Following the appointment of Jabu Mabuza as the new interim executive chairperson and acting group CEO of Eskom, the Black Business Council (BBC) and the Institute of Directors in Southern Africa (IoDSA) have called for an effective and efficient permanent appointment to be made.

Mabuza, who has been the power utility’s nonexecutive chairperson since January 2018, will take up the position of acting CEO, when Phakamani Hadebe steps down on July 31. 

“Eskom, which is under severe operational and financial pressures, is too important for South Africa, to fail, and it currently needs the stability and continuity that Jabu Mabuza would bring,” BBC president Sandile Zungu said in a statement on Tuesday.

“Ideally an acting person should come from among the executives, but the current executive committee members have got more than enough load in their current positions to carry an extra burden,” he added.

The BBC also encouraged the Eskom board to speed up the process of appointing a permanent CEO, one who will move Eskom, and by extension, the country, out of the current difficulties.

The council posited that the three months period in which Mabuza will be acting, is adequate to allow the company to appoint a suitably competent, qualified and more experienced permanent CEO.

Eskom has advertised the position of CEO and has asked for applications to be submitted by August 2.

Meanwhile, IoDSA CEO Parmi Natesan said Mabuza’s appointment raised many questions, particularly from a governance point of view.

“While it is true that governance best practice is to keep the positions of CEO and chair separate, there could be some justification for the move – provided that the right safeguards are put in place.

“The governing body should ensure that the appointment of, and delegation to, management contribute to role clarity and the effective exercise of authority and responsibilities,” she added.

Natesan indicated that the King Code on Corporate Governance was clear that the roles of the CEO and chairperson were quite distinct and that good governance required them to be kept rigorously separate.

“The chair leads the board in exercising oversight over management and should be independent, while the CEO leads the management team. The CEO and his or her team are accountable to the board, and this separation of powers is vital to ensure the necessary checks and balances are in place,” she said.

“However, King IV also makes it clear that governance is not a matter of blind compliance either – the board must exercise its judgement to come up with solutions that are in the best interests of the organisation and that will lead to a stated and desired outcome.”

Natesan said that while governing bodies needed to have the freedom to consider what would be best for the organisation, they also had to take care to communicate their reasoning to stakeholders – transparency was critical in demonstrating that the board had exercised its judgement.

In the circumstances in which Eskom finds itself, appointing the chairperson as CEO as an interim measure, with the purpose of creating a stable transition period until a new CEO is appointed, may be in the best interests of the organisation, IoDSA said.

However, it emphasised that this was not an ideal situation and urged that the two issues be properly addressed.

Firstly, to maintain accountability while Mabuza holds both roles, the institute called for clear steps to be taken to ensure the lead independent director plays an active role where necessary.

Secondly, it called for the process of appointing a new CEO to be transparent and, imperatively, that it be concluded within the short term.

“To have to extend this temporary arrangement would not be ideal from a governance perspective,” IoDSA said.

The institute also mentioned that succession planning for key management roles had to be prioritised. It said that, ideally, somebody within the organisation should have been groomed to assume the CEO role, even temporarily in an emergency such as this.

“The way this three-month period is handled will show whether the individuals in power are acting decisively in the best interests of the organisation,” Natesan stated.