S,A's Fin Min ends Zuma’s Russian roulette with economy and SAA


South Africa’s Finance Minister Pravin Gordhan is not shying away from issues affecting the ratings of the country and seems eager to follow through fired Minister Nhlanhla Nene’s plans.

Key to Gordhan’s budget is State-owned companies (SOCs) and an attempt to address poor governance and financial management.

South African Airways (SAA) has been suffering losses over the past decade estimated to be over 10 billion rand.


Gordhan believes there is need to look at governance and composition of boards not only for SAA but also other entities.

He signalled that SAA Chairperson Dudu Myeni tenure could be coming to an end at the troubled airline when he called for improved governance and financial management, issues that the current SAA chairperson is accused of having failed to address.

“State-owned companies have important roles to play in boosting growth and development. But there are issues to address in their governance, mandates, financing and operations,” said Gordhan in his budget speech.

[Read S.A Finance Minister Pravin Gordhan’s 2016 Budget Speech here: 

“…entities that are no longer necessary should be phased out. The resources raised or saved will be redirected to the balance sheets of SOCs that should grow.”

Taking an aim at the South African Airways he added, “It seems clear, furthermore, that we do not need to be invested in four airline businesses.”

“Minister [of Public Enterprises, Lynne] Brown and I have agreed to explore the possible merger of SAA and SA Express, under a strengthened board, with a view to engaging with a potential minority equity partner, and to create a bigger and more operationally efficient airline.”

Any merger with a minority partner would ultimately see change of leadership from political appointees to people with skills and credibility.

Gordhan also addressing the crisis of leadership in other SOCs said that the intervention by National Treasury was aimed at strengthening state entities so that they can play a propulsive and dynamic role in our development.

“Further financial support to State-owned companies will depend on clarity of this mandate and firm resolution of governance challenges.”

This is an area where Nene exerted much of his effort demanding SAA to resolve governance issues.

[READ: Firing Nene chaotic and political, investors should be worried]

Though the move is set to restore confidence and salvage the country from a sovereign ratings downgrade, this will leave president Zuma weakened.

According to reports, Zuma’s alleged close relationship with SAA boss saw Nene being made a sacrificial lamb last December as he was ‘meddling with affairs of running this entity’.  

Nene, according to reports, was worn-out of the entity’s poor leadership and endless financial bailouts. The airline have also been flying loss-making routes for political expedience, something Gordhan is likely to end.

Gordhan knows Zuma can’t afford to fire another finance minister and keep defending the SAA boss. The writing is on the wall, this budget speech will undoubtedly see the end of Myeni reign at the troubled national airline.

[For more Budget stories go to: /news/southern-africa/]