Rédaction Africa Links 24 with Tim Cohen
Published on 2024-03-14 19:45:19
Following the announcement by Public Enterprises Minister Pravin Gordhan that the Takatso transaction had been cancelled, several pertinent questions arise: Who is to blame? What does it mean for SAA? What does it mean for future public-private partnerships?
Assigning blame in this situation is not difficult, as it falls squarely on Gordhan. Throughout the process, Gordhan made crucial decisions that ultimately led to the cancellation of the deal. While governing success can be marginal, Gordhan’s consistent wrong decisions have brought SAA to its current state.
The government initially decided to pass the responsibility of funding SAA onto the private sector through a public-private partnership, rather than continue pumping billions into the airline. Rand Merchant Bank (RMB) was tasked with finding potential buyers, who likely demanded a majority stake in the equity of the airline. Despite this, Gordhan insisted on the government retaining a majority stake, leading to the need for a new solution.
As the Takatso consortium expressed interest in Mango, Gordhan allegedly convinced them to pursue the larger entity of SAA instead. This decision, along with bending rules to push the deal through, caused delays in the process and left SAA in a dire financial situation worsened by the effects of the Covid-19 pandemic.
Eventually, Gordhan signed a deal with Takatso, selling SAA for a nominal amount with the promise of a substantial payment if the consortium could revive the airline. However, as SAA emerged from business rescue with reduced staff and debt, it presented a more attractive investment opportunity for Takatso, even though the financial results for 2023 showed a loss.
The transparency of the deal came under scrutiny, with Gordhan facing criticism from his own department and the Portfolio Committee on Public Enterprises. Despite efforts to renegotiate the deal, Takatso walked away, leading to the collapse of the agreement.
The cancellation of the deal has negative implications for the government’s credibility in future partnerships and raises questions about its ability to handle such agreements effectively. For SAA, the future remains uncertain, with the possibility of either more government funding or seeking another buyer in the international market.
Overall, the failed deal highlights the importance of trust, transparency, and competency in public-private partnerships. As the government navigates the aftermath of the cancellation, the hope is that valuable lessons will be learned to prevent similar scenarios in the future.
Read the original article on Daily Maverick
