Political interference to blame for Eskom, Transnet leadership crises

The leadership crisis at South Africa’s state-owned enterprises (SOEs) has been caused by the intense political interference in their operations, with the country’s current shareholder representative model being a “case study in failure and what not to do”. 

This is feedback from Wits Professor Alex van den Heever, who spoke to Newzroom Afrika about the numerous leadership vacuums at South Africa’s SOEs. 

On Monday, Public Enterprises Minister Pravin Gordhan announced that Mpho Makwana has decided to step down as Eskom’s board chairperson and non-executive director.

Makwana previously served as Eskom’s acting chairman and acting chief executive while the corporation finalised the recruitment of a new CEO.

He will be replaced by Mteto Nyati. The department first said Nyati would be the interim chairperson, but it quickly corrected it to say he was the new chairperson.

UCT Professor Anton Eberhard highlighted that in Eskom’s first 82 years, between 1923 and 2005, it had seven chairmen, each serving an average term of close to 12 years.

Between 2005 and 2023, Eskom had ten chairmen and 13 CEOs. This shows the incredible instability at the top of Eskom, which is still without a permanent CEO. 

Van den Heever said the country has to look at the structural reasons for why this is occurring at Eskom, as well as other SOEs such as Transnet, Prasa, and the Post Office. 

These institutions involve a substantial amount of procurement and critical decisions that involve vested interests. This naturally creates patronage, the professor said. 

“Our current government shareholder model for SOEs is deeply flawed and designed to fail because it allows for an easy entry route into these patronage and procurement opportunities,” Van den Heever said. 

“One person, the government’s shareholder representative, can influence the design of the board and the appointment of CEOs and other management executives. So now they are placed right at the centre of the leadership functions of the organisations.” 

“When you see these high turnover rates and instability in leadership, you are seeing the pattern develop. Behind the scenes, someone is trying to get into that organisation through leadership appointments.”. 

Van den Heever called for a clear separation between the leadership of SOEs and the government through a complete overhaul of the current governance structure. 

“This model that we have had in South Africa is a case study of failure and what not to do. We really have to redesign our structural arrangements around the governance of these organisations,” he said. 

Board versus the government

Independent political analyst Khaya Sithole said the crisis at Eskom is predominantly due to an inability to balance the board’s autonomy with the involvement of the government’s shareholder representative, Gordhan. 

Sithole said Makwana’s resignation resulted from Gordhan’s rejection of Eskom’s preferred candidates for the position of CEO. 

The board had completed the process of finding a CEO, but the Minister took the view that the board had usurped his authority as he was entitled to receive three options that he could select from.

Eskom’s board expressed an explicit preference for one candidate. “That was bound to cause tensions,” Sithole said. 

“What we hoped would be different is that there would be an appreciation by the Minister, by Cabinet, and the President that the crisis at Eskom requires immediate fixes,” he said.

Sithole said one cannot linger on dealing with bureaucracy if an emergency needs to be addressed.

“I do think the Minister has to prioritise individuals who are politically palatable. While the individual must have the capacity and technical skills, they must also be an individual that the political establishment can trust,” Sithole said. 

Eskom’s current board was put together under the leadership of Makwana after a mass exodus of board members last year. 

South Africa was made to believe that this board would be given the resources and the space to deal with the country’s electricity challenges decisively. 

“The fact that a year later, we are already seeing this board disintegrating and the chairman resigning is not a good reflection on the Minister’s ability,” Sithole said. 

“The surprising thing about Eskom is that one thinks it has always hit the bottom of any crisis it can plunge itself into, and then it always surprises you.”