given fears about downgrades and the IMF having to intervene in the local economy. These concerns are gaining traction among a panicky middle-class as well as among foreign investors, whose capital and skills the country sorely needs.

Gordhan promised progress in the next couple of weeks, and said the president, exhausted as a result of having to consistently fight a rearguard action against those bent on recapturing the state, would be making a statement on progress in the Eskom turnaround.

Clearly, all is not well in SOE-land.

Three of the most capable CEO appointees at the helm of state-owned enterprises have quit in recent months, all in relatively quick succession, ostensibly for similar reasons: primarily, they are being constrained in doing the job they felt they needed to do.

Phakamani Hadebe had collapsed at work through sheer exhaustion and needed to recover. He wheel-spun his way out of Megawatt Park on the last day of July. Vuyani Jarana at SAA asked to be let off a mandatory 3-month notice period at SAA as he felt his position was untenable and was allowed to leave immediately, again amidst rumours that he was unable to implement his preferred strategy to fix the airline.

Speaking for the first time on Wednesday, since he quit the Post Office with 18 months to go on his contract, Mark Barnes cited a difference over strategy, again with “the shareholder” (aka government).

Barnes is adamant that in order to effectively compete with global companies, in a rapidly modernising world of couriers and fast deliveries, old-style post offices need a radical overhaul and the most successful are integrating financial services in their mix.

The outgoing Post Office CEO Mark Barnes isn’t one to shy away from a problem. He’s precisely what Eskom needs, argues Bruce Whitfield. Photo: Deon Raath

Barnes wanted to integrate the Post Bank with the Post Office to achieve a more efficient capital structure, which would allow for the allocation of capital to growth opportunities. But government wants a state bank, for political reasons, and wants to be seen to run it itself. Barnes claims he had the full support of not only his executive, but the board too, but was blocked by government and was obliged to step down.

Government’s refusal to allow him to execute to the best of his ability on the job he volunteered to do, saw him resign, as a point of principle, he says.

Gordhan is not blind to the problems and understands their import. He openly acknowledged last night that the country is in a race against time to restore the confidence of not just ratings agencies, but especially of local and international investors. Their high-octane risk-reward calculation is increasingly skewed in favour of divestment.

The president is going to need a rabbit, preferably a live one, to pull out of a hat soon.

As for Barnes - would he take the Eskom CEO job if offered it, given the level of frustration that drove him to resign from the post office?

Yes, he would, if asked. Or happily serve as a non- executive. Whatever is required to help change the collision course.

The bottom line is the country is just too important to fail. He’s willing to have another go. It’s doubtful, however whether, the others have the same tolerance level for the huge complexity of operating massive utilities, often with at least one hand tied behind their backs.

But Barnes isn’t one to shy away from a problem. He’s precisely what Eskom needs, but can government tolerate his uncompromising demands which must come if he does take the plunge? Time will tell.

Bruce Whitfield is a multi-platform award-winning financial journalist and broadcaster.

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