Race, Politics Threaten $64 Billion S. Africa Investment Plan
Source: Bloomberg, Antony Sguazzin and Mike Cohen (11/12/09)
"Powerful individuals are playing politics with the senior positions."
State power utility Eskom Holdings Ltd. has lost its chairman and ports and rail company Transnet Ltd. has no permanent CEO amid disputes fueled by allegations of racism.
Eskom plans to spend 385 billion rand ($52 billion) over the next five years to avert a recurrence of power shortages that idled the country's mines for five days last year. Transnet is spending 81 billion rand. Together the plans form the bulk of a government program to pull the economy out of its first recession in 17 years.
"If Eskom doesn't sort out their problems, the market will punish them by charging them more on their debt," said Malcolm Charles, a portfolio manager at Investec Asset Management in Cape Town. "They are running out of lives."
Bobby Godsell, the 57-year-old white chairman of Eskom, which has 71.5 billion rand of outstanding debt, according to Bloomberg data, resigned after he tried to enforce a verbal offer by the black CEO, Jacob Maroga, 49, to step down. The youth league of the African National Congress and the Black Management Forum, which represents black executives, said he was a racist.
Godsell had a "baas-boy mentality" toward Maroga, the forum said, using the Afrikaans term for master. The search for a new chairman and CEO may take six months, acting Chairman Mpho Makwana said at a press conference today.
"Powerful individuals are playing politics with the senior positions," said Nic Borain, a Cape Town-based political analyst. "The tension between running an effective state and running a mad feeding frenzy for an aspirant class of people is becoming untenable for the ANC."