Money-pit state-owned South African Airways (SAA) is about to receive a R3.5 billion injection from another government-owned entity, the Development Bank of Southern Africa.
SAA has made huge losses in every year since 2011.
It has burned through R20 billion in taxpayer money in only the past three years.
The Money Show’s Bruce Whitfield interviewed Zodwa Mbele, Group Executive for Transacting at the (DBSA).
As the Development Bank of Southern Africa with the R3.5 billion, you could’ve eradicated pit toilets which Human Settlements Minister Lindiwe Sisulu promised six months ago would be done by now. There is a multitude of things that could’ve been done for rural development – a big focus on the website of the Development Bank of Southern Africa. The DBSA chose instead to put it in the hands of SAA... It’s hard to see that there’s no political interference…— Bruce Whitfield, The Money Show
How does keeping SAA going in perpetuity aid South Africa’s development?— Bruce Whitfield, The Money Show
Our mandate is to look into economic development, and this is the view we’ve taken in extending this bridge funding facility to government… It’s not only SAA that would’ve gone down…— Zodwa Mbele, Group Executive for Transacting - DBSA
It didn’t take long [required due diligence]. SOEs are businesses we’re quite familiar with. We followed the normal processes…— Zodwa Mbele, Group Executive for Transacting - DBSA
We are not lending with the hope of getting repaid by SAA… The repayment will come from Government…— Zodwa Mbele, Group Executive for Transacting - DBSA
Our board is very much independent from the shareholder… There’s no misstep in terms of governance… The deal has gone through market-related terms…— Zodwa Mbele, Group Executive for Transacting - DBSA
Whitfield then asked Guy Leitch (Managing Editor at SA Flyer Magazine) – who was listening to Mbele – for comment.
That was a convoluted explanation if there ever was one… It’s going to be the taxpayer who just continues to fund this… This is not the end of it. They’re just going to continue to drip-feed the airline for next however many years.— Guy Leitch, Managing Editor - SA Flyer Magazine
Listen to both interviews in the audio below.
This article first appeared on CapeTalk : Development Bank of SA: We expect taxpayers - not SAA - to repay the R3.5bn loan