S. African president vows to reduce dependence of SOEs on gov't bailouts

Source: Xinhua| 2019-12-09 19:33:39|Editor: yhy
Video PlayerClose

CAPE TOWN, Dec. 9 (Xinhua) -- President Cyril Ramaphosa on Monday vowed to reduce the dependence of state-owned enterprises (SOEs) on bailouts and guarantees from the government.

"For too long, the South African taxpayer has been funding inefficiency and mismanagement in SOEs," said Ramaphosa in his weekly address from the Desk of the President, adding that "this is coming to an end."

Although many of these SOEs are deeply in debt, they remain valuable state assets with immense capacity, Ramaphosa said.

"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) and the National Post Office, all of which have been haunted by mismanagement and alleged corruption.

Last week, 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, said Ramaphosa.

"Business rescue is not the preferred option for fixing our state-owned enterprises, nor would it necessarily be advisable in other circumstances," Ramaphosa said. "But the resolve we have shown in putting SAA into business rescue cuts across all key SOEs."

Soon after taking office in February last year, Ramaphosa has taken steps to strengthen governance and reinforce effective management at strategic SOEs. New boards have been appointed and executives with the requisite skills and experience have been 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," said Ramaphosa.

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, Ramaphosa said.

Then financial systems must be strengthened and diligently observed so that no corruption is possible, he added.

"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 so that these entities are able to perform the crucial economic and developmental functions that the market would not on its own be able to perform," Ramaphosa said.

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, said Ramaphosa.

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.