Deputy president David Mabuza has explained the government’s decision to save South African Airways (SAA) and extend billions more to the struggling national airline.
Responding in an oral parliamentary Q&A on Thursday (26 November), Mabuza said that even as Treasury reviews government spending to improve efficiency, the country should ‘sharpen our conversations’ on initiatives which contribute to the empowerment of ordinary people, job creation, and ensuring that none of our people are subjected to hunger and extreme poverty.
“On the matter of government funding of the South African Airways, we must clarify upfront that the delivery of social and other services, and investing in the country’s state-owned enterprises as crucial drivers for development, should not be seen as mutually exclusive,” he said.
“On the contrary, funding of SAA should be understood in line with preserving strategic and catalytic state instruments for transformation, growth, development, service delivery and employment creation.”
Mabuza said that when cabinet approved the support of a R10.5 billion allocation to SAA, it did ‘appreciate’ the state of the country’s finances.
“As government, we considered obligations of the state especially if the airline were to be liquidated.
“We understood that this could be achieved through the reprioritisation in budget allocations, and that departments will have to adjust spending priorities and programmes to take into account the revised baseline allocations over the next three years.”
In doing so, Mabuza said that government will minimise any adverse impact that the reprioritisation may have on the delivery of social and other services.
“Even as we reprioritised the budget, the consolidated expenditure over the next three years shows that there has been no negative decrease on education, health, community development and social development,” he said.
Money will be put to good use
Mabuza said that the money which has been made available to South African Airways will be put to good use.
He added that the Department of Public Enterprises, will closely monitor these funds to ensure that they are used solely for intended purposes, as reflected in the Business Rescue Plan.
“The general scepticism by some South Africans towards the viability of keeping and providing Government’s financial support to SAA is understandable, more especially, given the historical challenges experienced by the airline that has cumulatively impacted on its financial performance and competitiveness,” he said.
“It is common cause that the current state of our national carrier, is largely as a result of legacy issues relating to tough global aviation conditions, poor governance, mismanagement and other malfeasance.”
Notwithstanding these challenges, the benefits of ensuring that SAA is kept afloat and contributes to the country’s economy, far outweighs those of collapsing the national carrier, he said.
Mabuza said that some of the reasons that the national carries will remain open, include:
- Government is able to facilitate international and regional trade, through reliable air connectivity in the region, especially the movement of people and goods;
- Indirect benefits in the supply chain including food and beverage, retail goods, business services for example, call centres, transport and manufacturing of goods further contribute to the economy;
- There is direct contribution to the country’s tourism and job creation in the sector;
- Productivity levels are improved across the economy as SAA Technical’s aircraft maintenance provides services to other local airlines that do not have maintenance licensing;
- There is advancement of the country’s innovation and skills development through SAA’s Cadet Programme, as well as contributing to the advancement of the aerospace industry’s technical capability.
“Considering all these economic benefits, it is notable that governments across the world recognise the airline industry as an essential economic enabler, and thus are rendering relevant support to their aviation enterprises,” said Mabuza.
“Equally so, South Africa as a developing country needs to maintain air connectivity towards achieving economic development in line with these global trends.”