Former finance minister Trevor Manuel has refused to rule out the danger that South Africa’s economy may worsen so badly that the IMF will need to bail us out.
He was addressing a conference at Deloitte HQ in Johannesburg when he was asked about the IMF.
Although he tried to deflect the question, Manuel said that the mini-budget speech this month must confront a “gaping and yawning chasm on the revenue side. It is a very difficult situation.” Manuel said he is worried about debt service costs, and he wondered how the latest bailout to SAA will be funded.
He noted the irony that there is now a danger of the IMF being called in, when this was fiercely resisted in the early days of the post-apartheid government.
“In our history, we weren’t going to knock on the door of the World Bank and the IMF. It will limit our sovereignty,” he said.
Manuel was damming about SAA and other parastatals, saying “the rot is now so deep.”
The former finance minister, who now chairs Old Mutual, questioned the ability of the SAA Board to provide effective oversight.
“I don’t know of any private sector companies where a Board of non-executive directors form a tender committee, and hand out the spoils.
“Some big decisions (about SAA’s future) are about management, but you won’t resolve things by pouring money into it.
“The cost structure is just wrong. It employs too many people, pay-scales are out of kilter with industry norms. Unless you can address costs, you are not going to sell it.
“When the chairperson misses six consecutive meetings and remains chairperson, something is fundamentally wrong.
“It is not a money metric, you need to do other things at that company.”
Manuel also spoke about the need for oversight of companies, and suggested the audit profession remains vital, despite the KPMG scandal.
“We may soon have to imagine a world without auditors and some would be happy,” he quipped.
“But it’s important we take a view on independent oversight and assurance in the context of risk.
“What does it mean if trust is lost and the assurance that auditors provide to investors is lost?”
He said a Board of Directors should play a key role, but directors are bombarded with so much material it can make it hard to function efficiently.
“One of the challenges Boards have is that because so much of what we do is regulated, more than 60 percent of board packs (briefing documents) are taken-up with pages of figures, “ said Manuel.
“The risk profile of companies is placed at too great a risk.”