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Vice 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 question and answer session on Thursday (November 26), Mabuza said that even as the Treasury reviews government spending to improve efficiency, the country should ‘sharpen our talks’ on initiatives that contribute to the empowerment of common people, job creation and the guarantee that none of our peoples suffer from hunger and extreme poverty.
“When it comes to the government funding of South African Airways, we must clarify in advance that the provision of social and other services, and investment in the country’s state-owned enterprises as crucial drivers of development, should not be considered mutually exclusive.” . he said.
“On the contrary, SAA financing must be understood in line with the preservation of strategic state instruments and catalysts for transformation, growth, development, service provision and job creation.”
Mabuza said that when the cabinet approved the support of a R10.5 billion allocation to SAA, it did “value” the state of the country’s finances.
“As a government, we consider the obligations of the state especially if the airline were to be liquidated.
“We understood that this could be accomplished by reprioritizing budget allocations, and that departments will have to adjust spending priorities and programs to account for the revised baseline allocations over the next three years.”
In doing so, Mabuza said the government will minimize any adverse impact that the shift in priorities may have on the provision of social and other services.
“Even when we change budget priorities, consolidated spending over the next three years shows that there has been no negative decline in education, health, community development, and social development,” he said.
The money will be put to good use
Mabuza said that the money that has been made available to South African Airways will be used appropriately.
He added that the Department of Public Companies will closely monitor these funds to ensure that they are used only for their intended purposes, as reflected in the Business Rescue Plan.
“The general skepticism of some South Africans about the feasibility of maintaining and providing government financial support to SAA is understandable, more especially given the historical challenges experienced by the airline that have had a cumulative impact on its financial performance and competitiveness,” he said. .
“It is a common cause that the current state of our national airline is largely due to inherited problems related to the harsh conditions in global aviation, poor governance, mismanagement and other wrongdoing.”
Despite these challenges, the benefits of ensuring SAA stays afloat and contributes to the country’s economy far outweigh those of collapsing the national carrier, he said.
Mabuza said some of the reasons the national will remain open include:
- The government can 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 beverages, retail products, commercial services, for example, call centers, transportation, and goods manufacturing, further contribute to the economy;
- There is a direct contribution to the country’s tourism and the generation of employment in the sector;
- Productivity levels improve across the economy as SAA Technical Aircraft Maintenance services other local airlines that do not have maintenance licenses;
- Advances in innovation and the development of skills in the country through the SAA Cadet Program, in addition to contributing to the advancement of the technical capacity of the aerospace industry.
“Given all these economic benefits, it is remarkable that governments around the world recognize the airline industry as an essential economic enabler and therefore provide relevant support to their aviation companies,” Mabuza said.
“Similarly, South Africa, as a developing country, needs to maintain air connectivity to achieve economic development in line with these global trends.”
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