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No, 98% of SAA’s spending doesn't go to ‘white companies’ – exact share still unclear

Startling claims about the financials of South Africa’s beleaguered national carrier airline, South African Airways, are not hard to come by. With former chairperson Dudu Myeni testifying at a public inquiry into allegations of systemic political corruption in South Africa, one claim in particular has resurfaced. 

On 7 November 2020, a Twitter user claimed that 98% of South African Airways’ spending “went to white companies”. The claim has appeared elsewhere on Twitter, with Myeni named as the source. The tweets have been shared hundreds of times. 
Africa Check looked into the claim in 2017 and found the figure was incorrect. Has anything changed since then? 
 

Black economic empowerment spending


In a now deleted tweet, South Africa’s then minister of police Fikile Mbalula claimed that black-owned companies got 2% of SAA’s procurement while 98% went to “white-owned companies”. He attributed the statistics to an October 2016 news article that quoted Myeni. This was also deleted, but the archived version can be read here.

Our fact-check determined that 95% SAA’s local procurement, which is subject to South Africa’s Broad-Based Black Economic Empowerment (B-BBEE) Act and codes, was spent on B-BBEE compliant companies. 

But just 1.7% of local procurement was spent on companies with “over 50% black voting rights”. These companies, according to the B-BBEE Act, are considered “100% black”.

State-owned enterprises, like the Airports Company South Africa, accounted for 27.5% of local spending. Unlike private companies, state-owned enterprises are measured against a specialised B-BBEE scorecard that excludes the assessment of racial ownership.

At the time, SAA wouldn’t confirm where the remaining 70.8% of local procurement was spent. 


 
SAA local spend in 2015/16 Percentage 
Companies that met black ownership requirement 1.7%
State-owned enterprises 27.5%
Remainder 70.8%
Total local procurement  R14.9 billion

Source: South African Airways 
 

SAA declines to provide information


Has the situation changed since 2015/16? It’s difficult to say. 

SAA has failed to file financial reports for both 2017/18 and 2018/19. This, it said, was due to concerns about being financially stable enough to continue operating. SAA’s latest financial report, for 2016/17, put the airline’s total operating costs at R33 billion. 

Deon Fredericks, SAA’s interim chief financial officer, told Africa Check the airline's total spend on procurement was R17 billion. Of this, 82% (or around R13.9 billion) was spent locally.  

Ninety-five percent of this local spending went to B-BBEE compliant companies.

When asked how much of SAA’s total local spend went to B-BBEE compliant companies that met the black ownership requirement, both Fredericks and the airline’s spokesperson Tlali Tlali declined to comment. They also declined to provide the amount spent on state-owned enterprises in 2016/17. 

Without this information it’s not possible to say how much of the airline’s local procurement went to “white companies”. 

But Yuneal Padayachy, who was deputy director of B-BBEE procurement, transformation and verification at South Africa’s department of trade and industry at the time, previously told Africa Check that it would be “wrong to say 98% went to white-owned companies”. A proportion of this share would have gone to state-owned enterprises.