By Leon Louw
Much has been written about Pravin Gordhan since his Friday 13 September death. Informed opinions range from depicting him as a god-like idol to satanic evil. His most cited crime was that he privatised South African Airways (SAA) and was privatising and destroying State-Owned Enterprises (SOEs). His final act was to choose to die in a private hospital. Whither NHI?
After a brief pause, the radical “left” started speaking ill of the dead, accusing Gordhan of heinous capitalism despite being a devout communist and struggle hero. Contrary to their lie, he privatised nothing. Instead, he went to ideologically extreme lengths to preserve nationalisation at any cost.
Social media turned against him. Half a million (70%) of social media posts were negative. His loved ones reminded us that he devoted and nearly lost his life in the anti-apartheid struggle, and that he opposed corruption and State Capture. He is credited with excellent revenue collection reforms.
Mindful of those accomplishments, his legacy is one of failure on balance. Although SAA was in no sense “strategic” or an “asset”, Gordhan perpetuated the “strategic asset” myth, including the nonsense that SOEs were government creations. All, like most of what the government does, were started by private enterprise and nationalised. They are vanity liabilities as opposed to strategic assets. None of these apartheid dinosaurs should be perpetuated.
Socialists and communists – there are no significant differences – denounce Gordhan as a failed minister whereas he was an exemplary ‘comrade’. He did precisely what their ideology requires, such as central planning and control, bountiful guarantees and subsidies with other people’s money, mismanagement, alleged corruption, cadre deployment and suppression of competition. Gordhan was, if anything, their fantasy control freak who refused to “hand over the economy to the likes of Leon Louw”.
Gordhan said that R200 billion was lost to corruption under him, which is no surprise when the core value of communism is seizing wealth without producing it. Of R331bn (plus billions more in guarantees) squandered on SOE bailouts since 2014, R213bn (65%) was during his 2014 to 2024 term.
The problem with “lefties” is that for them money is an abstract concept. A million here, a billion there, a trillion somewhere else just appears. They have no idea that for a rand to have value someone must produce more than they consume, plant a tree, make a t-shirt or wash dishes. For them, capital and money exist for their taking.
There are six ways to privatise SAA and the rest of which the sixth and worst was the one used.
1. Sell. Instead of selling SAA when viable for many billions, as it did with Iscor, it became worthless.
2. Discontinue. The government can stop doing things badly as with agricultural marketing, ‘bantu’ liquor, entertainment and licensing.
3. Outsource. Everything a government does can be outsourced as with vehicle maintenance, construction and printing.
4. Deregulate. Deregulation privatises by allowing private alternatives as with electricity, broadcasting and commuter transport.
5. Bribe. Government assets can be bribes to get officials and unions to support ‘people’s privatisation’, as in the former USSR and through Employee Share Ownership Schemes (ESOPs).
6. Fail. Government failure as with SAA, the Post Office and quality healthcare allows the private sector to fill the vacuum.
Anti-privatisation dogma produces the sixth and worst: privatisation-by-failure. SAA could have been sold for many billions, enough for up to one million RDP homes. Few recall that Swiss Air was once happy to buy 20% of SAA for R1.4bn. Instead of diverting subsidies from the poor who do not fly to the rich who do, the government could have increased revenue. Nationalisation penalises the poor twice over, lost welfare and lost taxes.
Privatisation-by failure ranges from partial (electricity, healthcare, broadcasting) to virtually total (SAA telephones, post, freight). SAA’s R70bn in subsidies and guarantees over a decade could have been saved by the second method, withdrawal. If sold as by the first method, SAA would still be our proud “flag carrier” instead of our national shame.
The third, deregulation (“open skies”), has been a spectacular success. The tax-paying domestic airline share grew from below 5% of the market to 95%. Had SAA been donated to employees by the fifth method, they would have been enriched and liberated from being discouraged and disgruntled victims to enriched and inspired owners.
Privatisation-by failure meant that the government got nothing, the poor lost welfare, civil servants lost jobs, and our national carrier became our national disgrace.
Gordhan’s mistake was not, as his radical detractors allege, that he wanted to privatise SAA or anything else, but that he refused to do so. He took communism too seriously. The late Communist Party icon and leader, Joe Slovo, was more pragmatic when Housing Minister during the early post-apartheid years.
He privatised (outsourced) housing construction. Fellow communist, Agriculture Minister Derek Hanekom, used the discontinue and deregulation methods to privatise agricultural marketing boards.
The degree of anti-Gordhan vitriol is shocking.
For struggle comrade, Carl Niehaus, Gordhan was satanic evil. “We were forewarned about the evil charlatan that uSatane, Pravin Gordhan, was. Yet, despite President Oliver Tambo's warning, he was allowed the toxic space to wreck (sic) the havoc that he did on our economy. A large part of that evil opportunity for Gordhan … was created by President Ramaphosa and his fellow sell outs, like Derek Hanekom.”
Gordhan was “fingered” in a Report of the Commission on the Cabal commissioned and released by then ANC President, OR Tambo, as, “one of the worst members of the cabal (set on destroying the ANC from within)”. There is, according to the Report, “a clique led by Pravin Gordhan with (President) Ramaphosa and (Murphy) Morobe”. Niehaus said that the cabal “controls the ANC” and Gordhan was “one of the most dangerous” who sold-out to “White Monopoly Capital” (WMC) and served “Indian and white pals”. There is, of course, no such thing as WMC, not even as a coherent concept.
According to another ANC communist, Mac Maharaj, who is an alleged author, Niehaus’s view is a “distortion” and misuse of the document.
Despite pretentions of virtue, Niehaus, like most comrades who preach communist gospel, committed malfeasance in 2005 for which he tearfully confessed fraud.
Many moderates and business elites saw Gordhan as sensible and were distressed when then President Jacob Zuma fired him as Finance Minister in 2014. When he became Public Enterprises Minister in 2018 Gordhan’s communist ideology rendered him incapable of rescuing SOEs. Whilst his department was abolished after the 2024 election his failed entities endure in other departments.
Within the ANC Gordhan was humiliated, His reports, methods and analysis were rejected in heated debates by the National Executive Committee (NEC), the Portfolio Committee, and the Special Investigation Unit (SIU). He allegedly bypassed Boards and interfered with management, especially on destructive cadre deployment.
Gordhan denied SAA employees the opportunity to invest as SAA shareholders. With People’s Privatisation they would have been given ownership for free, which should happen generally with everything from the SABC and hospitals and railways to roads. Gordhan preferred retaining SAA as a feeding trough for cadres and politicians. Eventually three thousand employees were fired and remain unemployed.
As a communist advocate of nationalised National Health Insurance (NHI), Gordhan should have been treated and died in a ghastly government hospital, but exposed the hypocrisy that characterises NHI propagandists by buying the best care money could in one of the most elite and expensive hospitals, Donny Gordon.
What remains of SAA is pitiful. It runs a few local flights on major routes where it serves no purpose other than to deny consumers access to more preferred private airlines. SAA still has an international monopoly where local airlines are banned. Almost all international flights it offers are on the planes of foreign private airlines. SAA is technically insolvent. It cannot be given away. It has liabilities (R9.182bn) exceeding assets (R8.134bn) by over R1bn. Revenue in 2022 was R2.031bn with expenses of R5.663bn for a deficit of R3.632bn.
The right thing for the government, now that we no longer have a department for failed SOEs, is to privatise them by one or more of the first five methods rather than more privatisation-by-failure.
Leon Louw is the CEO of Izwe Lami and Freedom Foundation.
BUSINESS REPORT