The South African Chamber of Commerce and Industry (Sacci) has pointed fingers at the Cabinet for failing to appoint the right people to the Eskom board, adding that the entire process of appointing board members of state-owned enterprises (SOEs) needed a wholesale review.
Sacci said it remained concerned as to what credible and established process the Cabinet followed in the selection, recruitment, retention and performance management of the leadership in state-owned enterprises (SOEs).
In a statement, Sacci CEO Alan Mukoki said the Cabinet’s role in the failure of SOEs needed to be scrutinised because that may be where the fault lines lay.
“The process of the assessment and performance review is not likely to address the root causes of the Eskom crisis and other SOEs if such review does not include the role of the Cabinet as the appointing authority,” Mukoki said.
“The review ought to include the evaluation of the skills, competencies, experience and performance track record of the selectors and decision makers as well.
“This is the only way in which effective, sustainable solutions can be realised. Otherwise, it will be the moving around of chairs and the avoidance of dealing with the root causes.”
This comes after Public Enterprises Minister Pravin Gordhan said on Tuesday that he would soon reconstitute and restructure the Eskom board after its term expired in 2021 and was extended subject to a review.
Eskom’s board has been crippled by a number of resignations since 2018, leaving it in dire shortage of directors who possess the necessary engineering, accounting and electricity generation expertise to end load shedding.
Gordhan briefed the Cabinet last week on the capacity of Eskom to mitigate the intermittent load shedding after the utility plunged the country to Stage 6 power cuts twice in as many weeks.
Mukoki said there should be an independent commission staffed by highly skilled and experienced individuals with the right values that would look at the selection and recruitment of SOE boards.
He said that it should be the role of the board, and not that of the shareholder, to appoint the CEO of an SOE, in line with established corporate governance principles.
“The current system where the Cabinet appoints boards and CEOs is broken, inconsistent and unreliable. We believe it is part of the chaotic mess we see,” he said.
“With respect, the Cabinet may not be the right authority to select boards and senior executives, as corporate senior executive level or non-executive director level experience may not be a specific requirement to be in the Cabinet, as the Cabinet deals with a wide range of state activities.”
The Cabinet is mainly composed of politicians who form part of the executive from the ruling party who may or may not necessarily hold any academic qualifications or possess corporate experience.
Sacci’s view is more aligned with the Institute of Directors in South Africa (IoDSA) which has long advocated the professionalisation of directorship in response to the increasing importance of the board’s role.
IoDSA CEO Parmi Natesan said yesterday that the moves to renew that Eskom board should prompt corporate South Africa to ensure that its own boards are fit for purpose, and have the right combination of skills, knowledge and experience to add value to the company.
Natesan said directors also needed to possess skills relating to directorship itself.
“Some have commented with disappointment that the country’s sole energy utility had virtually nobody on its board who has domain expertise in its core business,” she said.
“This is a basic shortfall that every company should guard against when assessing their board skills matrix.”
BUSINESS REPORT