State run enterprises are functioning very well: Gigaba
Sunita Menon | 2017-06-05 13:10:30.0
The only problem with state owned entities is a lapse in governance‚ according to Finance Minister Malusi Gigaba.
Speaking at the Ekurhuleni Investment Conference on Monday‚ Gigaba said: “Often we talk ourselves down in a whole lot of ways. If you look at most of our SOEs‚ they actually are functioning very well.”
“Even those who have one or two problems are making a significant contribution to the economy.”
He added that Eskom has massive investment programmes with three new power stations coming up that will power the SA economy.
“You would be made to believe that all is not well with our State Owned Entities.”
He explained that the first problem to fix is the governance of SOEs.
“Problems are created by a lapse of governance… because of the shareholder dropping the ball by not ensuring companies where they are shareholders are not governed as well as they should be.”
“I would be much more comfortable if we provided guarantees for State Owned Entities to bolster their balance sheets… instead of financing incompetence and corruption.”
He added that without state owned companies‚ SA would not have the infrastructure it has.
“I believe there is nothing inherently inefficient in our state owned entities. They pay well‚ should able to recruit well qualified professionals to run these entities.”
Singling out Eskom‚ he said that the SOE had only taken about R200 billion of its R350 billion guarantee and that there were possibilities that it would begin to pay back its guarantee and reduce its contingent liabilities. He also added that Transnet has a vibrant small enterprise hub.
“It is quite important for bigger state owned entities to develop those capabilities as part of a merger as a contribution to economic transformation.”
The government plans to spend nearly R950 billion over the next three financial years; SOEs will make up 46.7% of this expenditure. The total guarantees to SOEs amounted to R477.7 billion in 2016-17 — roughly 10% of GDP.