President Cyril Ramaphosa has vowed to reduce the dependence of state-owned enterprises (SOEs) on bailouts and guarantees from the government.
Ramaphosa disclosed this in his weekly address in Pretoria. “for too long, the South African taxpayer had been funding inefficiency and mismanagement in SOEs, adding that it must come to an end.
“Although many of these SOEs are deeply in debt, they remain valuable state assets with immense capacity.
“We will not allow any of these strategic entities to fail. Rather, we need to take all necessary steps, even drastic ones, to restore them to health,” he said.
South Africa has a suite of major SOEs such as electricity utility Eskom, South African Airways (SAA), Transnet (a large South African rail, port and pipeline company), weaponry manufacturer Denel, PRASA (Passenger Rail Agency of South Africa).
It also has National Post Office, all of which had been haunted by mismanagement and alleged corruption tendencies.
He noted that recently, the government placed debt-laden SAA under business rescue as the financial crisis at the airline had become so grave that the only way to secure its survival was to take this extraordinary measure.
“Business rescue is not the preferred option for fixing our state-owned enterprises, nor would it necessarily be advisable in other circumstances.
“But the resolve we have shown in putting SAA into business rescue cuts across all key SOEs,“ he said.
Ramaphosa, however, upon assumption of duty, took steps to strengthen governance and reinforce effective management at strategic SOEs. New boards had been appointed and executives with the requisite skills and experience put in place.
“An immediate challenge was to end state capture and tackle the corruption that had crippled a number of our state-owned companies.
“As the new leadership has undertaken this work, several individuals have been charged and, in some cases, stolen funds have been recovered, according to the president.
“This work must necessarily continue until all corrupt activities have been uncovered and those responsible held to account before a court of law,“he said.
Ramaphosa added that financial systems must be strengthened and diligently observed to avoid any form of corruption.
“As we do this work, we are clear that the state will retain ownership of all those state-owned enterprises that are strategic.
“This is to allow entities to perform the crucial economic and developmental functions that the market would not be able to perform on its own.
“Where necessary, and where appropriate, the government will seek strategic equity partners to assist with raising capital, injecting skills and technology, and improving efficiency at SOEs.
“This must be done transparently and in a manner that strengthens, rather than weakens, the ability of the state to meet the development needs of the people,’ he said.