SABC CEO Madoda Mxakwe has painted a bleak picture of the operational challenges that has crippled the public broadcaster and which has contributed to the impending job cuts.
Speaking to Fin24 after a press conference to address the organisation’s “dire financial situation” - Mxakwe stressed that a fresh approach was needed to steer the entity out of its current trajectory.
The broadcaster is going ahead with the retrenchment of 981 staff, in a move that has been met with fierce resistance from labour unions.
Mxakwe sat down with Fin24 to unpack some of the critical issues affecting the beleaguered organisation in this edited Q/A.
Fin24: How did the SABC get to this point?
Madoda Mxakwe (MM): I would say the challenges we see predate the past management [over the past] four to five years. But in terms of revenue decline, there was a lot of mismanagement and lack of good governance that happened in the past three to four years. This is where you really see that the SABC was being hollowed out, from a commercial point of view and governance point of view.
Fin24: What has the current management done to improve the situation?
MM: One of the things that we are currently faced with is that we are trying to instill proper business fundamentals. From a revenue point of view, we did quite well in the recent past. The biggest issue is expenditure, but I must say the team has done well, we have saved over R483m a year to date, which is indicative of what we have been doing in terms of cost cutting.
Fin24: What are some of the biggest drivers of expenditure?
MM: In business, you have to look at all the cost drivers, not just one. Salaries are a huge contributor at R3.1bn. The best practice in term of salaries to expenditure ratio would be 25-30%. We are currently at 47%.
Fin24: What are other operational challenges?
MM:It's the organisational structure, for instance you will find that one HR manager manages 10 people, in other organisations an HR manager would manage 250 persons. So therein lies the whole issue about a lack of structure that is fit for purpose to take the SABC to the next level.
Fin24: How dire is SABC's financial position?
MM: Look, we have something that we call the payments committee that sits on the 15th of every month. The committee now has to decide who will be paid and who will not be paid. They are faced with a difficult task of making things happen.
Fin24: It sounds like the organisation is living from hand to mouth?
MM: Yes, that is true. We are living from hand to mouth and battling to fulfil our financial obligations. The situation is very dire.
Fin24: Any plans of a government capital injection anytime soon?
MM: We have submitted all the documentation as far as a government guarantee is concerned. It was done last year in June, so we keep engaging with National Treasury to check progress. We have also engaged the financial institutions to increase our borrowing limit, but it becomes a problem because the Auditor General gave us a disclaimer which says we are technically insolvent. That affects our going concern with banks.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER