South Africa's SAA points to wider reform headaches

Significance

Uncertainty persists over SAA’s turnaround strategy, as well as that for other ailing SOEs including arms manufacturer Denel and the Land Bank. Operational problems at troubled power utility Eskom have resulted in renewed ‘load shedding’ (power outages), hampering economic activity.

Impacts

• More state funding for SAA could embolden public-sector unions in their ongoing pay dispute with government and undermine a recent IMF loan.
• The rumoured bolstering of the public enterprises minister's powers over SOE boards will raise fears of renewed political interference.
• SAA's retrenchment packages and related add-ons will set the bar high for other potential SOE retrenchment processes, most notably Eskom.