Appoint managers of state-owned firms on merit

WITH the wave of job losses and factory and mine closures as a result of the global financial crisis, the question should not be whether the government should bail out or nationalise certain struggling companies, it should be: which ones.

WITH the wave of job losses and factory and mine closures as a result of the global financial crisis, the question should not be whether the government should bail out or nationalise certain struggling companies, it should be: which ones.

The very real immediate danger of nationalising a private company is that the South African government's record of managing complex organisations is depressingly poor.

Of all state-owned organisations, arguably only the Industrial Development Corporation, the Development Bank of Southern Africa and the South African Revenue Service are being managed well.

PetroSA, a state-owned company supposedly set up to be run with the nous of an efficient private company, albeit with national development objectives, which is certainly the way to go, is still misfiring.

Most of the other state organisations are in the news for mismanagement, failure and corruption.

So there is a real danger that any company that is nationalised, or even any new company set up by the government, will be beset by mismanagement, jobs-for-pals and corruption.

Even the newly proposed state-owned mining company will fail, like SAA and the SABC, unless only the best talent is appointed to run it.

ANC leaders must forget about the ideology, faction or colour of the management appointed to run the proposed state-owned mining company.

What must now count is to set clear developmental targets, namely job creation, beneficiation, skills transfer, and so on, for the new company, and then to appoint only the best managers on merit to deliver on these targets. If they don't, fire them.

Handing over struggling companies to black economic empowerment tycoons or consortiums must be an absolute no-no.

During this economic emergency we cannot afford the luxury of giving away scarce funds and resources to enrich individuals.

To date, none of the BEE companies or individuals have contributed anything substantial to expand the skills base, to come up with totally new industries or to lift communities out of poverty.

We must set a stress test for bailing out or nationalising companies. The test for bailing out a company must include whether South Africa will lose strategic industrial and technological capacity and mass jobs, and the social costs to the surrounding community, region or province if the private company closes.

Crucially, it will be important to see whether the technology can be transferred to other sectors, and whether a company will be sustainable in the future but just needed financial support to survive the current financial global meltdown.

For example, not only is the automotive industry crucial in economically depressed Eastern Cape, it also has strategic capacity and technology that can be transferred elsewhere: building a locally owned industry to build buses, mini-buses and rail coaches during this economically depressed period.

Platinum is another industry that cannot be allowed to go belly up. Platinum is a strategic metal. For one, Chinese state-owned companies are eager to buy up struggling local platinum mines.

lGumede is author of Thabo Mbeki and the Battle for the Soul of the ANC

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