JOHANNESBURG, June 3 (Xinhua) -- With two South African state-owned enterprise (SOE) CEOs having resigned in two weeks, South African expert advised the government to consider partially privatizing SOEs.
This advice followed the resignation of South African Airways (SAA) Chief Executive Officer Vuyani Jarana and Eskom CEO Phakamani Hadebe.
Jarana's resignation letter to the board made it clear that lack of funding for SAA prompted the resignation.
"Lack of commitment to fund SAA is systematically undermining the implementation of the turnaround strategy. I spend most of my time dealing with liquidity and solvency issues," the CEO said.
Jannie Rossouw, Head of School of Economic and Business Sciences at the University of the Witwatersrand, said on Monday. "We all know SAA has been in fanatical problems for a very long time, if government is serious about these companies' financial survival, it must start privatizing some of these companies."
He said that while Eskom was too big to be allowed to fail, government would not be affected if SAA is privatized.
"Eskom is a national strategic company that supplies electricity, it must be helped. SAA can be sold, it is a luxury, the government can sell it today without the economy being affected." he said.
When Jarana was appointed CEO in November 2017, he was tasked to implement a long term strategy to return the airline to financial and operational stability, but without adequate funding, the turnaround strategy would not succeed.
Jarana said that a 5 billion Rand (344.7 million US dollars) funding secured from the government in 2018/19 financial year was "used to fund creditors." SAA also received 3.5 billion Rand emergency funding from local banks and that money helped to operate from December 2018 until now before it would be depleted in June.