SAA Woes Give Investors Inside View Into Zuma Government
South African Airways (SAA) has been locked in financial and management crisis since 2014 in what critics have described as effect of government mismanagement of public funds that has nearly crippled state-owned entities in the country.
Early this month, Pravin Gordhan, the finance minister approved a loan guarantee of about $334 million, bringing the total state guarantees to the crisis-hit airline to $1.35 billion.
Mmusi Maimane, the Democratic Alliance party leader described SAA to be on the brink of collapse.
Hong Kong tax authorities had threatened to deny SAA fleet landing rights if it did not provide financial records by Sept. 6. The move would have led other countries across the globe to follow suit.
This could have spiraled into a full blown liquidation of one of Africa’s leading arilines.
SAA finally provided its financial reports last week, revealing the picture of a state parastatal in dire crisis. In the 2014-15 financial year, it made a $330 million loss, AFP reported.
Last month, the national carrier said it needed investors to inject over $1.14 billion to avert an imminent collapse, PoliticsWeb reported.
South African Airways has been at the center of a fierce battle between the besieged Gordhan and Zuma in recent times.
SAA chairperson, Dudu Myeni’s re-appointment to head the airlines board was resisted by Gordhan, while Zuma voiced his support for her. He described Myeni as a competent civil servant, a statement that was quashed by the opposition.
Critics say that Myeni has a personal relationship with Zuma, AFP reported. Political patronage has been blamed for the woes facing SAA and other state parastatals.
Last month, Yakhe Kwinana, the SAA chair on audit and risk committee, resigned due to fears of liquidation facing the airline, City Press reported.
Kwinana said that Gordan’s failure to appoint a new board to run the airlines might have been caused by political pressure.
“It is his prerogative to appoint a new board. The minister has not done what is expected, maybe other forces are hindering him,” City Press quoted her.
Last month, Futuregrowth Asset Management, a privately-owned investment manager stopped lending money to six state parastatals due to the political uncertainty in Africa’s second biggest economy.
Other reasons for the decision were political interference into the independence of the Treasury and conflicts between different state agencies.
The state companies are Eskom, Transnet, Land Bank of South Africa, the South African National Roads Agency, the Industrial Development Corporation of South Africa and the Development Bank of South Africa, Enca reported.
Gordhan defied summons to appear before the elite Hawks police unit, last month on allegations of forming an illegal tax unit at the helm of South African Revenue Service in 2007.
Critics described the move as an attempt to oust the bold Gordhan and replace him with a Zuma-friendly minister who would be easily manipulated by the ANC’s political patronage.