The R3.5 billion lifeline that the state-owned Development Bank of SA (DBSA) gave to SAA last week might have shocked many, but it wasn’t surprising.
This was, after all, the decision that the governing ANC took at its national executive committee and lekgotla last weekend.
The party agreed that it would restructure SAA at significant funding from government.
This was against the proposal by Finance Minister Tito Mboweni and his team that the airline be liquidated to allow the government to start a new one.
After the decision was made, it was a no brainer that the money to bailout SAA needed to be found – and quickly.
The DBSA, the mandate of which is to provide long-term finance infrastructure projects to “improve the quality of life of people” and “support economic growth”, has come under fire for granting the facility to the airline, which has been reliant on state bailouts for years.
The bank said the facility was “subjected to the DBSA’s established governance, credit evaluation and approval processes” and that it “subscribes to the highest standards of corporate governance”.
It said R3.5 billion – which is about a quarter of its disbursement a year – “has not impacted the ability of the DBSA to execute on its development objectives and mandate”.
Over the years, SAA has failed to implement any of its own turnaround strategies – which came at great costs – and has seen an exodus of chief executives and boards. The situation is so dire that SAA will not be able, on its own, to repay the money it got from DBSA. Taxpayers will have to fork out, again, to keep SAA – which serves only a fraction of the population – afloat.
There are many development needs the country faces right now that should be the focus – not saving SAA.
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