The sale by the government of its majority share in SAA will serve as yet another proxy war in the ANC as several party leaders and alliance partners are fuming over the transparency of the deal.
Four national executive committee (NEC) members from different factions have expressed their dissatisfaction with the sale, saying that it was never discussed at the NEC.
While the leaders disagree on how the government should have handled the recovery of the entity, all four said President Cyril Ramaphosa’s “lieutenant”, Public Enterprises Minister Pravin Gordhan, was broadening the scope for an ideological battle within the ANC.
One of these, a Ramaphosa ally, questioned the legitimacy of the consortium that is proposed to take over 51% of the national airline.
Last week, Gordhan announced that the airline would receive a strategic equity partner as part of its restructuring.
Takatso, a consortium consisting of Johannesburg-based Global Airways, which owns the new budget airline Lift, and private equity firm Harith General Partners, will own 51% of the beleaguered airline.
The government will hold on to 49% of the carrier.
Takatso has committed more than R3-billion to fund the airline. The consortium will provide funding for the airline, which will eventually be listed, and the public will be able to buy shares in SAA, Gordhan said on 11 June. The government will keep a 33% non-dilutable golden share.
The NEC member and Ramaphosa ally said that while it was necessary that the airline be partially sold, many felt that government needed to retain its majority shareholding.
“It’s a huge leap from what we had discussed at the NEC and it was not expected. There is going to be a lot of noise about this sale and some of it will be warranted. For me, we have wasted a lot of money bailing out the airline, and I understand that something needed to be done. We could not continue on this trajectory, but we do not know anything about this consortium. This deal will put a target on the president’s back unnecessarily,” the NEC member said.
Another party leader who sits in the national working committee (NWC) said he would raise the issue at the next NEC meeting.
“The battle lines are drawn. This was never discussed, and typically a decision like this would have been presented to the NEC. SAA is a R300‑billion asset and this is another form of state capture,” the NWC leader said.
SAA was placed under business rescue in December 2019 and exited at the end of April this year. The process cost taxpayers about R250-million and the business rescue practitioners, Les Matuson and Siviwe Dongwana, were paid R78-million, according to department figures.
State-owned enterprises (SOEs) have been a bone of contention between the ANC and its alliance partners, trade union federation Cosatu and the South African Communist Party (SACP), as national pride vied with deteriorating and looted entities that have wreaked havoc on the country’s fragile economy.
This has led to endless deliberations with alliance partners, who have maintained that the SOEs must remain in the hands of the state.
Increased frustration from Cosatu in the Ramaphosa-led government could mean a shift in the president’s strength politically. While the sale of SAA may not tip the scales against him, NEC members say that it will bolster the efforts of his detractors.
The federation and the SACP were the first ANC-linked formations to endorse Ramaphosa to become president of the ANC ahead of the party’s elective conference in Nasrec in December 2017.
Speaking to the Mail & Guardian on Tuesday, Cosatu general secretary Bheki Ntshalintshali said the federation would have preferred that the government remained a majority shareholder in such transactions so that it was able to give direction in terms of policy to be followed.
“Government did not [approach us on] this matter so we were not consulted in terms of these issues. We were told like anybody else when it was announced. More frustratingly, unions on the ground, looking out for the interests of their members, say the same thing — that they were not consulted.
“We remain opposed to privatisation. We believe that as a strategic policy, we should be going for nationalisation. We also recognise that there are state-owned enterprises that are corrupt to an extent that at some point we were all told that SAA was in liquidation. There was some allusion that it would seek an equity partner, which was likely to be a private partner. What we did not get was a discussion by the government that now they were involved in a process of looking for an equity partner. What could be the terms of reference they take?”
Ntshalintshali added Cosatu believed the government was moving to the political right, adding this was evident from its austerity measures.
The Cosatu leader said the union federation was not loyal to Ramaphosa and only supported his presidential ambitions in principle.
“The reality is that under his leadership, the economy is performing very badly in terms of his policy, so there will be issues … the slow pace of taking decisions is worrisome. It took him how many days with [suspended Health Minister Zweli] Mkhize? Something that, in our view, would have been easy to do. His trying to unite the ANC at sometimes the cost of the country is … worrisome.”
Another NEC member and provincial leader said he was concerned that the sale of SOEs was proving correct the criticism of those who were against Ramaphosa during his presidency campaign.
“There are some who will use this against him, which may be disingenuous but a weapon nonetheless. It has been said that under his administration, state entities will be sold and privatised. This is not what was agreed at Nasrec. We wanted to move towards nationalisation. If we can sell SAA, what’s stopping us from selling other SOEs? This argument may carry weight in some corners,” the party leader said.
SACP first deputy general secretary Solly Mapaila said SAA was a public asset that needed an “all-of-state” approach to its recovery, adding that the government was diminishing its strategic role in the airline.
Mapaila said that the SACP would hold the government and the ANC to account for the sale when it meets with the party.
“We have communicated with the acting secretary general of the ANC, Jessie Duarte, to call for a meeting to discuss this matter and we have also called for an alliance bilateral [meeting] with the ANC,” Mapaila said.
“We think that despite the approach that we have jointly agreed on, other mechanisms are being implemented almost [in a draconian fashion]. This is unacceptable, particularly when we take a majority share of a public entity to a private entity without even looking at the value of SAA.
“Its licensing, its brand, its intellectual properties, its skills — all of that is not being considered. It’s a giveaway to a group of privateers to run our airline. It’s an incorrect deal against the government. It’s a good deal for the private sector … It makes us question why is there an addiction to private capital when it has shown to have dismally failed to solve major strategic challenges that face our economy,” Mapaila said.